Mandatory Franchise Marketing Programs

 Are you getting what you pay for?

The marketing should draw customers to the franchisees without having to hire and manage an outside marketing firm. A homogenous marketing message helps establish the franchise brand over the marketing area. Since all the franchisees pay into the marketing fund, the franchisor can hire a strong marketing firm and afford larger media buys that an individual franchisee probably could not afford. And because a large franchisor has enough marketing volume, the franchisor can negotiate national pricing agreements and deliver saving to the local franchisees.

So Why is the National Marketing Program often Problematic?

The marketing program is normally an area of divergence of opinion between franchisors and franchisees. At times, the conflict is inevitable. Many times, it's not.
Consider this.
- Marketing programs are funded by mandatory contributions paid by franchisees. Some franchisors ask a fixed amount; others charge a percentage established on the gross sales of the unit, but either way, it's required of all franchisees.
- Although we all see advertisements, direct mail pieces, etc., most of us really have no idea what goes into producing, executing and monitoring these programs. . But we think we do.
- It's always hard to spend money on something you have little or no control over. Maybe especially hard for the entrepreneurial individuals who gravitate to franchise ownership.
- It's easy to second guess, and view the expense, without understanding the absolute necessity of a solid franchise marketing program.
That said, marketing represents an art as well as a science. Some programs are effective and some are not, so you do need to do your best to assess the program and make sure it will work before you sign any franchise documents!
Here are some questions to ask the franchisor:
- How much marketing will the franchisor perform in your market? How are marketing dollars allocated? Advertisement dollars go a lot further in rural Wisconsin than they do in New York City.
- Is your market a typical market? If the majority of the materials are focused on a certain demographic, and your market is established of a different demographic, how will that be handled?
- Are franchisees responsible for any marketing, and if so, what elements? Is the cost of those components part of the mandatory marketing contribution?
- What percentage of the marketing budget is spent on image advertising vs. call to action advertising?
- What components of the program are most effective?
- How is the marketing program measured, and how often? Are results shared with franchisees?
- Is the marketing program fully transparent? Will the franchisor give you with an annual accounting of both the income and the expenses of the national advertising program?
- Ask the franchisor if s/he will share with you copies of their ads and promotional pieces during your franchise investigation. Most franchisors will send items that are in the public domain.
Here are some questions to ask the franchisees:
- Do they keep track of how their clients find them? If so, what percentage is from the marketing program (vs. word of mouth, driving by, etc.)?
- Which tactics are the most powerful? Electronic marketing? Television ads? Direct mail?
- What things - if any - would the franchisee alter about the marketing program?
The bottom line.
Perhaps the simplest measure is this: If you speak to a lot of franchisees, and the majority are unhappy with the marketing program (for reasons other than cost), you will likely be unhappy as well.
Conversely, if most franchisees feel the program is efficient (even if they believe it costs too much) it is certainly an effective franchise marketing program that will be an important factor in your future success!