By Eric Parker
We are often asked by Franchisees “how to evaluate a successful franchise”? We have broken this category down into 5 key questions:-
1. Is the business model sustainable?
2. Will you get a good, market related Return on Investment?
3. Is the Franchisor marketing orientated and are the marketing campaigns impactful?
4. Will you receive initial and ongoing support?
5. Is the Franchisor a sustainable and viable business?
Most Franchisors fail on the marketing question. This is why:
- They are not marketing orientated and they don’t allocate sufficient funds to marketing. It takes time to build up a marketing fund for a new franchise, it’s often necessary for the franchisor to lend the marketing fund some money to get a marketing campaign going.
- They use up the marketing budget with non media activity e.g. cost of conferences, travel and marketing staff. Franchisors must have marketing contributions paid into a separate fund and provide feedback on usage to franchisees to be compliant to the Consumer Protection Act (CPA). It’s important to use franchisee marketing contributions for the marketing of the brand.
- They do not dominate a selected media and they spread their expenditure across many different media. Many smaller franchisors have a small budget and the only way to make an impact is to choose one media, eg radio, and focus all the marketing spend on a specific campaign in the selected media.
- They don’t have a clear, well thought out communication strategy. This document must clearly state the brand positioning, features and benefits and the predominant target market. With no clear strategy, marketing activity will be unfocused.
So how should the Franchisor go about utilising the power of marketing to the full?
Note: Marketing is an Investment not an Expense.
Good marketing will generate increased revenue and profitability.
Steps to becoming a leading, marketing-orientated Franchisor.
1. Maximise your budget and ensure that the majority of this expenditure is spent on media. A rule of thumb is you should spend 10% of your Gross profit related to sales e.g. If Gross Profit = 50%, you should spend 5% of turnover excluding VAT on marketing.
2. Compile a clear communication strategy with target market, brand positioning, product benefits etc. This will focus your efforts and ensure that the right message is delivered to consumers.
3. Develop hard selling advertisements that people love to see. Nando’s is almost known more for its marketing than its chicken! You have to be different to stand out from the clutter of advertisements currently out there. However, it’s important to stay true to your culture and brand ethos.
4. Dominate the selected media which is most suitable for your major target market. This means that you should choose a medium that works for you, whether radio or online advertising, and focus all your efforts and budget on that.
5. You will get tired of your advertisements long before your customers do – Good marketing is all about a consistent message in consistent media. If you change your marketing message too much and too often, you will confuse consumers and lose impact.
6. This marketing will help you create a brand which is your most valuable asset! A well-known brand and collective advertising is one of the main drivers to buy into a franchise. Growing your marketing presence will also grow your franchise network.
Good luck! And if you need any help we would be more than happy to assist. You can contact Eric on firstname.lastname@example.org