Franchise Marketing

The Basics of Marketing for Franchisees

Exterior view of a Starbucks Coffee franchise in a mall.

Horacio Villalobos / Corbis / Getty Images 

Franchise system advertising efforts have two objectives: to build a strong brand and 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(s) 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 prior to 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 market:

  • Who is the competition, and how many competitors exist within the targeted area?
  • What types of services do they offer, and what is their pricing structure?
  • What are their strengths and weaknesses?
  • How are your competitors advertising and with what methods?
  • What types of customers are in your area, and where are they coming from; for example, are there large residential areas or large industrial or office complexes nearby?
  • What specific needs does each customer group have? What are common concerns for your customers?

    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

    • Web-based advertising (search engine marketing, display network advertising, search engine reports page advertising)
    • Direct mail (brochures, flyers)
    • Social media marketing (Facebook, Twitter, Google+, LinkedIn, Instagram, YouTube, Pinterest)
    • Radio and television
    • Print (newspaper ads, magazine ads)
    • Outdoor advertising (billboards, posters)
    • Grassroots marketing (encouraging referrals, participation in community events and charity events, networking, sponsoring local events)
    • Promotions and specials (coupons, cross-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 their 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.