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Are franchisees failing your brand?

Are franchisees failing your brand?

In the words of Kath Day-Knight, ‘Gee, one day, I’d like to be a franchisee, Kim’. So, what exactly is franchising and what’s so attractive about it?

Kath Day-Knight

Kath: Gee, one day, I’d like to be a franchisee, Kim.
Kim: Yeah, well, you look more like a chimpanzee today.
Kath Day Knight: What? Don’t be stupid, Kim. I do not.

The International Franchise Association defines franchising as a “continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organising training, merchandising and management in return for a consideration from the franchisee”.

From a branding, marketing and advertising perspective, a franchise business probably seems like a highly attractive proposition for people with no background or skills in the trickery of marketing and branding. It’s taken care of by ‘head office’ and they just have to deliver the product or service at a local level.

According to Greg Hodson, national leader of PricewaterhouseCoopers’ franchising practice, one of the key ingredients to the success of any business is uniformity in its contact with customers, and this is especially highlighted in the franchising business model.

Hodson states: “A customer should not know whether the person they are speaking with or the place they are visiting is a company or a franchisee. How consistent and therefore ‘uniform’ a particular franchise brand is across a network is dependent on the quality of the systems, processes and tools that a franchisor provides to each of their franchisees in the form of Operating Manuals, training, induction, marketing collateral, etc”.

So it follows then that if you sign up as a franchisee, part of the deal is that you don’t have free rein over the branding and marketing of your franchise operation, aside from ensuring that the product or service you offer is consistent with the master brand. You leave the branding and marketing up to the experts. After all, the franchise owner ‘owns’ the brand; they are almost ‘leasing’ it to you. It’s actually not your brand to play with. There are restrictions and rules.

The most common franchise businesses in Australia seem to be services (mortgage broking, cleaning, printing, gyms); fast food; real estate; and motor vehicle sales.

In franchising they say you are in business ‘for yourself but not by yourself’. The franchisee generally pays the franchise owner a marketing fee to help promote the brand’s awareness, nation-wide, which is a good thing for the franchise owner as well as all franchisees. It’s a good deal, the marketing fee generally covers things like regular brand advertising, in-store signage and point of sale material, the website, digital brand promotion, public relations, and presence on social media.

What the franchisee is really buying, aside from all the marketing and support, is existing brand equity, in other words, the existing popularity and strength of the brand. It’s a pretty straight-forward arrangement. So why do so many franchisees get it wrong? Putting local economic issues aside, normally they fail by doing things they shouldn’t be doing. All it can take is a local franchisee with a great ‘marketing idea’ to cause serious damage to the brand they are representing.

Case in point: Pizza Hut Australia was forced to publicly apologise after one of its Melbourne franchises offered “one free small animal” to customers who purchase 10 pizzas. The Pizza Hut franchise in Mt Waverley promoted the offer, which was run in conjunction with a local pet store.

Pizza Hut Mount Waverly

Free small animal and massive brand damage with every 10 large pizzas

The official line from the brand was:

“It has come to our attention that one of our stores have recently been running a promotion which was not approved by Pizza Hut Australia, nor was condoned in any circumstances. The poster has since been taken down and all those involved have been made aware of the severity and inappropriateness of the promotion. We would like to thank Oscar’s Law and all those who have brought this to our attention.”

On this particular ‘brand fail’, marketing expert Michelle Gamble from Marketing Angels told Smart Company “When you buy a franchise, you buy into a brand and its marketing structure. A lot of money has been spent investing in what works and what doesn’t.”

“Franchisees are very limited by strict control and for good reason. Anything that hurts them can hurt the entire brand … Their colleagues could be damaged by that kind of activity.”

The Australian and International media lapped up the Pizza Hut / small animal giveaway story due to the weirdness of the promotion, which led to more and more social media backlash. Social media can act like wildfire in these kinds of brand fails; especially where special interest or lobby groups are involved. The damage to the Pizza Hut brand was massive. But they’ll bounce back. Luckily, people have pretty short memories, and big pizza appetites.

As I’ve discussed in previous blog posts, branding goes deeper than visual identity, advertising and marketing. Quality of product or service and client experience also contributes to our overall perception of a brand.

If you experience poor service from a business that is run by a franchisee, your negative brand association will likely linger with the brand name, not that particular franchisee. You’re unlikely to tell your friends that the local franchisee of xyz brand is no good; you’ll just bag out the brand.

The strength of the master brand is only as strong as it’s weakest franchisee link. One bad move can have serious implications for all franchisees.

Consistency is the key with franchising. Real estate is another interesting case in point. Most real estate offices around Australia are run by a franchisee in the form of a licensed real estate agent, known as the Principal. The real estate brand provides strength and credibility to the office’s local operation. Trust in real estate is important, so it’s not surprising that franchisees buy in to an existing franchised brand name to secure market share and trust. Agency branding is consistent, national TV campaigns are run, guidelines are in place for everything from staff uniforms to poster layout to social media channels.

Real estate agents

Real estate agents: brand number 1 is me!

Where real estate brands can come undone is with sales agents employed by the local Principal, who notionally ‘belong’ to both the local franchisee and the master brand. But real estate sales people are all about their own brand as well. Which makes sense, because it’s all about trust, integrity, personality, referral, and reputation. These are all human variables, and with word of mouth being so strong, you can’t blame individual sales agents for looking out for brand number “1” first (their own selves) before and ahead of their local agency and master brand (numbers 2 and 3).

What happens though, is that local agents set themselves up with their own websites, social media pages, start doing their own individually branded direct mail; and it’s confusing and inconsistent from the customer’s perspective. It can also indirectly weaken the strength of the local agency’s brand because it can appear as though each of the sales agents are competing with each other (which they are, by the way).

So, what’s the solution? Legal contracts are a good place to start. Social media and media monitoring is also key to hose down local brand flare ups before they turn in to wild fires. Education, support, and brand handbooks are also good tools that brands can use to keep their franchisees in check.

Franchisees are a bit like 8-year-old kids. If you tell them they can’t have something, they’ll nag and nag until you give it to them; or just help themselves while your back’s turned. So it’s a good idea to allow some level of local brand promotion, where the local franchisee can use their own ideas and budget to promote local operations.

But all branded ideas must be centrally controlled and approved by head office brand management team. If the local franchisee wants to sponsor a local sporting team and this involves applying the master brand to uniforms, this is good.

‘Do it yourself’ television commercials for your local franchise operation, starting up your own Facebook page, free guinea pig with 10 pizzas: bad.

Brand managers or teams can be the arbiters of these decisions because they are employed by the brand owner / parent company to protect the master brand. And that’s what they franchisees have bought in to. So it’s worth protecting.

Stuart Austin
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