Shifting to a Higher Gear | International Franchise Association

Shifting to a Higher Gear

 

Together, franchisors and franchisees can prosper through improved alignment to build a stronger national marketing fund.

 

By Louie Beaupre

 

The relationship between franchisors and franchisees can be challenging, characterized by a "give and take" mentality, especially in regards to national marketing funds. Franchisors often want franchisees to give more dollars to national marketing funds, but franchisees believe franchisors already take too much.

However, when specific strategies are implemented, this challenge can be mitigated, and both parties are likely to agree that investments into a national marketing fund are appropriate and even desired. The basic framework for gaining franchisee support of a shared marketing fund includes objective and goal setting, complete information sharing, clear performance metrics and reporting, and analysis of competing marketing strategy alternatives.

 

Shared objectives, clear goals

To create a high-performing partnership between franchisors and franchisees, there needs to be a shared consensus about the national marketing fund purpose. Without this agreement, it will be nearly impossible to manage the fund, execute marketing initiatives, and maintain an effective investment level. The franchisor must help its franchisees understand that leveraging economies of scale is a primary benefit of franchising. In fact, it's one of the best business-building opportunities available to a franchise system. Franchisors should carefully explain that missing any opportunity to capitalize on the natural economies of scale that are inherent within a national marketing fund is tantamount to negligence by everyone involved.

 

Culture of partnership

When a franchise establishes a shared national marketing fund, creating a culture of partnership with franchisees is critical. With that in mind, the next step toward creating a successful fund is to share the information that all parties will need. This seemingly simple step is necessary, though often skipped. Information sharing allows both parties to come to the same business conclusions about the creation, management, funding, and execution of the national marketing fund.

When a franchise dedicates itself to full, transparent sharing of information with franchisees, everyone prospers from this shared understanding and cooperation. What type of information should be shared? Total dollar amounts being contributed, marketing investments, detailed performance of investments, description and quantification of fund expenses, and articulation of the fund efficiencies and opportunities.

 

Reporting Metrics

If a franchise company expects its franchisee partners to support a national marketing fund, it should also expect the franchisees to want, and even demand, clear performance metrics and reporting. It's fair for the franchisor to expect support for the national marketing fund. It's equally fair for franchisees to expect clear reporting of results when significant dollars are invested.

With any economic transaction, the basic equation centers around two questions: What do I give? and What do I get? If franchisees aren't given the answers to the second question, it's likely the franchisor won't enjoy the support it needs to effectively manage and grow its national marketing fund. Thankfully, in the modern marketing age, it's easier than ever to prepare and share reports that support or challenge your marketing results.

Whether your results are positive and easy to celebrate, or less than stellar and difficult to acknowledge, both results must be shared for the sake of transparency, building trust, and decision-making. Then, both parties can move forward in a collaborative manner. In the long term, this is the only viable strategy for mutual success.

 

Evaluating alternatives

One of the most impactful ways to build support, collaboration, and incremental investment under a national marketing fund is to conduct a critical evaluation of alternatives. This means looking at all marketing investments considered inside the fund, and any possible investments outside the fund. Then, you'll complete a fair, critical, and open evaluation of each alternative investment using the same evaluation criteria. That criteria will likely include: alignment with fund objectives (lead generation, revenue growth); investment requirements; economies-of-scale; ease of execution; efficiencies; scalability across the network; ability to measure/report results; expected performance; and a ranked comparison to other alternatives.

By applying strict, consistent evaluation criteria for all prospective investments (both inside and outside of a national marketing fund), both parties can make rational, objective, and aligned business decisions. What often manifests after this exercise is the shared realization that thoughtful, strategic investments under a national marketing fund are the best use of marketing dollars, even when compared to alternative investments. Both parties often realize that a shared fund should be supported with continued investment at current levels, and potentially with increased investments to take advantage of unmet needs and opportunity.

If, for example, lead-generation tactic A, available within a national marketing fund provides leads at a cost of $100, and the next best lead-generation tactic, B, available to a franchisee outside of the national fund costs $125, clearly the franchisee will support the purchase of additional $100 A leads within the fund rather than the alternative $125 leads of tactic B outside the fund. Rational people make rational business decisions when they have data to support their decision.

When franchisors and franchisees collaborate on developing, managing, and funding their national marketing funds, it will inevitably provide another winning scenario that's common to high-performing franchise companies. Both parties will enjoy expanded reach to target audiences, strengthened brand awareness, more consistent brand messaging, and most importantly, a significantly increased likelihood of improved marketing results for all.

 

Louie Beaupre is a Franchise Strategic Consultant for Parallel Path Digital Marketing. Find out more at www.franchise.org/parallel-path-supplier.