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• 1 2018-04-23T13:40:31-04:00 Incentives and Rewards 3 incentives; sales; market; profit; loyalty; turnover plain 2018-11-13T14:35:31-05:00 Timothy Yang Although the structures of its franchise system enabled it to be successful, the company had to adapt its structures to fit the realities on the ground.  One issue was that despite the company's measures to ensure franchise loyalty, the company often encountered disloyal merchants -- who openly dabbled in other manufacturers' distribution networks -- particularly as it grew larger and expanded its reach further into a national market.  The financial health of the franchises on the ground was paramount.  The success of the system was built upon maintaining franchise loyalty to the parent company; if individual franchises did not make profits, they were often tempted to skirt company orders or to leave the company's network.
   
  Hoshi Pharmaceuticals employed a number of incentives and rewards to promote the fast turnover of its products and maintain strong ties with its franchises.  For example, in January 1919, the company introduced a program called the "Friends of Hoshi (Hoshi kōkai)," which established a club for high-performing stores.  Anybody could be a member as long as certain sales figures were reached, and ideally wanted every franchise would want to join.  The requirement was an average of above one yen of sales per day or 365 yen per calendar year.  If a store reached this goal, it was awarded between 3 and 200 yen, with the amount determined by a lottery.  The winners were celebrated and ranked in Hoshi Pharmaceuticals' company newspaper.