Monthly Archives: July 2017

Buying a New Franchise and Marketing It

When it comes to buying a new franchise and marketing it, one thing you will have is an advantage over those that buy a new business. Why is this? The reason is you will have name recognition and advertising from both the regional and national levels, which will give you a very strong start.

Marketing New Franchise

On average it takes a person anywhere from 7 to 12 connections with a brand before they will take action on what your are offering. Before you even open your doors, the fact that you will have some of those connections made will make a real difference in marketing your business.

In addition to having a franchise with name recognition, your franchisor will usually provide you with a marketing manual to get you going in the right direction.

What Can You Expect from the Marketing Manual?

  • Rules: You will receive rules for the marketing efforts you will be doing, which will probably include usage guides for logos and similar regulations.
  • Comprehensive Plan: The marketing plan will include information such as how to market the grand opening as well as marketing in the first few months of your business.
  • Graphics: In the marketing manual, you can expect to find ad slicks as well as graphics for your print ads, brochures, banners, postcards and other marketing materials.
  • Examples: Successful marketing efforts by other franchisees will be included to show you information and examples of what has worked for them.
  • Experience: Keep in mind that in addition to all of the information provided, your franchisor will have experience that is invaluable.
  • Additional Information: Other kinds of information you can expect to see in the marketing manual and materials are things like what campaigns have worked best for other franchisees and the frequency they recommend for leads. This will save you the expense and effort of trial and error.

As Eleanor Roosevelt once pointed out, we need to learn from others mistakes, since we don’t have enough time to make them all ourselves.

Major Takeaway in Franchise Marketing

1. Follow the rules of your franchisor and piggyback on their success. They have gone through the difficult stages of developing a strategy and they have most likely already paid for the expensive graphics to go along with it.

2. Your franchisor does national advertising and your local marketing should work along with it. Make sure that you take advantage of all of the opportunities your franchisor offers. There are many times a franchisees web page will be empty when it could have information about the local team as well as photos, hours and information.

3. One thing you will definitely want to take advantage of is the low cost local marketing opportunities, especially those that build on national efforts. For example, if the national franchise has an ad in Glamour magazine, your franchise can put the magazine page in a frame and say, “As Seen in Glamour Magazine.”

4. Social media is also something that you will want to get cozy with the national efforts on. When you are on Facebook or Twitter chatting with your franchisor, you will get greater visibility and encourage more people to join in.

As you get started marketing your new franchise, follow your franchisors guidance. As your business grows and develops, you will learn what networking and advertising efforts will best support your business.

Assessing a Franchise Marketing Strategy

When it comes to owning a franchise, assessing a franchise marketing strategy witha 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 franchise marketing strategy and some will provide it as an opportunity.

Assessing a Franchise Markting Strategy

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 franchise 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 Franchising 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.

Franchises Must Avoid Joint Employer Liability

Today, franchises must take all the steps necessary to avoid joint employer issues. This issue originates with the National Labor Relations Board and is affecting multiples of franchises, including McDonald’s and other restaurant franchise brands.

Avoiding Joint Employer Issues

What is a Joint Employer Liability?

A joint employer liability 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 Liability?

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 Franchises Can 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.
  • Franchises must 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 franchises will want to 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.