Benefits of a Franchisor - Marketing Strategies and Strength

One of the most important factors to a successful business is finding a successful market and selling to customers. In the early days, active selling by the franchise was not the most significant factor in the stability and growth of the business. Most competitors were independents that didn't have the franchise companies' national buying power, (be name recognition, or the allocation of dollars for local advertising. Now most competitors are other franchises that all have similar benefits. It is now extremely important, not only for success but simply for survival, for the owners being sales-oriented, particularly in those fields where outside selling is possible.

Franchise companies used to say that you didn't have to be sales-oriented to succeed. Some franchise companies are still saying this. In great part, it is no longer true. You need to assess how your franchise company will help you sell. Look especially at its training program.

The Franchisor Does Your Market Research for You

One of the services many franchise companies provides is market research. To assess your franchisor's marketing capabilities, you need to examine and evaluate:

• Your market environment,
• Your customer base,
• Your marketing priorities, and
• Your maximum marketing impact and the approach best suited to achieve it.

These concepts may seem a little complex, but they are the focus of most franchise marketing departments. Will someone develop and constantly re-evaluate these concepts when you don't have the time, experience, or inclination to do it yourself? This has a dollar value.

Consider, for example, a retail ice cream company that failed to recognize the following facts:

• The competition was getting stronger in the marketplace.
• Yogurt was detracting from the ice cream market.
• Low-calorie substitutes were appealing to diet conscious consumers.
• Exotic flavors were becoming popular.
• Supermarket freezers were becoming subtle, but serious competitors to on-the-street-consumption customers.

A shop owner who is involved with the daily problems of refrigeration breakdown, tardy or absent employees, delivery times, shop hygiene, and customer complaints might find it difficult to address the long-term, but ever-important demands of market research. Having a parent company there to help has a dollar value.

The ice cream shop's franchisor monitors changes in the marketplace, plans ahead with new test flavors in a few stores, and recommends changes in decor to attract new customers or draw old customers back out of their homes and into the shop. Obviously, this kind of analysis could go on and on without even addressing each industry's particular dynamics.

Is Purchasing a Franchise an Advertising Investment?

The advertising services provided by the franchise company are also at the core of many franchise relationships. Many business people consider advertising an expense of doing business rather than an investment in the future. Survival, let alone success, requires good advertising. You must tell people that you have a product or service for sale.

You could save money by not advertising if you weren't obligated to do so by a franchise contract. You shouldn't buy a franchise just for the discipline of making certain advertising commitments. Advertising is mandatory whether you are a franchise owner or an independent. Your only consideration ought to be whether the franchise company can do a more effective job locally then you can. Who will impact your customer base more? The effectiveness of a national advertising campaign depends on the type of business and the size and financial strength of the franchise company.

Some franchise companies actually develop focus group studies that tell them what the customers' interests and tastes are in a given geographical marketplace. They then develop materials that are structured to make their national or local advertising most effective. The independent just doesn't have the resources or the finance to develop this kind of program.

In advertising, frequency is often the key to success. An isolated 10-second spot on national television may not be as effective as 10 to 30-second spots on a local radio station, but the cost may be exactly the same. The quantity purchasing power of the big-dollar franchise to buy multiples of advertising space in all media makes it very difficult for the independent to appear as often or take as much space in any medium with his or her spending limits.

In many industries, the franchise system ensures noncompetitive situations within its own franchise family by designating exclusive geographical areas. Keep in mind, however, that this offer only the protection of preventing another member of that particular franchise from opening a location within that territory. It does not prevent any businesses from advertising anywhere they choose!