How to Assess a Franchise Marketing Strategy

When it comes to owning a franchise, having a strong marketing message is crucial. It is important to find out how much your franchisor will be helping you both directly and indirectly in the sales process. There are many franchises that will require you to buy into their corporate marketing. Some will make it a requirement for you to use their marketing and some will provide it as an opportunity.

If a franchise does require you to use their marketing and you don’t agree with the way they approach marketing, frustration may ensue and last throughout your business relationship with them.

Three aspects that are important to look at when assessing marketing strategies that are provided by a franchisor are:

  • How much you will be contributing as a franchisee
  • The range of the marketing strategies that are provided
  • The impact their marketing has on traffic, conversions and sales

Contribution Costs
When it comes to marketing funds, one big point of contention between franchisors and franchisees is how much each will contribute to the marketing strategy. Some franchisors will charge a flat fee, some will charge a flat percentage and then there are others that will use a sliding scale. Those that use a sliding scale make the more successful franchisees bare the brunt of the burden. It is important to know how much you will be paying for marketing because it can be a huge factor in your decision to open a franchise. If you do not have a baseline understanding of what you are paying, there will be no way to determine how effective it is.

Understanding the Marketing Strategy
Important questions about the marketing services that are provided by the franchisor you will want to ask yourself are:

  • Does the marketing cover your area?
  • Is the marketing strictly television ads or an omni-channel experience?
  • How far does the marketing reach?
  • How many people does the marketing impact?

These questions are some that you need to ask about the marketing strategy. Determining the answers to these questions is important before the contract is signed. Depending on the answers you are given, if you feel that the franchisor isn’t approaching marketing correctly or the reach isn’t sufficient enough, it will only irritate you further when your money is dedicated to something that you don’t believe will positively impact your franchise.

It is important to ensure that you are getting your money’s worth in terms of reach and area neat your franchise. If the franchisor doesn’t market in your area because of a lack of locations, can you expect them to start? If this is one thing that is important to you, you will want to get it written into your franchise agreement.

Impact Analysis
One thing that the franchisor should have some data on is the ROI of their marketing campaigns and some may be willing to share it. An important thing to ask existing franchisees is about the impact of the marketing strategy and campaigns. This can be a vital step towards understanding the effectiveness. You will also have to do some research to figure out how much advertisement was done in the different markets and how existing franchisees were impacted. This will help you to fully understand what a franchisors marketing campaign can do for you. Something else you will want to ask about is how sales increased and how much additional attention the brand received as a whole. Some campaigns do a lot to pique interest from the public, which may not mean more sales, just more traffic and attention.

Remember to ask these questions when determining the marketing opportunities for your new franchise, once you get the answers, it will help you feel confident about your decision.

Avoiding Joint Employer Issues When Owning a Franchise

What is a Joint Employer Issue?

A joint employer issue can happen when one company may end up supervising what at first glance could appear to be another company’s employees. If a company has direct and immediate control over another company’s employees, it will be considered a joint employer.

An example of this is when an airline may use an outsourcing company to provide baggage handlers at airports or when a franchisor of fast food restaurants may train its franchisees cooks.

One instance of a fast food chain running into this issue with its franchisees is McDonalds. The National Labor Relations Board determined that McDonalds was a joint employer with franchisees and both McDonalds and its franchisees have been suffering ever since.

Lexology, the legal blog, explained why this happened with McDonalds in a post and their explanation can help you choose a franchise that won’t have the same problem McDonalds is having.

As you go over the requirements for any franchise you are considering, look at the amount of control the franchisor has over its franchisees. You will want to look at the hiring, managing and firing decisions. Requiring a uniform is not the same as having control over daily decisions about employees and there are legal decisions supporting that difference.

Anything beyond that brand protection can be a sign of trouble. Make sure to take the time to discuss it with the franchisor.

What Isn’t A Joint Employer Issue?

Freshii, which is a Canadian fast casual restaurant franchise, was determined not to be a joint employer by The National Labor Relations Board, so the Freshii franchisees didn’t get dragged into a general anti-Freshii morass and each franchisee has been responsible for his or her own behavior toward workers.

Freshii didn’t participate in any aspect of hiring for franchisees. When people applied for jobs through the Freshii website, the corporate office just sent all the applications along without any screening.

When it cam to scheduling workers, Freshii also had no participation. Having a scheduling algorithm built into the franchisor’s business management software can be very helpful. However, it can also create problems.

The Freshii manual had suggestions for hiring, training, supervision and more, but franchisees don’t have to follow the suggestions. The franchisees also don’t have to get permission to change workers’ wages or any other aspects of their relationships with their workers.

Freshii also never made any recommendations about unions or unionization.

How to Avoid Joint Employer Liability

    • Make sure the franchise is not deemed a joint employer when purchasing it.
    • When you own a franchise, you want to make sure that you clearly post and celebrate the fact that your franchise is locally owned. A sign saying, “Independently Owned and Operated” is something that belongs on your wall.
    • Something else to remember is not to use job application forms that imply that the franchisor is hiring your team members. Use your franchise name, not the name of the corporation, on evaluation forms and hiring contracts as well.
    • You will also want to make sure that your workers understand that they are part of your team, not part of the corporate office’s team. Be careful with comments stating that corporate is requiring you to let someone go, those kinds of remarks can come back to haunt you.
    • Ensure that employee manuals and other documents clearly state that you and not the corporate office are in charge of hiring and firing staff members.
    • Another thing you will want to do is avoid using software that can interfere in any way with employee matters. One example of this is software that uses an algorithm to make schedule changes in real time. Any corporate software that monitors employees can also cause problems in the future.
    • Finally, don’t allow franchisor representatives to conduct employee evaluations or otherwise to behave like your workers’ boss.

When purchasing a franchise, remember that every business investment involves some risk. Being aware of possible issues and planning ahead to avoid them is the best way to reduce the risk.

Start-up Costs For Top Franchise Opportunities

If you’re thinking about buying a franchise, you probably have two questions that keep popping into your mind. How much can I make in a franchise and how much does it cost to start a franchise.

To help you decide which franchise is right for you, we decided to break down some of the start-up costs and fees of some of the most popular franchise systems and franchise industries in general.

For the record, low-cost franchises are those that you can buy for under $5,000 up to approximately $25,000 and the most expensive franchise systems can cost as much as $2 or $3 million dollars.

Let’s start with some fast food restaurant franchises and quick casual restaurants that are some of the most popular franchises across America. I’m sure a few of these are on your wish list.

1. Jimmy John’s

Initial Investment: $325,500 to $555,500
Initial franchise fee: $35,000
Royalty fees: 6% of weekly Gross Sales
Ad and development fund: 4.5% of weekly Gross Sales
Estimated Number of Units: 2,500

The perception is the Jimmy John’s costs much less than it does and for that reason, they get thousands of inquiries every single month. You’ll need a minimum of $80,000 in non-borrowed liquid assets and a net worth of at least $300,000 to qualify for consideration. Did you know the average Jimmy John’s franchisee will own more than one franchise unit within two years of purchasing the first?

2. Little Caesars Pizza

Initial Investment: $334,000 to $1,370,500
Initial franchise fee: $20,000
Royalty fees: 6% of weekly Gross Sales
Estimated Number of Units: 4,200

Little Caesars Franchise Availability: Little Caesars is an International brand but is seeking additional growth and franchisees in almost every state. To check availability in your state, click the following link: Little Caesars Franchise Availability

3. Subway

Initial Investment: $147,050 to $320,700
Initial franchise fee: $15,000
Royalty fees: 8% of total gross sales
Estimated Number of Units: 45,000

4. Bonchon Chicken

Initial Investment: $400,000 to $700,000
Initial franchise fee: $40,000
Royalty fees: 3.5% to 4.75% of Gross Sales
Estimated Number of Units: 223

Bonchon Chicken franchise will assist you with site selection. Our full-service dine-in restaurant requires between 2,000 and 3,000 square feet.

No previous restaurant experience is required but we will train you at our New York City headquarters and flagship store for 4-weeks. We will assign you a designated supervisor and you will work with our team at Bonchon Chicken, New York.

5. Paisano’s

Pizza, Pasta, Subs, Wings and more.
Initial Investment: $383,000 to $605,500
Initial franchise fee: $30,000
Royalty fees:6% of weekly gross receipts
Estimated Number of Units: 33 units

Paisano’s is a premier pizza and wings quick casual restaurant franchise. You can open a Paisano’s franchise typically within 120 days of site selection. An exact timetable varies because of multiples of variables.

Paisano’s franchise owners average more than $1,000 average sales per square foot and boast a 19-year operating history and not a single restaurant has closed.

Slide over fast food, chicken and pizza franchises, you may want to give serious consideration to owning a service-based franchise. Most home services franchises are low-cost, stay at home businesses with low overhead.

Service-based businesses are ideal for people who are tired of working for someone else and want to be their own boss. They’re great for retirees who want to run a business from home while managing a team of service professionals. In some cases, service-based franchises allow for part-time ownership providing supplemental income with upside potential.

If you fall into one of those categories and want to control your own future, you can research service-based franchises that specialize in junk hauling and moving, lawn care, carpet cleaning, pest control, painting, window cleaning, pet grooming, house cleaning, home improvement, home restoration, handyman services and more.

How Much Does a Service-Based Franchise Cost? Here are some of the hottest franchise brands in the industry.

Mosquito Joe

Initial Investment: $63,850 to $122,500
Initial franchise fee: $25,000
Royalty fees:10%
Estimated Number of Units: 170

Mosquitos carrying the Zika Virus are a concern so the demand for pest control continues to rise. Mosquito Joe is a premier franchise brand with a proven business model and ranked #1 in Category and #26 overall on Entrepreneur’s 2017 Franchise 500 List.

Fresh Coat Painters

Fresh Coat Painters franchise owners manage the business and customer service. Franchise owners benefit from five profit centers, a turnkey business opportunity and national accounts provided by Fresh Coat. This is a home-based franchise with exclusive territories.

Initial Investment: $53,850,000 to $82,000
Initial franchise fee: $44,900
Royalty fees: 6% of gross revenues
Estimated Number of Units:135

College Hunks Hauling Junk

Initial Investment: $89,300 to $208,200
Initial franchise fee: $40,000
Royalty fees: 7% of gross sales
Estimated Number of Units: 205

ScreenMobile

Initial Investment: $83,600 to $119,200
Initial franchise fee: $39,500
Royalty fees: 7% of gross sales
Estimated Number of Units: 95

ScreenMobile is America’s largest mobile screen repair company. Franchise owners specialize in window, door and patio porch screens as well as solar shading products. In business for more than 30 years, with no national competitors and ranked #404 on Entrepreneur’s Franchise 500 for 2017.

Low Cost Franchises For Children

Today, parents are all about giving their kids more opportunities than ever before. Whether it’s supplemental education or specialized athletic training or music, parents want their children to succeed.

The Children’s sector is one of the fastest-growing with franchise opportunities focused on dance, music, child fitness and child care, college planning and child entertainment. There is a major focus on STEM which is science, technology, engineering, and mathematics.

Following are the costs and fees for some of America’s hottest children’s franchises:

Soccer Shots

Soccer Shots is ranked #1 in the Children’s Fitness Category year in and year out and #334 in Entrepreneur’s 2017 Franchise 500. They have been franchising for 11 years and their model is proven nationally. There are more than 29 million children aged 2-8 in the U.S.

Initial Investment: $31,784 to $39,000
Initial franchise fee: $29,500
Royalty fees: 7% of monthly gross sales
Estimated Number of Units: 175

e2 Young Engineers

As an e2 Young Engineers franchise owner, you start with a statistically-proven product. This is a low-cost children’s franchise with a fast ROI and multiple revenue streams. Special discounts of 10% are exclusively available at America’s Best Franchises.

Initial Investment: $36,400 to $59,183
Initial franchise fee: $25,000
Royalty fees: 7%
Estimated Number of Units: 120

STEM for kids

Engineering, robotics and computer programming are the focus in this Top New Franchise on the Entrepreneur’s 2017 list. STEM for Kids provides educational enrichment for children age 4-14 through camps, after school programs, field trips, and workshops.

Initial Investment: $19,900 to $81,570
Initial franchise fee: $12,500
Royalty fees: 7%
Estimated Number of Units: 5

Whether you’re into big food franchise brands and high-value franchise systems or you value low overheads from a home based location, there is a franchise opportunity for you. Request more information from the franchises listed above or browse our franchise directory to find a franchise that’s the right choice for you.

5 Tips for Buying Equipment for Your Franchise Business

One of the biggest expenses when you first open your new franchise will be equipment. Depending on what kind of franchise you’re opening, these costs will vary. For example, if you plan to open a restaurant franchise, you could spend upwards of $100,000 on equipment alone. With a fitness franchise, you can end up spending $50,000 to outfit your gym franchise business.

Suffice it to say, franchise equipment doesn’t come cheap. But there are a few ways you can save money and still get what you need.

Restaurant Franchise

Woman chef inside a Restaurant Franchise

1. Shop Used

Most of the time, you don’t need new equipment. While you need an industrial-grade refrigerator for your restaurant or top-of-the-line treadmill for your gym, there’s no reason they have to be 100% new.

There are a few places you can find used equipment. Craigslist is the obvious choice, as often franchises and businesses who are going out of business or who are replacing older equipment will post their used items here. And don’t overlook eBay, especially for equipment you can feasibly drive to pick up.

Search for auctions in your city, as many going-out-of-business companies will enlist the help of an auction company who can easily sell all equipment, fixtures, and tools at once. It’s a great opportunity to get quality equipment at a fraction of the price.

2. Check the State of the Equipment

It’s great to save money on used equipment, but not if it breaks down just a few months after you buy it. Have a qualified repairman inspect any piece of equipment you’re considering buying before you buy it. Ask if it’s still covered by warranty.

It’s also a good idea to find out the typical cost for repairs for this type of equipment. Some brands may have higher part costs (similar to how European cars like BMW have much higher costs for parts than American models), and factor that into your decision on what to buy.

3. Decide What Should Be New

While not everything needs to be brand new, some things, like computers, are better purchased out of the box. For one, they’ll be under warranty. But also technology changes so rapidly that buying even a five-year-old computer will already put you at a disadvantage. Computers are fairly inexpensive, so budget for new where it matters.

4. Consider Equipment Financing

Rather than try to limp along without the equipment your franchise needs to succeed, look at financing your equipment costs, either through your franchisor or another lending source. Taking the pressure of paying for your equipment up front out of pocket will free up your finances and ease your stress.

5. Buy Over Time

You might not need to buy every possible piece of equipment you might ever need before you launch. Instead, plan to set aside a percent of your profits so that you can buy more equipment over time. This will keep your cash flowing more steadily in the early months.

Having the right equipment is essential to your franchise. Use these tips to ensure that you save where you can, buy equipment that will last, and invest in new equipment where appropriate.