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.
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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.
Jeff Elgin is the "Buying a Franchise" coach at
Entrepreneur.com and has almost 20 years of
experience in franchising, both as a franchisee and a senior
franchise company executive. He is currently the CEO of FranChoice Inc., a company that provides free
consulting to consumers looking for a franchise that best
matches their needs.