This article appears in the July/August 2013 issue of Business Franchise Australia & New Zealand
Why do some franchisees in a system perform consistently well, whilst others flounder?
More often than not, the answer is that the successful franchisees are very good at local area marketing. They are the ones who are always thinking and planning about what they can do to attract more customers and increase their brand awareness in the community, and putting those plans into action.
In my 20 years in franchising, there has been no coincidence that the best performing franchisees are those who are active in local area marketing and constantly driving their businesses.
Local Area Marketing (LAM) involves identifying and implementing marketing opportunities in local communities by engaging positively with individuals, groups, organisations, businesses and local media. A pro-active and sustained LAM program will increase the individual franchisee’s own profile as a dynamic member of their community and will increase overall brand awareness of the franchise system and its role in the community.
Franchisees who sit back in their franchise and expect the franchisor to achieve everything for them are going to run their business into the ground very quickly.
One franchisee recently summed it up perfectly when she said to me: “Andrew, you’ve got to spend money to make money.”
This particular franchisee has taken two ordinary performing stores to become the number one store in the network. This franchisee also spends a minimum of three per cent of her turnover on local area marketing. In addition, this franchisee also has a strong staff incentive program in place, ensuring that her team helps her to drive her businesses.
So how much should franchisees spend on LAM?
The rule of thumb in franchising is that franchisees are expected to pay anywhere between 1.5 – 3 per cent on local area marketing, over and above their national marketing contribution, which can sit anywhere between five and 10 per cent, depending on the franchise.
Far too often, franchisees believe their marketing finishes when they contribute to the national fund. The national fund is certainly utilised to promote the brand, however, there are many marketing costs that are taken from that marketing fund, including creative design, website, online media, national sponsorships, print and electronic media, etc.
How far can a franchisee go?
The large majority of Franchise Agreements stipulate that no local area marketing can be conducted by franchisees without the approval of the franchisor.
This should be standard across all agreements. A lot of money is invested by the franchisor to develop, promote and maintain the integrity of their brand.
A lot of the good franchises have local area marketing portals, which allow all franchisees to utilise artwork, ideas and campaigns that have been created and have worked successfully for other franchisees. If rogue franchisees want to alter logos, create different themes and colours, change tag lines and USPs, then they should ask themselves whether they want to be part of a franchise or create their own business.
The success of a franchise is the brand, how that brand is promoted, how that brand engages and how that brand drives sales. The LAM program must complement the system’s national marketing plan and all LAM activities should be consistent with the system’s over-riding marketing plan. However, it is also vital that the individual franchisee forms a distinct relationship with their local community and local media to help generate local loyalty to their business.
In our network, many of the franchise systems we work with have participated in a LAM workshop which assists franchisors to stimulate, engage and encourage their franchisees to support national marketing programs with strategic LAM and PR.
The key outcomes of the workshop are:
• Differentiate between Public Relations, Brand Marketing and Local Area Marketing
• Identifying LAM Opportunities
• Planning a Local Area Marketing campaign
• Understanding your demographic
• Analysing LAM
By actively and consistently engaging in your local community and with your local media outlets, you will help drive the success of your own business and contribute to the overall success of the brand.
Andrew Kelly is a professional journalist and PR specialist with more than 20 years’ experience in franchising corporate communications.
Andrew fully understands the dynamics and idiosyncrasies of franchising and is able to play an active and ‘hands on’ role in promoting and growing the businesses of existing and new clients.
For further information about local area marketing contact Andrew Kelly, Director PR & Marketing, FC Business Solutions.
Phone: 03 9533 0028 or 0488 333 191