In recent years there has been a huge increase in franchising. With recent economic downturns, lay-offs, bankruptcies, and insecurities over a very shaky global economy, more and more people are keen to go out on their own, be their own boss, and live the American Dream.
Franchising is a $700-plus billion industry that features hundreds of thousands of companies from a wide variety of industries. According to the International Franchise Association’s (IFA) 2011 Outlook report, the franchising industry is projected to grow 2.5 percent this year—providing a fertile ground for individuals looking to be self-employed.
Franchise small businesses will once again grow at rates that exceed non-franchise business growth in 2016, according to the Franchise Business Outlook: 2016 released today by the International Franchise Association.
“We are forecasting that for the sixth consecutive year, franchise businesses will grow at rates that exceed the economy-wide growth of industries where franchises are concentrated,” said IFA President & CEO Robert Cresanti. “Franchise businesses are showing tremendous capability to provide new jobs for working families and new businesses for first-time business owners across all sectors in local communities, despite the fact that franchisees are facing many new regulatory threats at all levels of government.”
Key findings from the 2016 Economic Outlook prepared for the Franchise Education and Research Foundation by IHS Economics Include:
Franchise businesses will have a 3.1 percent growth in jobs, adding 278,000 direct jobs to the economy this year for a total of 9.1 million.
For the past five years, the average annual job growth in the franchise sector was 2.6 percent, nearly 20 percent higher than all businesses economy-wide. Over the last five years the franchising sector has added nearly 1 million jobs to the economy.
The number of establishments will grow this year by 13,359, or 1.7 percent, to 795,932.
Today's customers have access to greater amounts of information faster than ever before. With pervasive social media tools and the current trend of video snacking, brand managers are met with an ever increasing number of threats to maintaining their brand’s image and credibility. This is particularly challenging for franchising companies. Franchisors wrestle with the balancing act of protecting their brands while supporting the creative and entrepreneurial spirit of their franchisees. This universal challenge exists, in large part, because of the very nature of the franchising model and its inherently competing characteristics.
Successful franchise brands are built over time by consistently setting and meeting customer expectations of the brand experience. This can’t be done without network-wide adherence to brand and operating standards. However, many people purchase a franchise so they can be their own boss, own their own business and control their own destiny… not necessarily so they can follow the brand guidelines established by the corporation. These don’t have to be mutually exclusive, if expectations are properly managed from the beginning stages of the franchise acquisition process. But even the most thorough disclosure process cannot control what people believe or remember during the sales process, creating the inherent conflict that pits the enterprising franchisee against the corporate brand manager.
There are four strategies that, when used, foster franchisee creativity and enthusiasm for the brand, while maintaining the brand promise.
1. Rationalize the Need to be Compliant with Education
Many franchisees don’t understand the complexities of creating and growing brand awareness because they’ve never been exposed to the role of brand management. Key to this strategy is educating franchisees about the potential harm to the brand when guidelines aren’t followed, which in turn can negatively impact their own individual investment in the business. As reinforcement of the franchisee education, it is important that all franchisee-facing personnel understand the brand guidelines and the need for them. This is especially true for bigger networks with field support personnel. In some cases, franchisees are more likely to be influenced by their local operations or marketing representatives with whom they interact on a more regular basis. Show examples of the good, the bad and the ugly - and explain how each impacts the customer and their loyalty to your brand.
2. Make it Easy to Follow the Rules
Let’s face it, not all franchisees are created equally when it comes to computer skills, graphic design and frankly, good taste. By their very nature franchisees are do-it-yourself-ers and when they are looking for a particular marketing tool that they can’t find or they don’t believe exists, they will surely create their own. The second strategy is to provide a robust platform of tools for franchisees to use in their advertising and marketing efforts. The trick here is to control the overall brand identity and message, while giving franchisees enough flexibility to tailor the tool to their particular need. Most franchisors use a web-based platform with a library of marketing tools, everything from point-of-purchase materials, free-standing inserts and print ads to outdoor banners and radio spots. This allows the do-it-yourself mentality to be nurtured and promoted within the context of your brand strategy.
3. Avoid Brand Extremism
Every franchisor knows how critically important it is to develop and nurture positive relationships with their franchisees. Otherwise, franchisee validation can suffer, which in turn impacts network growth. The third strategy is use common sense to avoid an overly harsh approach to brand management. It might be okay to use red and green during the Christmas holiday promotion, even if red and green aren’t part of the approved color palette. In the majority of situations, this level of flexibility will not harm the brand. And if an individual unit happens to have an odd shaped wall, thereby making it impossible for customers to see the menu if installed per build-out guidelines, by all means make an exception.
Brand extremism can be destructive to the cause and erode trust among the network. Certainly standards must be maintained and brand management is not for the weary. However, it is easy to become so mired in protecting the brand that we lose sight of the bigger picture, and flexibility and common sense get lost. When this happens, guidelines become overly rigid and they suffocate creativity and enthusiasm for the very brand they are meant to protect.
Before standards are established and put into place, they should pass a “common sense test” that would pose the following questions:
Who is this guideline protecting and how - the brand, corporation, franchisee, customer?
Who gets hurt when the guideline is not followed - can such damage be quantified?
Is the brand image, at its core, at risk if the guideline isn’t followed (corporate values, brand promise, etc.)?
When would it be appropriate to alter from the guideline? How likely and often might this happen?
Can this guideline be enforced as you are managing multiple facilities?
Does the guideline prevent the franchisee from promoting the business or make it difficult to explain the value proposition to the customer?
With the goal of maintaining brand strength, does the guideline have legal implications?
Does the guideline have safety implications for your facility maintenance management? These questions and their answers should be used to guide your brand management strategy and dictate the extent to which you define and enforce the guidelines.
4. Emotionally Engage Your Network
If you are successful with the first three strategies, the fourth can make the biggest difference. Successfully balancing franchisee spirit and brand management depends on your ability to motivate and foster emotional engagement of the brand across the network. It doesn’t happen overnight. Unfortunately, the passion and enthusiasm created at the beginning of the franchisee training process, or at the annual convention rarely last on their own. Many franchisors agree that the most important brand marketing you do targets the franchisees directly. Videos that celebrate the brand and position franchisees as heroes and leaders in their communities can be very inspirational and create an emotional attachment to the brand. Programs that recognize and reward franchisees for the way they represent the brand can also have a sustaining impact. All of this should be complemented with an ongoing communication strategy that reinforces the value of the brand and business model through relevant and open franchisee discussion.
If you are about to franchise your business, you need to make sure that a plan is in place and you set clear expectations from day 1. A clear plan with set guidelines will make the onboarding process much easier for everyone involved, will protect your brand's identity, and will also keep your costs down due to increased buying power.
At a previous company that I worked for, these guidelines were non-existent which led to numerous problems. My previous employer was a preschool soccer program, which was supposedly unique due to the curriculum and the clearly identifiable ball which the entire class was based around. However, each owner had different ideas about what kind of design they wanted, some craved a fair trade option, and some just wanted the cheapest option available, and ended up with a generic soccer ball from the local sport store. This really hurts a business as there is no consistency, what separated you from the pack has now disappeared, there is no cohesion in the network, buying power has been lost, and each franchise owner is essentially on their own island. It would be like Disney using Mickey mouse at Disneyland and Markey Mouse at Disney World. Slight exaggeration, but hopefully you get the point!
One of our major roll-out projects at Royal Services involves decommissioning stores, when retailers move to a new leasehold. Not only is it important to have all locations looking the same while they are in business, it's also important to remove all of your branding when vacating a building, so as to not draw negative attention to your brand.
Companies with a combination of corporately owned and franchised stores can have many issues with maintaining a brand as the flagship stores need to look impeccable to draw in more investors, and these costs soon add up for the individual owners. One of the biggest problems that you will run into is that everyone wants to do things cheaply and their own way and all of a sudden the brand quality is diluted. Rather than flowing through a corporate structure, where the brand can be enhanced, franchisees google the cheapest option in their city and get the job done, but this is actually at a huge long term cost to the franchisor. Companies with a combination of corporately owned and franchised stores can have many issues with maintaining a brand as the flagship stores need to look impeccable to draw in more investors, and these costs soon add up for the individual owners. One of the biggest problems that you will run into is that everyone wants to do things cheaply and their own way and all of a sudden the brand quality i
The balancing act can be tricky, but consistently executing the four strategies mentioned above will make it easier, especially when working with custom roll-out projects. By educating the network on the risks of noncompliance to their own investment, you’ve provided them with a rational reason to follow the rules. And by giving them a flexible platform of marketing tools, you make it easy and practical for them to market their business. Flexibility, when demonstrated, shows your commitment to franchisee success and strengthens the partnership. And when your network is emotionally engaged in building and protecting your brand, they become the brand itself. They talk it, they live it, they promote it and they defend it.