Cornering the Market

How to tell if a franchisor’s marketing will make or break you.

Cornering the Market

When you’re shopping for a franchise, one of the costs listed among initial franchisee fees, set-up costs and royalties, is a marketing fee. This is usually a percentage of your turnover, and by pooling these fees between all franchisees, much more impactful marketing campaigns can be launched to benefit your business and the group as a whole. It’s one of the biggest perks of belonging to a franchise as mass marketing like radio and TV ads are simply out of the budget of independent SME businesses.

But marketing can also make or break you if you become a franchisee, so asking existing franchisees about their system’s marketing can provide you with a clear indication of how they feel about the stewardship of their marketing contributions. This research can pay dividends in making sure the franchise you buy into has its marketing act together.

What to look for in marketing

Of all the factors you’ll want to check out when evaluating a franchise opportunity, none is more important than the franchisor’s marketing. Few subjects hit closer to home with franchisees than the basic question of how well their marketing is helping them succeed in the business.

This is also a topic that can help you separate the great franchise opportunities from the marginal ones. If you ask the right questions you’ll have no problem learning exactly what the existing franchisees are thinking on this critical topic. The four best questions to ask are:

1. How does the marketing programme work?

Most franchisors have a marketing programme with mandatory participation, significant fees and many rules. If you begin with this kind of open-ended question, you’ll usually receive the basic details you already know from the franchise disclosure document, but you’re also likely to get an earful about their satisfaction with the programme. Your goal is to get them talking and then listen carefully to their tone as well as the actual words they use.

2. What do you receive for the fees you pay?

Franchise marketing programmes usually have a required contribution from the franchisee that’s either a fixed amount or a percentage of the gross sales of the unit. Marketing programmes can range from just phone assistance or ad slicks (pre-approved ad templates on slick, camera-ready paper) to full multi-media advertising campaigns. You’ll want to find out whether franchisees feel they’re getting their money’s worth.

3. Do you have any say in where the money is spent?

Once franchisees pay their marketing fees, the contract usually says that the franchisor has total control over how the money is spent. But successful marketing funds typically provide a number of formal or casual input opportunities for franchise owners. This often includes local co-op groups or national or regional franchisee advisory groups (elected or appointed) that meet with the corporate marketing staff to review ideas.

Find out whether most franchisees feel that their marketing programme is well run and that someone will listen to them if they have input.

4. Does the marketing programme do a good job of driving customers into your business?

This is really the bottom line for every franchisee. You want to have a very clear idea of the answer because if you become a franchisee, you’ll be dependent on this marketing programme for your success. Take some time to explore this question and you’ll learn whether to be confident or concerned. Hedging is a red flag signaling the need for extra effort to find out why your direct question isn’t getting a direct and positive answer.

Market through customer service

While franchisors will be able to provide marketing in the form of radio, TV, print and digital advertising for the benefit of the group, a franchisee is still ultimately responsible for marketing their store through excellent customer service. Some ways you can go above and beyond for your customers are simpler than you might expect:

  • Think about your own experience as a customer — what would you like and dislike?
  • Recall times you were delighted by extra efforts to accommodate your needs. What were they?
  • Visit other businesses you know your customers are likely to frequent. How do they treat customers, and how can you adapt accordingly?
  • If there’s a problem with a purchase, call the customer personally with updates and expected time of arrival. Ideally hand-deliver or send a hand-written note apologising.
  • Customer loyalty is hard to win and easy to lose, show them their experiences count by asking for feedback on how their experience can be improved.
Jeff Elgin
About the Author
Jeff Elgin has developed a consulting system that matches pre-screened, high-quality prospective franchisees with the franchise opportunities that best fit their personal profile.

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