April 2014
| Business World Magazine | 79
positively and negatively, depending on
the brand, and it’s something prospective
franchisees should consider in their due
diligence. Is the franchise focused on smart
growth or just fast growth? How will the
brand’s growth aspirations affect its culture,
franchisee community, fees, and royalties?
Is the parent company reinvesting some of
its profits back into the business e.g., ramp-
ing up operations and field support as they
grow?
Along with the increased focus on
growth, franchisors have increased their
emphasis on marketing and advertising to
consumers. Some brands that slowed down
their advertising to reduce their franchisees’
expenses have re-upped the required mar-
keting contribution for franchisees, taking
it back to where it was pre-2008 – or even
higher. Although increased marketing costs
can cause dissatisfaction among franchisees,
when done right, it can drive increased rev-
enues at the unit level. A brand that charges
franchisees less for marketing isn’t necessar-
ily a better brand for franchisees – nor is a
brand that charges more. Potential franchi-
sees need to carefully look at what a brand
offers as part of its marketing program (Do
they provide local support in addition to na-
tional? If not, do they give you guidelines for
local marketing strategies and spending? Do
they offer details of where the ad fundmoney
is being spent?) and what current franchisees
say about a brand’s marketing support.
