Evaluating a Franchise's Marketing Program
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You may have heard that one of the key reasons for buying a franchise and paying an ongoing royalty fee rather than going it alone is for the benefits provided by a strong marketing program. Such a program provides you with the advantage of knowing that there is a common pool of dollars set aside to help build the value of your brand and drive customers into your business.
Most marketing programs require each franchisee to contribute either a fixed amount, or a percentage of their gross sales, into this pool. The money is typically administered by the franchise company, often with some form of oversight by the contributing franchisees.
The marketing fund created by the franchisee contributions is used primarily for three things. First, it covers the cost of administering the marketing effort (internal expenses, agency fees, etc.). Second, it covers the costs of production of advertising materials (print, direct mail, radio, TV ads, etc.). Finally, it pays for media purchases to place these advertisements for the benefit of the contributing franchisees. These placements can be made on a national, regional or local basis, depending on the total number of dollars available and the objectives desired from the placements.
Any franchise company you are considering should be willing to thoroughly explain the mechanics of any national or regional marketing fund you are required to participate in as a franchisee. These kinds of funds are very common in franchising and, if managed correctly, should be a huge advantage for your business in the long term.
Franchises are generally willing to disclose a fair amount of public information about their marketing efforts to a prospective franchisee. There's really no proprietary risk in showing you samples of advertising they've done in the past, from a newspaper or direct mail ad to a radio or TV commercial. This will allow you to form opinions on the quality of the work they produce for franchisees to use.
Also ask them to provide you with at least the table of contents of the marketing support manual(s) they provide for franchisees. This will give you a good idea of the scope of the possible strategies they address in training franchisees to market effectively. It demonstrates that they have perfected their systems to the point where they have documented them in manuals and other support and training tools.
Assuming a marketing fund exists, find out what kind of oversight and input the franchisees have as a group for making sure the money is spent appropriately. Virtually all these funds are controlled by the franchisor in terms of the final decisions, but there is a large differentiation between companies in terms of how much franchisee participation is involved before decisions are made. In most cases, you are going to be better off with more franchisee participation in this process.
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. They should be very forthcoming on this matter, since very few things are closer to their hearts than marketing.
This topic is perhaps the most important one you'll address in your research 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 question to some other topic just as fast as they can.
Be specific and ask the franchisees how well the marketing worked in terms of driving customers to their business. Ask them whether they would do things differently if they had to do it all over again and, if so, why they feel that way. Finally, ask if they think they are getting good value consistently from their contributions to any required marketing fund.
If there is tension in a franchise system, it usually shows up in the marketing arena before anywhere else. Keep in mind that if you find most franchisees are unhappy about the marketing programs in place, in all likelihood, you will be as well. Don't settle for that situation-keep looking until you find a company with strong marketing programs that work effectively, and you'll probably end up happier as a franchisee.
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