09/28/21

Is Your Favorite Store a Franchise?

Did you know Ikea is a franchise? How about UPS or The Body Shop?

While we may be familiar with the idea of fast-food chains like McDonald’s being franchise organizations, a stunning number of businesses you frequent are franchises. The Economic Census revealed some surprising facts about franchises:

  • 63% of private mail centers are franchises.
  • Only 3% of used car dealers are franchises, but they make up 24% of sales.
  • 93% of retail optical businesses are operated by franchisors.
  • 100% of new car dealers are operated by franchisees.

When done well, franchise brand management keeps the business structure of the franchise invisible to the customer. Instead of thinking of each store as having its own spin on the brand, every location delivers a consistent experience.

In fact, one of the goals of franchise marketing is to deliver an on-brand experience at every one of a franchise’s locations.

For this reason, having a solid marketing strategy for a franchise business is critical, not just to growing the franchise but to managing franchise marketing costs effectively.

Blake Martin, president of FranNet of the Heartland, has decades of experience working both nationally and internationally with franchisors and franchisees to evaluate the right fit for franchise business opportunities.

He shares three insights that can help outsiders better understand the world of franchise marketing and help those within the franchising structure achieve more profitable outcomes.

Every franchise is unique.

“One size does not fit all in franchising,” he says. “The pain points for each organization are different.”

While there are similarities within categories, Martin says not everything can be franchised and not everyone is a good candidate to be a franchisee.

“Industries that require professional licensure or extensive school and technical training that has to be obtained by the franchise owner themselves may not be a good match for franchising. We may never see law offices franchised, for instance.”

The way franchises choose to grow varies as well. Many will offer opportunities to a single franchisee to take responsibility for an entire region into which they want to expand. In other cases, local franchisees buy additional locations over time.

Good franchisors add value to franchisees.

Martin says corporate franchisors must prove their value to franchisees all the time. “Good franchisors should always be thinking about how they are adding value to the franchisees. The market has changed, and there is now a push for franchisors to put more into local marketing.”

Martin says local franchisees generally know what they need to do from an operational perspective but need strategies on how to identify new customers in their local markets.

Franchisors are expected to take a lead role in pushing business to local franchisees through digital marketing, online marketing and social media campaigns, as well as more traditional channels like outdoor, radio and TV.

“Most franchisors would have a hard time getting people to join them if they didn’t invest royalty dollars in solid advertising and marketing tactics.”

Smart franchisees listen to their franchisors on the big things.

A constant push and pull exists between franchisees, who are independent business owners, and the national/international brands they represent. The franchise systems that master the art and science of developing healthy, long-term relationships between franchisees and franchise owners are the most sustainable.

“It’s a bit like a marriage,” Martin says. “It’s both a blessing and a challenge. There is a constant push from franchisees who don’t want to implement everything coming down from the national home office. The best systems are composed of patient, humble, hardworking people who listen to each other.”

Martin, who sits on the Franchise Advisory Council for FranNet, says franchisors can look to advisory councils as a way to test new ideas, field important feedback and keep an open feedback loop with franchisees.

“In many franchise systems, the advisory group controls at least some portion of the purse strings. They see the pilot programs and opportunities first and help vet them for the rest of the franchisees.”

Pilot programs were part of what led fast food chains to incorporate drive through windows into their business models.

“In many cases, things were going great at the time and franchisees saw no reason to break a hole in the side of their buildings to put in something no one was asking for,” Martin says. “But the home offices knew from the results of their pilot programs that drive through was going to catch on like wildfire, and if franchisees didn’t invest in retrofitting their buildings, they’d be left behind.”

It was a hard sell for some franchisees, but it’s a quintessential example of a time when franchisors had the data to back up recommended approaches and were ahead of the competition.

Franchisees who didn’t listen were indeed left behind.

In an industry that is only growing faster over time, the future of franchising looks bright, particularly for those who follow Martin’s advice.

 

Do you want to grow your franchise business? Whether you want help with growing the franchise, need a marketing strategy for franchise business or don’t know how to advertise your franchise, customer insight is key.

Connect with the professionals at OBI Creative today for assistance with research, strategy and execution driven by customer journey insight.