Let’s be honest, marketing is one area of business that everyone knows they need, but few really understand how to get the best from. Recent data from our friends at Smith & Henderson(www.franchisebenchmark.co.uk) found that marketing support was the third lowest area of franchisee satisfaction in their 2011 Franchise Satisfaction Benchmark programme. The third lowest! As someone who spends everyday developing and implementing marketing strategies for clients, I can tell you it really doesn’t need to be that way.

Amongst franchisees there is clearly an appetite for better marketing support. We have worked with some who were desperate for marketing support, yet they felt their Franchisor was providing only a general solution, rather than addressing what they saw as territory specific issues. They wanted to see initiatives that supported their business and helped their sales to grow – they just didn’t see that promoting national brand awareness was enough on its own.

The truth of course, is that marketing has to address both national and local objectives. One feeds the other, but unless the marketing you provide actually works for your franchisee, then it often ceases to be seen as support. Marketing isn’t abstract, and it’s not something that can be generalised – it’s about positioning yourself correctly within the context of the market you operate in. That’s how I look at it in my business and I know that’s how most of the Franchisees who we have worked with have looked at it.

I’ve got good news and bad news. The bad news is there is no single right answer. Every business is different and every business needs to find the right marketing mix that will work for them. The good news is there are some simple things every network can do to help their franchisees. The first is to think locally.

Think Local

Local marketing isn’t a new concept, but it’s been one that many people only think is relevant when they move into new countries with new languages and new cultures. Not so. Marketing is always about local, because it’s always about the individual customer. It’s about what the customer wants, how the customer sees your brand and what the customer needs at any given time.

There is no reason for franchising to be any different. The Franchisor creates a strong brand and a strong system, which in order for the network to grow, requires marketing on a national level. The franchisee however, needs to understand how to fit that brand into their local territory, and yes, this requires specialist marketing at a local level.

Cut The Waste

How many times have you looked at the costs of a marketing campaign and cringed, wondering if it was all going to be worth it? You’re not alone. Everyone does it. Many franchises adopt a one size fits all approach to marketing. Single campaigns are developed and then distributed to every territory to use. Everyone gets the leaflets, everyone gets the posters and everyone gets the same deal. It’s quick, it’s simple and it can be fairly low cost, but… it’s just not effective. That means no matter how much or how little you spend, most of it will inevitably be wasted.

There is local competition and there are local tastes, local traditions and local demographics. The challenge that local marketing poses is to get you to understand how your brand and values can fit, not how you can get the territory to fit your brand and values.

A couple of years ago we started to work with a large, national, retail franchise. Our first step was to visit all of their franchisees, to explore their local area and evaluate their local market. The first thing we found out though, was that only about 25% of the franchisees thought the national campaigns were even remotely relevant to their territories. Worse still, a large proportion of the other 75% didn’t even bother to implement the campaign, such was their belief that it wouldn’t work for them. The actual amount money being wasted here was frightening and almost no-one saw any benefit.

By talking to the franchisees and understanding their individual circumstances, we were able to create new initiatives that were flexible enough to be tailored to each territory. The best thing about it for the franchisor was, because no spend was wasted, they got effective campaigns that didn’t cost any more to produce than the ineffective ones did.

Talk To Your Network

You put a huge amount of time and effort into attracting and selecting the very best franchisees for your network. Talk to them. They are your secret weapon in understanding how to bring your brand into their home turf. They know the people and the area, they know the competition and the local tastes, so, let them guide your marketing. You trust them with your brand, so trust them to help you sell it.

Your franchisees are your biggest asset for local marketing and you need to use them. We certainly do. I consider myself to be an expert in marketing, but I don’t know more about franchising than my franchisor clients and I don’t know more about the territories than their franchisees. We use their knowledge because it’s the best source there is.

Support Leads to Goodwill

I know I started a bit “doom and gloom” by leading with the fact that franchisees ranked marketing support as one of the bottom three areas of satisfaction. Sorry about that. The good news is that thinking locally can have a big impact on your network – both financially and in your relationships.

A welcome, if unexpected, piece of positive feedback we received from a client once concerned the level of increased ‘goodwill’ he was receiving from his network thanks to the work we were doing on his behalf. Franchisees felt more valued and in more control than ever before, and they were really grateful for that.

If you support your network on a local level, if you focus your marketing so that it is effective for your network within their own territories, you are showing your network how much you are really doing to help them grow. That’s good for everyone, and it makes a compelling reason to buy one of your franchises.

If everyone wins, everyone wins.

Jordan Fleming is managing director of Designate, an innovative marketing company that specialises in providing hands-on local marketing support for franchise networks. He is speaking on local marketing at the BFA Specialist Seminar during Scottish Franchise Week in May and again at the BFA annual conference in June. You can reach him at www.franchisemarketingsystem.co.uk

(This article originally appeared in the May 2012 issue of What Franchise magazine)

A number of high profile court battles have illustrated very clearly that franchisors can no longer rely on the fundamentals of the franchise agreement, no matter how tightly they think their lawyers have buttoned it up.

Because awards in court cases – up to £150,000 in some instances – are only the tip of the iceberg. Without the armour of PI, franchisors can be saddled with unbearable costs and expenses, not to mention the unquantifiable cost of reputational damage.

It is perhaps hardly surprising, in these litigious times, that instances which might previously have been hammered out by full and frank discussions between the protagonists now end up under the judicial microscope.

The franchisor/franchisee relationship is quite unusual in business and has to be carefully nurtured on both sides. It is quite unlike the relationship between head office and a branch manager, where one side issue orders and the other implements them.

With a franchise, the deal is between an established entrepreneur and a would-be entrepreneur. The latter is buying into the former’s vision and, in return for his franchise fee, has a reasonable expectation that the spoils he is promised will materialise in good order.

There are innumerable reasons why that might not happen, not least failings on the part of the franchisee. But if a franchisee fulfils all his obligations and duties under the agreement, and success does not timeously follow, he might start asking awkward questions, such as: was his training adequate; was there misrepresentation of the figures; and was the franchisor in any way negligent in term of the business template?

In this case, the franchisor may find that the £300 to £400 pa cost of PI premiums is about to pay off in spades. Because once a dispute ends up in court, there is no telling which direction it will take.

In one dispute just over a year ago, the franchisor accepted that it would be liable for any statements made fraudulently, but the judge decide that it was also liable for any failure of duty of care.

A  duty of care arises between claimant and defendant where there is a sufficiently close and proximate relationship between them (the judge clearly felt that a franchisor/franchisee relationship fitted the bill here) and where it is fair and reasonable that the defendant should have a duty of care.

It might be expected that disputes of this nature, requiring cast iron professional indemnity on the part of the franchisor, would become more frequent as franchises expand and the attention of the franchisor is divided among ever greater numbers of franchisees.

In fact, they can arise every bit as frequently in the early growth stages, when the franchisor is effectively still refining his business model and the franchisee, to some extent, is fulfilling the role of guinea pig.

In an ideal world, differences of opinion and disputes about strategy could be resolved by open and transparent discussions, with the guiding principle being a fair shake for all.

But, human nature being what it is, franchisors would be well advised to make sure they have the strength of high quality PI around them. After all, you didn’t build a business just to have someone else cost you your house.

Maurice Logie is director of Moreland Insurance.

For further information, contact Maurice Logie, director, Moreland Insurance Brokers, 117 Cadzow Street, Hamilton, South Lanarkshire ML3 6JA . T: 0845 1800 500. www.morelandinsurance.co.uk.

I asked him to list out where they spent their marketing budget. His answer:

• Creative Company
• Leaflets
• Posters
• Advertising
• PR
• SEO
• Website Development

The list was pretty good. I was impressed. They definitely were not shying away from spending money on marketing.

There was a problem, however. His franchisees were still complaining to him that they weren’t seeing return for their marketing levy. They weren’t happy, and they were letting him know about it.

He asked me the question: How can that be?

From my view it’s pretty simple. Just because you’re spending money doesn’t mean it’s money well spent. If you spend £70K on an advertising campaign that only generates £20K worth of business, do you really think people will be congratulating you on investing so much on your marketing? Like hell. They’ll be asking you why you wasted all that time and money with no reward to show for it.

You don’t get points for trying. You get points for results.

Back to my conversation. I more or laid out this same idea to him. The reason his franchisees were unhappy was that they weren’t seeing any benefit from the marketing spend. From their perspective, all they were seeing was money flying out the door. It never seemed to be coming back in.

Sure they got the leaflets delivered every month, and yes they were very pretty. But there was nobody helping them with what to do in their territory. Nobody really helping them get the most out of what they had to work with.

Now THAT is where local marketing comes in.

And the even better news?

It’s normally cheaper and more effective.

How? It’s a simple numbers game.

Let me give you an example. Say our franchisor decides to put on an offer and send it out to all of his network. He prints up 500,000 leaflets and gets them distributed to all 50 of his franchisees. It’s the same offer to everyone, with no recognition of the differences between the different local markets.

Now in this scenario, only about 15 of his network thinks that the offer will work in their territory. 15 out of 50. If we assume that they will only use about 30% of the printed leaflets, the numbers start to get scary:

500,000 Printed Leaflets: £5000

Distribution to 50 Franchisees: £500 (£10/franchisee)

Total Expenditure: £5500 (£110/franchisee)

Sure that’s not a lot of money. Only £110 per franchisee.

But hang on. Only 15 of the 50 are going to use the campaign, and they will only use 30% of the leaflets. If we look at those numbers we really only need to print up 45,000 Leaflets. That’s a much more targeted way of doing a marketing campaign – send out the most effective materials for those areas. The numbers look better:

45,000 printed Leaflets: £650
Distribution to 15 Franchisees: £150 (£10/franchisee)
Total Expenditure: £800 (£54/franchisee)

See any difference? We can make it even more brutal:

Total spent on mass campaign: £5500
Total spent on targeted campaign: £800
Wasted Marketing Spend: £4700

That’s 85% of the campaign budget being flushed away.

THAT is the importance of local marketing.

THAT is where franchises need to focus on.

And if you want to know more, give me a shout.

- Jordan

(This article was originally written at www.franchisemarketingsystem.co.uk – please contact Jordan directly if you’d like to learn more about Designate’s unique local marketing systems for franchises)