Mandatory centralized marketing programs are probably one of the greatest strengths of franchising. Pooling funds from all of the franchisees in a system gives them, collectively, much greater marketing power. This central fund can be used to do things that no single franchisee could afford, like running television advertising campaigns. The fund can also be used to hire experts to produce advertising materials of far better quality than what an individual owner could create.
These funds can also be a great source of conflict, though, because franchisees often feel that the pooled money is not being spent in the way they think it should be. This can be a huge issue in any franchise system, especially in a recession when all advertising tends to be less effective than in better times. So it is essential for anyone contemplating a franchise investment to know in advance that the company's marketing system is a good one. The following are five essential qualities of a good franchise marketing program:
1. It drives customers
Plain and simple, the number one question for any franchisee to ask is whether or not the marketing fund brings enough people through the door to make the business successful. If the answer is yes, conflicts will be kept to a minimum. If the answer is no, watch out for World War III.
2. It involves the franchisees
Successful franchise marketing programs typically give franchisees substantial opportunity to weigh in with their opinions. The ultimate decision-making authority is normally still reserved for the franchisor, but well-run funds get plenty of input from the people closest to the customer-the franchisees. You should look for at least a franchisee advisory group (elected or appointed) that meets with the company's marketing executives regularly to provide input on future projects and campaigns.
3. It gets the splits right
Marketing fund dollars are used primarily for three things. First, they cover the costs of administering the marketing effort (internal expenses, agency fees, etc.). Second, they cover the costs of producing advertising materials (print, direct mail, radio and television ads, etc.). Finally, they pay for media purchases to place these advertisements for the benefit of the contributing franchisees. A common franchisee complaint is that too much is being spent in one of these area and not enough in another. For example, the fund clearly needs to produce high-quality promotional materials, but if all of the money is spent on production, there won't be any left to deliver these wonderful materials to consumers. There obviously has to be a reasonable balance between these two needs. Another common conflict is over the amount spent to promote "brand-building" advertisements versus the amount spent on "customer attraction" advertisements. Many marketing department executives seem to favor the first approach, whereas most franchisees strongly favor the latter. So again, if there's not a reasonable balance between these two needs, massive conflict can result.
4. It is well-documented
A well-thought-out and proven franchise marketing system will be carefully documented by the franchisor. Though they probably won't provide you with all of their proprietary internal marketing documentation, you can request at least the table of contents of the marketing support manuals they provide to franchisees. This will give you a good idea of the scope of the strategies they address in training franchisees to market effectively. It will also demonstrate that they have perfected their systems to the point where they have documented them in manuals and other support and training tools.
5. It validates well
The surest way to find out how well the marketing program is working is to get on the phone and start asking the existing franchisees. You'll find that they will be very forthcoming on this topic since few things are closer to their hearts than marketing. Be specific and ask them how well the marketing works in terms of driving customers into their business. Also ask if they think they're consistently getting good value from their contributions to any required marketing fund. If you find a franchise system where the majority of the existing franchisees are unhappy about the way their marketing dollars are being managed, you can safely assume that you'll end up unhappy as well if you become an owner. Do yourself a favor and find another company. On the other hand, if most of the franchisees are pleased with the way the marketing fund is handled by the franchisor, that's a great sign. You'll often find that if this is the case, the franchisees are happy about most other factors in their business as well.
The topic of marketing is probably one of the most important you'll address in your search for a franchise opportunity, so expect to spend some time on it. If the marketing materials are of good quality, if the systems are effective and well-documented and if the end result is working well in terms of driving new customers into the business, everyone will be more than happy to give you lots of information about the marketing systems. If things are not going well, you'll find that they want to move off this topic and onto something else as fast as they can.
Take your time and make sure you know whether or not you're dealing with a good marketing program. This is no small matter, since your livelihood will rely on the success of the marketing program in driving customers to your business. The time and diligence you invest in this area can pay big dividends in the long run, and you'll be happy you made the effort.
Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.