Making Money Online

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Franchise Marketing Mistakes

When marketing campaigns succeed, everyone benefits. Brand recognition increases and traffic to individual franchises increases, too. However, even the best thought-out marketing campaigns can fail. There are a few common mistakes that franchise systems can avoid making to make your franchise opportunities succeed.Using the wrong medium - If your customers are teenagers, they probably won’t read your ad if it’s placed in the business section of the newspaper.

Conveying the wrong message - Your pet food may delight dogs and cats, but if your message is that pets don’t have taste buds and might as well eat your pet food, you’re not creating demand.

Putting together the wrong offers - For example, if you’re representing a high-end brand, you don’t want to cheapen it by slashing prices to be in alignment with discount stores in your area. This will only confuse the customer.

A lack of trust - Many franchisees feel that the franchisor is out to turn a profit on advertising fees. However, this money funds the marketing department, which should hire the best in the business. Their strategy should be trusted by individual franchisees, since it’s usually based on hard data and has been focus tested thoroughly.

A lack of integration and coordination - If the franchisor takes out a national ad, franchisees would be wise to build on that message in their regional and local efforts.

Overpromising and underperforming - If the ad portrays the franchise as a clean, well-run, efficient operation that serves its customers well, and individual franchises are unwelcoming and serve inferior products, the reality won’t match the advertised promises, and customers won’t return.

In addition, franchisees should give a marketing campaign a chance. Ads must be repeated many times before the message sinks in. If you feel that your advertising money is being wasted on ads that are replayed over and over again, it isn’t. The message needs to be repeated to build brand awareness.

Overall, marketing campaigns work best when everyone is open to new ideas and can get enthusiastic about them. If a franchisee doesn’t promote new products, or doesn’t know anything about them and therefore can’t properly sell them to customers, the brand will weaken. However, if franchisees are willing to try something new and be well informed about the newest promotions and products, the customer will be satisfied on all levels.

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New Franchisees?

Franchising is becoming a more attractive business vehicle for a variety of people, and this diversity is strengthening the franchising community.

Women franchisees are becoming more common. Working with data provided by the U.S. Bureau of the Census, the Center for Women’s Business Research found that as of 2004, there are an estimated 10.6 million privately held U.S. firms that are 50 percent or more women-owned, accounting for nearly half (47.7 percent) of all privately held firms in the country. These firms generate $2.46 trillion in sales and employ 19.1 million people nationwide. The largest share of these firms is in the service sector; however, the greatest growth in the number of women business owners can be seen in the construction sector.

Many of these women business owners are franchisees. Women franchisors are also becoming more common, too, such as JoAnne Shaw of The Coffee Beanery. Women also are becoming more involved at the top levels of franchisors’ organizational headquarters as well.

The International Franchise Association (IFA) is striving to meet the needs of women in franchising and to welcome new women to the community. It has developed the Women’s Franchise Committee as a resource for women seeking career-growth franchise opportunities. It also provides international network opportunities, an annual meeting, and monthly phone conferences.

Minorities are finding that franchising presents opportunities as well. Franchising allows someone to become a business owner but it also provides training, financing, and ongoing support that many minority entrepreneurs lack. To help meet this need, the IFA has established its Minorities in Franchising Committee. The mission of this committee is to increase the number and success of minorities in franchising, including franchisors, franchisees, suppliers, and employees.

Veterans, too, are being welcomed into the franchising community thanks to the IFA’s VetFran program, which not only helps veterans connect with franchisors but also helps to finance their ventures. I’m a great supporter of veterans’ involvement in franchising, because they are able to follow a system, hang in there when times get tough, and can lead others with authority.

The changes in the economy are bringing new people to franchising. Those who have been downsized find they can use their skills and business connections in the variety of industries served by franchising. Franchising also provides a measure of stability and security that many who have been downsized are seeking. With their franchisor’s support, these people can create a second career that’s as fulfilling, or even more fulfilling, than their first.

People who aren’t quite ready to retire but are at a turning point in their careers are drawn to franchising as well. While some employers may not want to hire an older worker, these workers can become great franchisees before retiring full-time. They can make a 10-year commitment to a franchise system, at which point they can sell their business or pass it on to one of their sons or daughters. In some cases, they can tap into their 401(k) or IRA to help fund their franchise. There are abundant examples in franchising of people collecting social security who in fact come out of retirement to develop a franchise. It may be for the cash flow, but more often its to restore a meaningful purpose for their life.
This diversity of the franchisee community ensures that it will continue to thrive. Franchises come in all shapes and sizes and aim to meet a host of different consumer needs. The franchise community needs franchisees with diverse skill sets and ties to communities in all parts of the country. In fact, just about anyone who is willing to work hard, has a thirst for knowledge, and lives up to high standards can find a place in the franchising community.

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Franchise Networking Opportunities

Given that the health of a franchisor’s relationships contributes to the health of the overall system, all franchisees should take part in as many networking opportunities as they can.

The franchise system may provide many of these opportunities. For example, it may have regular workshops, seminars, and meetings for its franchisees. A good franchisor will understand the importance of these gatherings and will encourage participation. Franchisees will be able to learn from each other and get to know others who are also walking in their shoes.

Franchisees can also find networking opportunities through the International Franchise Association (IFA). Franchisees can participate in the Franchise Business Network, which was initiated by Fred DeLuca, the founder of Subway. Franchisees can communicate via the IFA’s electronic forums on its website. There seems to be a forum for every concern, ranging from women in franchising to newcomers to franchising. Also, the IFA has established a Franchisee Forum in addition to their Franchisor and Supplier forums. All three forums provide franchise opportunities for each segment of franchising to provide guidance and counsel to IFA’s governance.

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Trends in Franchises

The franchising way of doing business is growing and you can find franchise opportunities everywhere, there’s no doubt about that. It’s because it’s a win-win situation for those who want to be in business. For franchisors, franchisees provide the capital and manpower needed to grow the business. For franchisees, the franchisor provides a complete system of doing business, as well as brand recognition, training, and support. Plus, franchising supports the dream that so many of us share, the dream to own one’s business. That’s a powerful message, one more and more people are attracted to.Franchising isn’t an industry, it’s a method of doing business. This type of business structure is found in almost any industry you can think of: lodging, quick-service restaurants, dry cleaners, business support services, florists, fitness centers, office tech support, and so on.

Some of the trends in franchising’s growth match the growth in the U.S. economy as a whole. As more people are working at home, business support services are growing. This includes franchises that ship packages, offer technical support, create marketing materials, and do bookkeeping and accounting. As more people are purchasing their own homes, home inspection services, repair and remodeling companies, and cleaners will generate more business. As the job market remains in flux, franchised temporary help agencies will meet the needs of employers. If you can think of an emerging, potentially long-term trend that will affect a large portion of the American economy, you’ll find a franchisor willing to move into and dominate that market segment.

Technology also plays an important role in franchising. Not only are tech-based franchises becoming more plentiful and profitable, but technology is changing the way that franchisors do business. Some franchisors have highly developed communications systems that allow them to keep in touch with their franchisees and know quite a bit about how each unit is doing. Technology also gives franchisors more training alternatives. Although websites and conference calls should never replace a personal training session, they can supplement initial training programs and help franchisees be aware of changes in products and services at any time.

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The franchisor-franchisee Relationship

As franchising continues to evolve as a way for companies to distribute and market their services, the demand for qualified franchisees increases. The ability of a system to maintain a competitive edge depends on the quality of its franchisees. This means that franchisors should have a well developed franchisee recruitment and selection process.

Many of the problems that are experienced in some franchise systems begin with how franchisees are recruited, selected, and brought into the system. Franchisors can’t just focus on closing the deal and increasing their number of operating units. They must find the right family members. With the wrong family members, some systems will never realize their true potential.

This means that the purpose of recruitment should be seen in a different light. In this view, recruiting is meant to create the future of the franchise system. This goes beyond a numbers game and turns into a consultation process between the franchisor and franchisee. Rather than convince someone to buy a franchise, franchisors should grant a franchise to the right candidates, and franchisees should make an informed business decision. The candidate should fit in with what the franchise system needs and should be able to contribute to the overall goals of the organization. Each franchisee should be valued for what he or she brings to the organization.

Each partner in this relationship needs different things to build a trusting, mutually beneficial relationship.

The franchisor needs franchisees who:
- Follow the system.
- Become profitable and grow.
- Adhere to their payment schedule.
- Maintain high standards.
- Participate in marketing campaigns.
- Can communicate with the support staff.
- Are enthusiastic about the brand.
- Offer excellent customer service.
- Get involved in their community.

When the franchisor is guaranteed to get this from their franchisees, they’re more likely to lead the system into a new realm of success. Instead of becoming too involved in franchisees’ affairs, they’ll be able to allocate their resources to other ventures.

Franchisees need franchisors to live up to their end of the agreement, too. Franchisees need franchisors that:
- Have a clear system and a superior product or service.
- Offer thorough preopening training and ongoing support.
- Can anticipate problems and find areas to innovate.
- Listen to their franchisees.
- Have a strong support staff.
- Recognize star performers.
- Reinvest in the brand.
- Have a long-term vision.
- Treat their franchisees fairly.

If all of these elements are in place, the franchisor-franchisee relationship can be one full of trust and with little conflict.

Find out more interesting articles on franchises available at Franchise Opportunities Guide.

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Your Franchise is Like a Family

To turn your franchise opportunities into profitable business, you must understand that a franchise system is in many ways like a family. The parent (the franchisor) has its offspring, which are the brother and sister franchisees. Like any family, there are rules that must be followed. When this gets off track, the entire system can become dysfunctional, just like so many families. And although the brother and sister franchisees often get along, some may struggle with sibling rivalry. This can also turn the system into a dysfunctional one.What makes a franchise system different from a family is that the offspring - the franchisee - gets to choose its parents. This happens during the due diligence phase, the time before the franchise agreement is signed when the prospective franchisee checks out anything and everything about the franchisor. If it seems to be a good fit, then the two entities enter into their partnership.

Many times, problems start when this due diligence hasn’t been done thoroughly. Perhaps the prospective franchisee doesn’t ask enough questions, or doesn’t ask the right ones, or ignores answers that don’t seem quite right. Or the franchisor may not be too picky about who joins its system and overlooks many warning flags about the prospective franchisee.

Whether you’ve asked all of the right questions or not, after the franchise agreement has been signed, there’s no going back. Therefore, it’s vital to the health of the entire franchise system - the family - that all members understand how to make their relationships work.

These relationships are the source of franchising’s strength. For a franchise system to work in the long term, the franchisor and its franchisees must be able to communicate. That includes talking, of course, but also listening. In my view, listening is the most deficient skill in the workplace today. Ultimately, effective communication will lead to the growth of the entire system.

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The Franchisee-Franchisee Relationship

Whereas the franchisor-franchisee relationship may be like a parent-child relationship, the franchisee-franchisee relationship has a different dynamic. This one is more like a sibling relationship. Brother and sister franchisees are on a more equal footing. They can be distant or close, rivals or friends. In the best case, they know how to work together to build a strong brand. Like the franchisor and its franchisees, sibling franchisees are interdependent, and their relationship must be built on trust.

This relationship, in some cases, can be quite competitive. The brother and sister franchisees may develop a sort of sibling rivalry. One franchisee may feel that another is getting preferential treatment from the franchisor, such as better territory or more support.
Franchisees should note that the success of one unit will enhance the image of all units. Even if brother and sister franchisees are in close proximity, they shouldn’t feel threatened. A large exclusive territory doesn’t always equal success, and a high number of sibling franchisees clustered in one area doesn’t mean that there won’t be enough customers to go around. Although this is often confused with cannibalization, it isn’t. In many cases, this strong presence in one area will help build the brand and will actually increase the franchise’s customer base. So, even if a franchisee’s exclusive territory is small, it shouldn’t be threatened by the nearness of a sibling franchisee.

In fact, franchisees should see their successful sibling franchisees as a source of support. For example, when just starting out, a new franchisee could claim one as a mentor who can provide guidance.

In fact, many franchisors have set up formal mentoring programs as part of their training package. Even if done informally, franchisees should always offer their support to others in their system.

Another reason why franchisees should be grateful to have successful sibling franchisees is that their success will enhance the image of the brand and reflect on fellow franchisees. After all, if a customer knows that she will get superior service at the nail salon near her home, in a pinch she’ll check out the sibling hair salon near her office.

Financially, franchisees will also benefit from the success of their siblings. All franchisees have the same task to establish the brand name as the dominant one in the market. More sales mean that more money is sent back to the franchisor, which can be spent on developing the entire system. In addition, more money will be sent back to the franchisor for national advertising, too. And the regional advertising pool will also swell from the contributions made by successful franchisees. You’d be smart to recognize this advantage.

Therefore, brother and sister franchisees should get to know each other and band together. They can set up regular networking meetings to discuss the local climate and how they can increase their customer base. They may want to do additional promotions above and beyond their usual marketing efforts, such as sponsoring charitable events or hiring a local public figure to endorse their brand.

Read more articles on Franchise Opportunities Guide.

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How to Launch New Franchises in another Country

Franchising for franchising’s sake won’t work in foreign markets. It must be done properly. A franchisor has a number of decisions to make before establishing a toehold in another country. To be successful, the franchisor will need to determine which franchise model it will follow, who it will partner with, and how it will modify its materials and concept to appeal to another culture. The franchisor must also develop the support system that will keep everything humming, along with the legal documents that will ensure that the business is run properly.

At the top of the franchisor’s list is determining which type of franchise model will work best in developing a franchise system in another country. After all, signing individual franchise agreements to individual franchisees in another country can be terribly inefficient. Each franchisee will have to be screened and selected by the franchisor. He or she will then have to come to corporate headquarters for training; the franchisor will have to help identify and set up individual locations in another country; and the team at each site must be trained. As you can see, this is terribly difficult to do and will strain the franchisor’s support system.

This isn’t the only option for lunching franchise opportunities overseas. Actually, the master franchisee or master development franchise agreement works best in international expansion. In this set up, the franchisor sells the rights to develop a territory that will encompass many franchise outlets to one master franchisee. The master franchisee is like a mini franchisor that sells franchise agreements to sub franchisees, who will establish individual franchise outlets. These sub franchisees pay the initial franchise fee and ongoing royalty payments to the franchisor, but the master franchisee will have earned a portion of it, thanks to its support, training, and site development, and other activities. The master franchisee also helps the franchisor and franchisees clear regulatory and legal hurdles that will govern the business.

In short, the master franchisee or master developer is the most appropriate method of market penetration for the following reasons:

  •  Its efficiency in establishing a global network and family of franchisees.
  • The master franchisee is required to provide the financial resources to establish and exploit the business development system. Whatever these resources are, they must be found by the master franchisee.
  • The master franchisee is responsible for staff recruitment for the pilot as well as his or her own business organization. This blends the franchisor’s business development system into local conditions through the master franchisee’s local knowledge.

In addition to the people, a global franchise system must have the organization to launch a foreign venture. It needs to have a mature domestic infrastructure in place. Without a strong base from which it can build, the entire system will be strained and could even collapse. Think about it: If a franchisor based in Tampa can’t work well with its franchisees in Portland, how will it connect with its franchisees in Tokyo? If its franchisees in Austin have a hard time understanding its operating manuals, how will the franchisees in Berlin feel?

The franchisor must adapt its domestic products and services to a foreign market. This requires some cultural sensitivity, because the business will have to appeal to another culture. (This is another way a master franchisee can help.) You don’t want to change the business so much that it isn’t recognizable to anyone familiar with your brand, but you don’t want to be so pure or inflexible that your products or services don’t appeal to customers outside of the United States.

This is an area where, early on in international development, the waters were littered with franchisors’ bad decisions. Domestically, one of the strengths of franchising is the operating plan in which some things are inviolate. The franchisor won’t change anything -fees, products, or services. Because franchisors were committed to what works, they tried to do the same things internationally. But they needed to be more flexible. Franchisors are learning that being flexible internationally is an asset, not a liability.

Language is another important factor. Marketing materials, advertising, training materials, and operating manuals must be translated. This has to be done well to ensure that the message you intend to send actually gets across. If potential customers don’t get your slogan, or if the employees don’t understand the operating manuals, they may as well be written in English.

All legal documents should be in place, too. This not only applies to the agreement your master franchisee signs, but also to the subfranchisee agreements, the documents that cover your trademark and your right to conduct business in the countries you choose, and any papers you need to make your U.S. business work internationally. Each country or economic unit, such as the European Union has its own requirements for operating a franchise within its borders, so you’ll need to know what they are and then conduct your business according to their regulations.

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Dealing With Change and Conflict in Franchise Business

The relationships that make up a franchise system are inherently full of conflict. Franchisees may feel that they’re in competition with one another or that the franchisor isn’t earning its franchise fee or royalty payments.

Franchisees should speak up if they feel that something is going wrong. They can speak to the field representative in the area to see if they can resolve the matter without much fuss. Incidentally, this is yet another reason why franchisees should get to know the staff of their franchisor when things become difficult, these personal relationships can help a franchisee find resolution to challenges.

Many franchisors have an ombudsman who addresses complaints from franchisees. The IFA has also developed an ombudsman position for conflict resolution. The ombudsman is a neutral party whose job is to help find solutions for problems to the satisfaction of all parties. Franchisees can look to this as an extra arena in which their voices can be heard.

In addition, although it hopefully will not get to this level, the UFOC spells out how conflicts can be sorted out at a more formal level either through mediation or visa the courts in a specific state.

Many times, conflict is generated when the franchise goes through a big change, and franchisees are expected to go along for the ride. For example, a franchise may decide to upgrade its entire software network, and the franchisees will be forced to undergo rigorous training and be inconvenienced during installation. They may even have to bear some or all of the cost. This software will, incidentally, allow the franchisor to have access to more customer data, which the franchisees aren’t so crazy about.

However, in this case, franchisees should understand that a change such as this one will benefit them in the long term. Despite the short-term inconvenience or expense, this software will give them a competitive edge over their rivals. In addition, the data will help the franchisor develop more targeted strategies to reach the right customers. It isn’t excessive prying or snooping - it’s being involved with technology that can grow the business for all.

Whatever the change is, franchisors should communicate their strategy and rationale clearly, and franchisees should listen - as well as find an appropriate way to voice their concerns. Again, this goes back to trust. Franchisors must trust that franchisees are operating their units according to the system, and franchisees must trust that the franchisor is making decisions that will benefit the entire system and create more franchise opportunities.

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