Evaluating a Mandatory Marketing Program

How do you evaluate whether the marketing program provided will give you a fair value for your money?

First let’s take a look at why such a fund can be an advantage. When a franchisor pools funds from all of the franchisees in the system, it can hire a top public relations or advertising company to create a marketing campaign that will benefit the entire system. It also has a much greater ability to do expensive advertising, such as television. This large scale advertising helps to build the brand, which in turn helps the individual franchisee build value in their business.

Without a marketing fund, each individual owner would be on his own, doing advertising on a much smaller and less-noticeable scale. Your franchise will be seen in a more positive light if your marketing is done by experienced professionals than if you print off flyers designed by you or someone else inexperienced in the integrated brand building efforts of the franchisor.

A franchisee contributes to the mandatory marketing fund in usually one of two ways, either by a fixed amount or a percentage of the gross sales of the unit. For some reason, many franchisees believe that contributing to a marketing fund makes them instant marketing geniuses and they like to second guess every decision. During your evaluation process, knowing what to look for can help you decide if this franchisor is doing a good job with their allocation of marketing funds.

Consider the most frequent causes for friction in the franchisor-franchisee relationship.

•Problem: When the cost of the production of marketing materials is so great there isn’t enough money left to actually get the materials to the consumer. There should be a reasonable balance between these two sides of the same coin. Great commercials lose effectiveness if the franchisor can’t afford to air them frequently and in all markets. Poorly designed advertisements aired everywhere and all the time do more harm than good to the brand.

If the franchisor you are evaluating strikes a good balance between creating memorable and classy advertisements and keeping the brand top-of-mind, your advertising contribution is well-spent.

•Problem: When the amount of money spent to promote the brand is greater than the amount of money spent to attract customers. This is again a matter of balancing two key aspects of marketing. Just as it is important to build a brand, it isn’t enough. You may know the Krispy Kreme name but unless marketing makes you want to pop those donuts into your mouth, the individual franchisee is getting little benefit from his marketing contribution. Thus, a balance is essential between brand building and call-to-action marketing.

If you are evaluating a franchise that seems to put all of its eggs in the brand marketing basket, you can assume you will be unhappy down the road. Without a proper balance between brand building and customer attraction, you’re just getting half of the equation necessary to build your business through efficient use of your marketing contribution.

The best way to find out how a franchisor spends its mandatory marketing fund is to ask existing franchisees and then compile their opinions. If a majority of these franchisees are unhappy about the way their marketing contributions are spent, you can assume you will also be unhappy.

If you find that most franchisees you contact are pleased with the franchisor’s management of their marketing dollars, there’s a strong chance that this company has been able to strike the magic balance between brand building, customer attraction, production costs and distribution costs.

When you know your mandatory marketing contribution is being used to help you grow your business, it makes the mandatory part of the mandatory marketing program much easier to embrace.

FranChoice helps future entrepreneurs realize the dream of owning their own business. FranChoice will help you find that perfect fit; matching up your interests, talents, and investment level with a strong franchise business. We provide this valuable service for free. Pre-screened, high quality franchise companies pay us a fee for referring qualified, prospective candidates.

From the beginning, FranChoice has been committed to its Mission Statement: "Helping People Realize Their Dreams." By developing a unique and thorough system of candidate qualification, consultant training and franchise selection, FranChoice has helped thousands of entrepreneurs find a great franchise.

C.E.O. – Jeff Elgin
President - Lori Kiser-Block
Year Founded – 2000
Years in Business – 7+
Location – Corporate offices are in Eden Prairie, MN (15 minutes outside of Minneapolis). Consultants are located all over the U.S.
Experience Level – Consultants have over 2000 years of combined experience.
Market Share & Industry Position - #1 Deal Closer, we are recognized as the Premier Franchise Consulting Firm. We place 20% of all new Franchise Owners in the U.S.