A franchise’s national advertising strategy is a critical component to its overall value proposition and should be examined when looking at a potential franchise opportunity. Strategically planned and well managed advertising initiatives have numerous benefits to a franchisee and therefore should be considered when deciding whether to invest.
To leverage the collective power of the franchise, discerning franchisors will establish an advertising fund, which is a systemwide pool of marketing capital to which all franchisees contribute to on an ongoing basis. The amount franchisees are required to pay into the fund can vary from industry to industry as well as franchisor to franchisor. Most commonly the amount is based on a fixed revenue percentage. The specific fee structure is listed in the company’s Franchise Disclosure Document (FDD), usually in Item 6 where franchise fees are listed.
Using economies of scale, a national advertising fund provides powerful marketing capabilities and multi-layered advertising campaigns that would normally be cost-prohibitive to an individual business owner. This results in higher performing marketing initiatives through improved efficiency, while maintaining continuity of messaging and brand integrity.
To learn more about what goes into a strong national advertising strategy and the importance of an advertising fund, we spoke with Martha England, senior vice president of marketing for Sport Clips Haircuts.
“The overall objective of an advertising fund is to build brand recognition while driving growth at the individual store level. Strong campaigns allow franchisees to focus on a few key local marketing opportunities and operational excellence, knowing they have full-service marketing support,” says England.
When looking at a brand’s national advertising fund, here are some questions to consider:
- Has it demonstrated a track record of effectiveness? Is there a national presence? In the case of Sport Clips, England says, “Franchisees have the accumulated benefit of 25 years of advertising, brand recognition, credibility and trust.”
- Is there a team of marketing professionals dedicated to strategy, development, execution and measurement of success of marketing and advertising plans? A dedicated team allows the brand to look ahead of trends and best practices to strategically reach a targeted demographic. England says, “A successful approach to marketing is a targeted approach through multiple media channels intended to reach the client in their preferred environment, which is constantly evolving with technology.”
- Is the brand using consistent and multi-layered strategies? A layered approach is key to successful marketing. England says, “Sport Clips maintains a presence everywhere our client might be. In addition to message placement on traditional media channels, we are heavily invested in the digital and social space with streaming video and audio, podcasting, e-sports, OTT channels and devices.”
- Is a dynamic web ecosystem inclusive of websites and social pages present? How is the brand engaging clients and promoting positive client feedback through its social presence?
- What sort of marketing resources are available to franchisees? Does the franchise provide a repository of current and customizable marketing materials?
- Does the franchise provide training to optimize the utilization of marketing tools?
- Does the brand promote any cause-related programs as part of its marketing strategy? Besides being an effective and impactful way to give back to the community on a large scale, aligning with a cause creates greater brand awareness and loyalty. “Sport Clips is a proud supporter of many programs on a national and local level, including the American Red Cross, VFW’s Sport Clips Help A Hero Scholarship Program, St. Baldrick's Foundation and Ageless Aviation Dreams Foundation,” says England.
- Is there communication and a collaborative culture present between the franchisor and franchisees about the national advertising strategies and initiatives? England says, “Sport Clips has established multiple channels for franchisee input and feedback because we feel it is invaluable. Franchisees can discuss how the initiatives work with their Area/ Regional Developers as well as the Team Leaders Advisory Council. There is also an annual franchisee survey.”
A well-managed and well-coordinated national advertising fund is a tremendous benefit to the entire franchise system as well as the individual franchisee. It can do some of the heavy lifting in marketing, allowing you to stay focused on your store sales and operations. Educating yourself on a brand’s fund is one way you can decide whether the offering you are considering is a good fit for you.