Great Expectations
1 Dec 2007

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Branding invades so much of our lives but how can t be most effectively managed for the franchise you are purchasing? Domini Stuart takes a look at what franchisors need to do to keep their brand alive.

If buying a franchise is all about the brand, surely every franchise should be striving to produce brand-building advertising. “Not so,” says Troy Hazard, director of The Edge corporate Strategies. ‘Franchising is about selling a solid business. The brand comes later.’ Hazard gets very nervous when someone wanting to franchise a business claims to have a great brand. “That tells me he’s driven by ego, not by experience,” he says. “He’s already under the misconception that people care. They don’t.

“Lots of marketing people read the textbooks and come out with the ‘Four Ps of Marketing’ — price, position, product and placement. That’s all well and good, but the reality is that you’ve got to try to get people to care. The line I drum into franchisors and franchisees whenever I’m speaking is ‘I’m a consumer and I care less’ Once they understand that concept they have a much better chance of success. Being humble about our business keeps us in our reality. As soon as we lose sight of reality and begin believing our own sales pitch the wheels start falling off.” As for brand advertising, Hazard claims it barely exists. “Of the $60 million a year McDonalds spends on marketing, just 10 per cent might fit into that category,” he says.

“Everything else is attached to a promotion, activity, product or service and specific to driving sales rather than ‘hey, we’re McDonalds and we’re open’. There’s so much clutter around these days that a brand advertising campaign is bound to get lost in the maze. Between the time we wake up in the morning and go to bed at night we will have seen, on average, 3,500 marketing messages. Of those, we will remember less than 2 per cent. Do just four brand campaigns a year and there’s no chance people will remember you. A specific product-driven promotion may have half a chance of cutting through the clutter and, if you overlay that with an integrated mix of local, regional, relationship and brand marketing, you’re going to touch people a lot more often — and you’re substantially increasing your chances of being into the 2 per cent they remember.”

Grass roots

When a franchise is in its early stages money is bound to be tight. Local area

marketing is cheap, perhaps even free and, at this point it may be the only alternative. Talking to local sporting and charity groups about how you might be able to support each other can lead to important long-term relationships. Hazard says that, in their early days, groups like Eagle Boys Pizza, Poolwerx and Subway all relied heavily on getting out into the community, becoming good corporate citizens and developing loyalty locally.

Paola Tanner, director of Printrak, says something as simple as marking a special occasion by dressing up a store with balloons and coloured paper can attract both attention and sales, particularly if it’s linked with some kind of offer. “You can also generate very cost- effective and strategic word of mouth campaigns by giving people a good experience they’re not expecting — something that’s going to get them talking,” she says. “For example, if you clean cars, you could hand out freshly-baked cookies to customers as they wait.” While brand integrity is crucial, Tanner believes systems can be designed to allow flexibility without undermining the accountability which protects brand compliance.

She encourages franchisors to give franchisees a little leeway, at least at the community level. “Many people who are running a business, and especially those who’ve been doing it for a while, know what generates sales in their local area,” she says. “It makes sense to give them an opportunity to make the most of that.”

Kamil Kreiser, a senior consultant at DC Strategy, says that most of the franchisors he works with are very clever about the way they spend their marketing dollars. Early on, its almost always below the line and, for a store- based retailer, the first priority is bringing the concept to life. “Pie Face, for instance, sells pies with faces on them — a different face for each flavour,” he says. “This point of difference is both memorable and fun and, at first, they spent almost all of their marketing dollars on the right store locations and creating a look that reflects the unique brand personality.” The next challenge is persuading people to try your product then keep coming back for more. For Pie Face, that meant handing out ‘Pie Cheques’ which were good for a discount, a free mini pie or, in various cross promotions, a free drink.

Attracting return custom can be as simple as giving out loyalty cards with the promise of a reward after a certain number visits. Pie Face chose to target children with a range of collectible stickers. When McDonald’s target kids they focus not on the meal but the experience and the fun that goes with it,’ says Kreiser. Whilst these kinds of strategies work well for retailers with a shop front and walk-by traffic a service provider needs to look elsewhere. For Gizmo, a company which brings technical help into the home, potential lay in aligning itself with more affluent channel partners. It approached Microsoft, who was quick to see the benefit of providing customers with the option of an end-to-end service including support and installation. Now Gizmo is included on relevant collateral, named as a preferred supplier for servicing.

Gizmo also developed relationships with retailers of PC’s and broadband services. Strategic placement of point of sale materials puts the message in front of potential consumers when their interest is likely to be at its peak. However, Kreiser warns against presuming that customers will ask the right questions, or that retailers will automatically include you in their sales pitch. “You need to budget for motivating and training sales people to cross sell your product,” he says. “You also need to choose your partners wisely — point of sale will only generate consistent sales if your service is closely aligned with your partners’ brands.”

The marketing minefield

Who pays for what? Who does what? If the answers to these apparently simple questions aren’t established from the outset, marketing can disintegrate into a bitter battle between franchisor and franchisees. Franchisers know that, as a rule of thumb, break-even kicks in at around 20 outlets. Fear of going broke before they reach critical volume can drive them to oversell their marketing offering. “It’s not easy to get people to put their money where your business idea is, particularly when your brand is not well established,” says Tanner. ‘You want to promise the world so that they’ll come on board but, if you can’t deliver, there’ll be problems down the track.”

“The message should be that it’s going to be tough — we’re here to support you, we have a good system in place, but you need to work,” says Hazard. “Some franchisers are afraid to say those things. They gloss over the fact that a franchise is a small business, and that small business is tough, in order to make the sale.” In terms of how the money is spent, Tanner says that, once again, expectations must be aligned from the start. “A franchisor must make it very clear what they’ll be providing, and what franchisees are expected to do for themselves, For instance, if franchisees need to cover half the cost of every marketing initiative, they need to know this. If the franchisor plans to spend 50 per cent of the budget on sales generation and 50 per cent on trialling new ideas, again, the franchisees need to know. They can’t be expected to create their own business plans if they have no idea how much they will be expected to invest in marketing or how that money will be spent.”

When a franchise breaks through the 20 outlet barrier, generally franchisers can afford to take a more professional approach to marketing and plan for the year ahead rather than shooting from the hip. However, when a franchise breaks through the 50 outlet barrier, franchisees often start to question why their brand isn’t on TV. “The reality is that a franchisor simply can’t afford it,” says Hazard. “You want a national TV campaign? Give me $5 million and I’ll give it half a go.

“Between 50 and 70 outlets you’re likely to be working with a total annual budget of around Si million — but we still see franchisors fold under the pressure and go on to TV even though they don’t have the money for effective reach and frequency. When the campaign fails, franchisees want to know why they wasted their money on television. It’s a vicious circle.” By the time they have 70 outlets, franchisors are likely to be less jittery. They generally have a marketing manager in place, and a more integrated strategy. “As local, regional, relationship and brand marketing come together the moon and stars start to align,” says Hazard. “Finally, you have a brand.”

Franchising: November/December 2007

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