The key to any effective business model is marketing. Today, more than ever before, the value of effective marketing is more apparent than ever and with more and more “noise” in most markets, the ability to create awareness for a product or service is increasingly valuable. Most small businesses are unable to create enough “buzz” to capture customers consistently which makes for a significant disadvantage no matter what business they are in. Franchising, when done right can be the perfect combination of small business owner and larger brand power. Great franchise systems offer enormous leverage and economies of scale through group marketing initiatives.
How does it work? A Franchise marketing system is a multi-pronged approach to covering as many aspects of the brand promotion as possible to add increasing visibility to the brand on a national, regional and local level. Great franchise marketing systems allow a franchisee to feel, act and be represented like a large corporation or business entity while still operating like a small business owner, the combination can be lethal.
The franchise model incorporates four levels of marketing into any good franchise system. First is the local marketing requirement that all franchisees must operate with in order to be compliant with the franchise model. Local franchise marketing is a requirement of the franchisee to spend a certain amount of dollars in their market on developing business and creating awareness for the business. This might include things like direct mail, Google Adwords geo-targeted to that market and signage in the local market. The franchisor never sees the dollars being spent, they only review and confirm that the local advertising investment was made.
The second tier of franchise marketing are regional cooperatives which two or more franchisees agree to spend money on a regional advertising campaign that will equally benefit those in the area. This could include cable advertising, radio or a tradeshow that is in the area. Franchisees work together and manage this through a committee, it is generally one of the most effective and easily determined returns on franchise marketing.
The third tier of franchise marketing is the social aspect that many franchisors incorporate into their franchise system by requiring that franchisees contribute to a charity fund. This is typically managed by the charity directly and the franchisor only collects the funds to donate, but sometimes the franchisor may also run the charity and facilitate how the funds are used. The goodwill and brand development that comes from this type of franchise marketing is limitless and of enormous value to all franchisees involved in the system.
The fourth tier of franchise marketing is the National Marketing Fund which is managed directly by the franchisor. Typically, franchisees contribute to this fund with a 1-3% monthly contribution of Gross Sales and the Franchisor finds ways to invest the capital where it will equally benefit all of those involved in the franchise system. This could be celebrity endorsements, improvements to the website SEO, brand improvements or other large scale marketing investments which will benefit all of those involved in the system.
In the end, the franchisee wins when the franchisor has invested in and developed a franchise marketing system that leverages the group buying power and is managed efficiently. People want brands, people trust brands, franchising helps create brands for small business owners with great marketing.