Franchise Marketing

The Basics of Marketing for Franchisees

Exterior view of a Starbucks Coffee franchise in a mall.
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Franchise system advertising efforts have two objectives. The first is to build a strong brand and the second is to recruit customers. Building a strong brand requires that the franchisor and all franchisees send a consistent message to prospective and current customers. For this reason, franchisors in well-designed systems set strict rules for the use of their trademarks and control the use and creation of marketing and advertising materials.

Trademarks and Marketing Materials

Franchisors go to great efforts and expense to develop the name for their product or service, to create an identity or “brand personality” for the name, and to ensure that it is legally protected. For the health of the franchise system, it is therefore critical that franchisees use the approved trademark in strict accordance with the franchisor's established guidelines.

Misuse of the trademarks can harm the brand and also jeopardize the franchisee's franchise. Franchisors typically provide trademark art (for example, logos) to franchisees in electronic format with the requirement that the art cannot be recreated or altered in any way.

Usually, established franchise systems provide franchisees with specific marketing and advertising materials for adaptation to the franchisee's use. In systems where franchisees may create their materials, approval from the franchisor is typically required before the materials can be used.

Franchisor Marketing

Most franchisors have comprehensive marketing plans in place for the overall franchise. The national plan typically includes advertising campaigns, commercials via television and radio, internet advertising, social media, public relations, and direct mail efforts. Therefore, brand recognition is widely established, and franchisees benefit from this brand equity. The system's advertising fund (also called brand fund) helps to fund these system-wide efforts.

Franchisors that do not manage marketing on a national level usually provide an outline for the franchisees to follow in preparing their marketing plan on a local level.

Franchisee Marketing

It is typical for a franchisor to require initial "grand opening" or "market introduction" marketing, as well as an annual marketing plan, be submitted by the franchisee for approval or developed jointly with the franchisor. The market introduction period generally begins several weeks before the opening of a new franchise location and may last for six months after opening.

In addition to the franchisor's national marketing, franchisees are often permitted to perform local marketing initiatives on their own, within certain restrictions. Approval from the franchisor is usually necessary before proceeding with the local plan. Many franchisors also have a local advertising and marketing requirement wherein the franchisee must spend a certain percentage of their gross sales on local advertising, and provide proof of such advertising to the franchisor on an annual basis.

Researching the Competition and Identifying the Target Customer

To create an effective advertising and promotion program, you must do your homework. The two key factors that will influence your planning are your competition and the demographics of your target customer profile. There are many questions to answer about your target markets such as who is your competition and the number of competitors you may face.

When you look at the competition you will also need to consider the products and services they offer and their pricing structures. Look for where they may be stronger or weaker than you. Review their use of advertising and the methods they employ.

Next, look at the target market customers. Think about who these customers are and where they come from. For example, are there large residential areas or large industrial or office complexes that house these clients. Customers will have specific wants and needs that you must meet. Some will be common needs and others will be specific to your product.

Creating and Executing a Marketing Plan

Marketing plans can be very complex, but here are the basic steps, keeping in mind the "5 Ps" of marketing (product, place, price, promotion, and publicity):

  1. Collect information
  2. Plan the campaign
  3. Implement the campaign
  4. Review and assess the results

Media Choices to Consider

Consider using web-based advertising. Gain an understanding of search engine marketing and optimization, as well as display network advertising and search engine reports page advertising.

Social media marketing through Facebook, Twitter, Google+, LinkedIn, Instagram, YouTube, and Pinterest are another form of reaching your customer online. You can directly follow the response to advertisements by creating dedicated domain pages and following the customer's interaction with these pages.

Direct mail (brochures, flyers) is a common marketing method used by many businesses, as are print newspaper ads and magazine ads. While you will reach customers in this method, they are more remote in contact than online marketing. You never know if your prospective client read the ad or threw it in the garbage. Radio and television marketing and outdoor advertising through billboards and posters also allow you to remotely reach a possible client.

Another type of marketing is grassroots marketing. This type of endeavor will encourage referrals from current customers. You can also expose your brand during participation in community events and charity events, networking, and by sponsoring local teams or events.

Finally, you can use promotions and specials such as coupons and cross-product promotions.

A Note on Websites and Social Media

Due to the swiftness with which information on the Internet and social media can spread, it is not unusual for franchisors to exert strict controls over Internet presence and social media marketing.

Franchisees are typically prohibited from creating individual websites. Instead, franchisors usually publish franchisee information on the franchise system's website. If a franchisee is permitted to create their website, they are usually required to link it to the main site.

Creating Customer Loyalty and Referrals

Positive word-of-mouth from your customers is one of the most powerful methods of marketing your franchise. It is critical to maintaining a loyal customer base. Loyalty and reward programs tend to work well. Special promotions and coupons are also popular methods of keeping returning customers.

Finally, referrals are always an important part of a marketing package. Referrals can be exchanged with other business owners or via existing clients. An incentive program with existing clients, who refer new clients, is one popular method of obtaining referrals.