Sell (A Lot) More Franchises: A Guide For Franchise Executives

Transcription

1 Sell (A Lot) More Franchises: A Guide For Franchise Executives By Louie Beaupre Strategic Consultant at Parallel Path 4688 Broadway, Boulder, CO // //

2 About the Author Mr. Beaupre is a thirty year franchise veteran who served as CMO, and later as COO, of a Denver-based international franchise company. Prior to that he was a leading producer for a franchise consultingbrokerage company. He holds a BS in Business Administration and MBA, and currently uses his expertise as a Franchise Strategic Consultant for Parallel Path.

3 01 Introduction 03 Determine If Your Franchise Tells A Weak or Compelling Marketing Story 06 Understanding the Cycle Of Success 09 Fill the Marketing Hole to Sell More Franchises 11 How to Build a Compelling Marketing Story 13 What Is a Corporate Managed Marketing Program? 17 Tell Discovery Day Candidates What They Need to Hear 20 How to Tell A More Compelling Story: Your Checklist For Discovery Day Marketing Presentations 21 Conclusion

4 Introduction To sell more franchises, executives must learn how to develop (and communicate) a more compelling marketing story. Sophisticated franchise companies understand the direct relationship between effective franchise marketing and its positive effect on unitlevel sales, and therefore profitability. In turn, these companies successfully leverage their marketing story during the franchise sales process. In this guide, franchisors of all sizes will learn how build and leverage their unique marketing stories. Use this roadmap to help sell more franchises, improve profitability, and increase shareholder value at both the franchisor and franchisee levels. 1

5 Determine If Your Franchise Tells A Weak Or Compelling Marketing Story 2

6 Anyone who has ever sold or awarded a franchise will acknowledge that a prospective franchise investor s single highest priority is determining the ability of the franchise to be profitable, including its precise level of profitability and the estimated time it takes to become profitable. A related concern is the type of marketing system the franchise company has in place to support the franchisee in achieving profitable operations. Many franchise companies have well-funded, centralized, high-performing, nationally managed marketing funds that provide a compelling story to tell prospective franchise investors. Others don t. They may not even realize their marketing stories are weak, and therefore ineffective. WEAK STORY Low ratio of national to local marketing dollars COMPELLING STORY High ratio of national to local marketing dollars Small national marketing budget Large national marketing budget Unclear brand articulation Clear brand articulation Unclear marketing goals Clear marketing goals Incomplete understanding of competitive landscape Full understanding of competitive landscape Inexperienced corporate marketing team Experienced corporate marketing team Little commitment to digital marketing Full commitment to digital marketing Abdication of marketing to local efforts Commitment to national corporate managed marketing Unclear marketing strategy Clear, well-articulated marketing strategy Uncoordinated marketing vendors Strong, cohesive, coordinated marketing partners Weak marketing training & support Strong marketing training & support Little or minimal leverage of economies-of-scale Complete leverage of marketing economies-of-scale Little or minimal marketing analysis and reporting Complete and regular marketing analysis and reporting Weak or marginal results Strong, consistent marketing results Little transparency of marketing results Full transparency of marketing results Weak franchisee support of marketing system Strong franchisee support of marketing system Weak franchisee validation of marketing results Strong franchisee validation of marketing results Characterized by franchisee resistance Characterized by franchisee embracement 3

7 Simple Question, Important Answer Question: What typically happens when a business spends more marketing dollars, or spends existing marketing dollars more effectively? Answer: Sales increase. And when sales increase, there s typically a cascading positive effect on profitability and shareholder value. In franchising there s also a multiplier effect, where both parties benefit from the growth in franchisee revenue. As franchisees sales increase, the franchisor s royalties increase, setting off a cycle of success for both. 4

8 Understanding the Cycle of Success 5

9 Sophisticated franchise companies understand this basic concept and are committed to building high-performing marketing programs that lead to strong growth of unit-level sales, overall profitability, and shareholder value. In turn, more franchises are sold. The sale of new franchises generates new franchise fee and royalty income for the franchisor, along with the resulting increase in profitability and shareholder value. It s a classic economic win-win. Cycle(s) of Success Increased unit-level shareholder value Increased unit-level profitability Increased unit-level sales Increased leads / store traffic Improved national marketing Improved national marketing Increased royalty income Franchise Cycle of Success Franchisees Increased expansion of existing franchisee footprint Improved validation for prospective new franchisees Increased sales of new franchisees Increased royalties on new franchises Increased franchise fee income Increased profitability Increased shareholder value Franchisors 6

10 FRANCHISEE FRANCHISOR Improved national marketing Improved national marketing Increased leads / store traffic Increased royalty income Increased unit-level sales Increased expansion of existing franchisee footprint Increased unit-level profitability Improved validation for prospective new franchisees Increased unit-level shareholder value Increased sales of new franchisees Increased franchise fee income Increased royalties on new franchises Increased profitability Increased shareholder value The Growth of Your Franchise Network Matters In recognition of the cycle of success dynamic (and the profound economic benefits), virtually all franchise companies seek to expand their networks through the sale of new franchises. This network expansion can be the result of both new franchisees and the awarding of new franchises to existing franchisees. Regardless, the addition of new franchises contributes to the total number of franchises that pay royalties. When a national marketing fund is in place, each new entity can contribute, effectively supporting incremental growth for both franchisees and franchisors. Additionally, strong, consistent growth of a franchise network is critical to the organization and is a primary barometer of its health to prospective franchise investors at both the franchisee and franchisor levels. Both the franchisee investor and franchisor investor expect revenue growth, network growth, and growth in market share. The absence of growth is a red flag to investors, therefore successful franchise companies are acutely aware of the importance of building a sustainable model that supports the sale of new franchises. Further, successful franchise companies connect the dots between telling a compelling marketing story and the story s positive impact on facilitating new franchise sales. 7

11 Fill the Marketing Hole to Sell More Franchises 8

12 The franchise marketing hole is a common phenomenon in franchising. Some franchise companies document, in detail, the entire business model through operations manuals. Somehow, they miss the mark on marketing, abdicating this important function to the franchisees with ill-defined and poorly articulated national marketing plans. Even worse, some franchise companies don t have a strategic national marketing program. A franchise company most likely has a marketing hole if it s franchise agreement is structured so that significant dollars are directed to local marketing requirements, versus a strong national program. Simply put, a franchise has a marketing hole if it can t tell the compelling story outlined above. If a franchise doesn t fill this marketing hole, it will be at a significant competitive disadvantage to companies with high-performing, strategic marketing programs. It s commonly understood that prospective franchise investors evaluate and consider a number of concepts before making a decision to invest. Franchise companies with a marketing hole will almost certainly lose candidates to competitors who have filled the hole and can tell a compelling marketing story. Sophisticated franchise companies fill the marketing hole through the development of a strategic, corporate national marketing program that leverages the economies-of-scale inherent to franchising. These companies enjoy consistent, strong marketing and business results that are validated by their franchisees to help recruit prospective new franchisees. A franchise that can t articulate a compelling marketing story is highly vulnerable to companies that can. Franchise sales at companies with a marketing hole will suffer. 9

13 How to Build A Compelling Marketing Story 10

14 In order to tell a more compelling marketing story, a franchise must first have a compelling story. Owners and C-level executives of franchise companies need to complete an honest and critical evaluation of the company s current marketing story and determine if it s a competitive advantage or disadvantage. If the current national marketing program is strong and offers a competitive advantage, the company needs to vigorously protect and leverage it to support the sale of new franchises. If the franchise company has a weak story and is at a competitive disadvantage, the company is likely vulnerable and needs to take quick, decisive action to correct. The quickest, and most effective, way for a franchise to create a compelling marketing story is to leverage its national marketing fund through the implementation of a corporate managed marketing program. 11

15 What Is A Corporate Managed Marketing Program? 12

16 (Hint: Your Company Probably Doesn t Have One) Extensive surveys of hundreds of Franchise Disclosure Documents (FDDs), and interviews of hundreds of franchise executives, reveal a small minority of franchise companies with well-defined corporate managed marketing programs. A well-defined program creates a sustainable competitive advantage. A corporate managed marketing program also plays a critical role in creating a franchise cycle of success. It is embraced and championed by franchise ownership, senior leadership teams, and franchisees alike in recognition of the importance to the organization at every level. A modern corporate managed marketing program utilizes a highly organized, centralized, and systematic method to leveraging a franchise company s national marketing fund. A corporate managed marketing program is fueled by a generous, well-architected national marketing fund, where franchisee contributions provide financial resources to support the program. With sufficient and sustainable funding provided by the national marketing fund, a corporate managed marketing program is led by a team of highly skilled and experienced franchise marketing professionals to implement and manage the program. The program includes each element articulated in the Compelling Story table on page 3. In summary, the program strategically addresses each critical component of a high-performing marketing system, including: Clear brand articulation, Quantifiable marketing goals, Well-developed and cohesive strategy, Effective use of appropriate modern digital marketing tools and; Fully transparent, comprehensive, and regular reporting of results based upon key performance indicators. 13

17 A high-performing corporate managed marketing program is usually developed, supported, and maintained in concert with a team of highly skilled and experienced franchise marketing partners. These partners may include: Branding agencies that help define and articulate the brand (a foundational aspect of any thoughtful marketing effort). A full-service digital marketing agency to help: Build the strategy, Complete a competitive market report, Build data collection infrastructures, Design and launch campaigns using a variety of digital marketing channels, and; Provide comprehensive reporting at both the franchisor and franchisee levels. The team of marketing partners might also include traditional advertising agencies, graphic designers, content writers, web designers, and web developers. The extent to which a franchise company depends on third-party marketing managers will be contingent upon the in-house marketing resources and staffing philosophy of the franchise company. What Isn t a Corporate Managed Marketing Program? An increasing number of franchise companies, both small and large, have been sold programs disguised as corporate managed programs. A true corporate managed marketing program is organized, funded, supervised, and controlled by the franchisor to ensure consistent branding, strategy development, campaign execution, tactical deployment, comprehensive analytics, and transparent reporting of results. Any marketing partner relationship that allows regular, direct communication between itself and franchisees violates a basic tenant of a true corporate managed marketing program. If franchisees have direct business and financial relationships with either third-party vendors, or with major advertising providers such as Google, Bing, Yahoo, Facebook, Twitter, YouTube, Pinterest, and others, the franchise company is not executing a high-performing corporate managed marketing program. High-performing corporate managed marketing programs depend upon centralization and leveraging economies-of-scale. Neither can be fully achieved if franchisees are dealing directly with third-party relationships. 14

18 A true corporate managed marketing program is comprehensive. It does not delegate critical marketing activities to a variety of channel managers who claim expertise in SEO, PPC, retargeting, social media advertising, content development, and management. If a marketing/advertising company s focus emphasizes local marketing tactics, any single marketing channel, or is structured to tactically support franchisees rather strategically support the franchisor, the company is merely a channel manager. Certain franchise marketing companies that claim expertise in national franchise and local franchise marketing are simply channel managers who do not employ established corporate managed marketing best-practices. Sophisticated franchise marketers understand the critical nature of being strategic and coordinated in their planning, execution, and performance measurements. They seek support from full-service marketing partners that are channel agnostic, which means strategically selecting the appropriate marketing channel (such as SEO, PPC, social media, retargeting, television, radio, print, sponsorship, billboards, and others) based upon the marketing goals, not because a certain channel is the only tool in the vendor s toolbox. 15

19 Tell Discovery Day Candidates What They Need to Hear 16

20 In the hyper-competitive world of franchise sales, franchise companies need every sustainable competitive advantage available to sell franchises. Often, franchise companies focus too much energy on the products, services, technology, and people, but too little attention to the issues that matter most to prospective franchisees, including marketing, sales, profitability, and shareholder value. Franchise candidates really only want to know one thing: If the financial risks they are considering will result in a profitable business. Not just a marginally profitable business, but profitable to the extent it replaces current income as a minimum, with the potential for substantially more. Candidates will not risk a significant portion of their net worth, childrens college funding, lifestyle, and retirement unless they walk away from the sales process convinced they will succeed. Consider an example of a husband and wife couple visiting two competing franchise companies for Discovery Day. One company enthusiastically articulates a high-performing corporate managed marketing program that is helping new franchisees quickly ramp-up to profitable operations to sustain strong growth over the longterm. The second company shares the same basic presentation it has used for many years, essentially telling the candidates it has certain national marketing programs, and a number of other tools and tactics that their franchisees can use for local marketing. Clearly, one company has created competitive advantage and leverages it during the sales process, including during Discovery Days. The other offers little more than vague promises that can t be quantified. 17

21 Questions Candidates Are Thinking (But Not Always Asking). Can Your Company Answer Them? Is the company s marketing program modern, digital, and dynamic? What do I get from my participation in the national marketing fund? What are the national marketing fund key performance indicators? What are the results of the national marketing fund? What s my ROI under the national marketing fund? Will my participation within the national marketing fund deliver the results I ll need to build a sustainable and profitable business? How quickly? How much local marketing will be dependent upon me? (Hint: Candidates prefer a minimal amount.) How much time will I need to invest in marketing my franchise? How does it compare to the sales and operational needs of the business? How much marketing expertise do I need to be successful? Is the franchise s marketing system strong enough to overcome my marketing weaknesses? Will my lack of modern marketing experience be overcome by the national marketing program? What is the level of marketing expertise and support provided by the franchise company? Does the franchise company articulate a compelling marketing story? 18

22 Use the Marketing Team to Sell More Franchises Prospective franchisees won t buy a franchise until they re convinced the franchise has a proven, dependable marketing system to build sales and profitability. To help convince candidates, franchise companies need to include the marketing team in the sales process. A franchise company s franchise development (sales) team is not a substitute for a senior-level person from the marketing team. The importance of communicating the national marketing program effectively, confidently, and persuasively to franchise candidates cannot be underestimated. The responsibility of convincing the candidate of the marketing support they will receive should not be delegated to the franchise development staff. Astute franchise development teams will embrace the support of the marketing team, understanding the importance of communicating a compelling marketing story to their candidates. Candidates simply won t buy the franchise unless they have a high degree of confidence in its ability to overcome their fears about marketing, sales, and profitability. As a minimum, a senior-level marketing person should directly participate in Discovery Day presentations and be available to support the franchise development team and candidates alike. A recent survey revealed Discovery Day-to-close ratios nearly doubled by using senior marketing executives to articulate a well structured, high performing managed marketing program to their candidates. 19

23 How to Tell A More Compelling Story: Your Checklist For Discovery Day Marketing Presentations Articulation of the company brand and positioning Articulation of the national marketing fund, including local marketing requirements Explanation of franchise national marketing economies-of-scale Statement of marketing goals Description of the competitive landscape Articulation of the marketing strategy Description of any local marketing plans Description of the marketing training and support to be provided Description of performance measurements Description of performance results and transparency Description of the corporate marketing team (including key marketing partner) 20

24 Conclusion The modern reality of selling franchises can be summarized in one word: challenging. The pond of qualified candidates is small, there are fewer fish than ever, and there s a lot of people fishing. In this challenging sales environment, smart franchise companies will continue to focus on developing quality leads, identifying motivated candidates, and creating sales processes that effectively close. These same high-performing franchise companies will create sustainable competitive advantages at every opportunity, including through the development of a compelling marketing story that can be persuasively articulated to the increasingly rare, qualified and motivated prospective buyer. Today s franchise buyers have never been more demanding and selective, nor have they ever had as much choice and access to information. Smart franchise companies aren t afraid, because they have a compelling marketing story to share, and they re leveraging it to help them sell franchises. 21

25 About Parallel Path Parallel Path is a full-service digital marketing agency located in Boulder, Colorado. We are a group of franchise industry leaders and digital marketers that understand the challenges of operating a franchise network. We ve partnered with franchise clients for more than a decade, effectively implementing corporate managed marketing fund best practices to dramatically improve marketing results. We help our franchise clients develop their own unique and compelling marketing stories, with results that help them sell more franchises. FOR MORE INFORMATION CONTACT HARDY KALISHER HKalisher@ParallelPath.com // // ParallelPath.com 22