Captives for franchise and dealer networks
One question has to be settled before any of the others. Is the captive for your members, or is it a new revenue stream taken from them?
Why it decides everything
Both are legal, and they produce different pricing, different governance and different participation rates. Your members will work out which one you chose, usually within two renewals.
The question sharpens when ownership changes. If a sponsor buys the franchisor, the members who funded the captive may not own any part of it. Settle that before the structure is drawn, not afterwards.
Network programs succeed or fail on whether individual operators choose to stay in them.
What I can tell you
- Whether your network carries enough premium volume for fronting carriers to engage.
- Which lines belong in the program and which should stay in the commercial market.
- How to price it so participation is voluntary and still holds.
- What governance keeps members confident once the program is running.
Where this comes from
I ran a franchise insurance program with 85 per cent participation and retention close to 100 per cent, across a national network of independent operators. Voluntary, every year.