(FS10) Evaluating National and Local Franchise Advertising Strategies

If you’re not the best at advertising, don’t worry. It’s not all on your shoulders. Most major franchisors actually lead in regional and national advertising campaigns. That’s where part of your royalty (and other franchisees) royalty checks go. If your franchisor is newer, smaller, or doesn’t offer that, they should at least offer guidelines and help of some kind for how to make a marketing campaign. It’s easy to get overwhelmed if you focus on the bigger picture too much like it’s your responsibility to reach all of it. If you’re feeling a heavy weight on your shoulders regarding marketing because of the audience you’re trying to reach, breaking it up into smaller, more manageable pieces can help. Divide it down to local regional, and national levels and focus your attention.


Franchise-Specific National Ad Campaign

While some franchisors include ad campaigns as part of the package with royalty fees, some franchises charge an advertising fee from their franchisees. If you’re part of a larger franchise, they often administer system advertising funds. These charges usually run between 1-10% of a franchise’s income. Not all franchisors charge a fee, but this should be laid out for you in the FDD or the franchise agreement so you should be informed ahead of time.


Requirements and Recommendations

The requirements and recommendations vary greatly based on chain size or industry. While sometimes it can be helpful to have information on advertising prior to approaching your franchisor, if it’s vastly different than the way your company works, it can actually get in the way. Walk in with an open mind and understanding. You can also talk to other franchisees about the franchisor’s approach, whether they think it’s effective, and if there are individual franchisee advertising strategies.shutterstock_308144909


Not all advertising plans are the same though. They can vary vastly in structure, especially if they allow for franchisee input—which they should, but they don’t all. Some franchises will even set up regional and national advertising campaign committees to get together and discuss their results, next campaign, and the effectiveness they’ve seen in the past (or lack thereof).


Educate Yourself on the Marketing by Your Franchisor

Since you’re paying for the service, you should try and educate yourself on where exactly your payment is going as your advertising funds should only go towards that. If you’re paying for marketing, the funds shouldn’t be going to recruit more franchisees for the company. While it’s important to know if this is happening, you’ll also have to be aware of the other costs of advertising such as paying the administrative staff that handles communications with the advertising agencies and public relations. It’s a rare occasion when the franchisor will actually handle these things personally as they’re usually busy with other more pressing issues that are a bigger concern to the company.


You’re unlikely to get an audited or unaudited financial statement on the advertising funds. At the very least, you might be able to get an unaudited slip if you ask for it, but keep your expectations in check and make your request in writing. Read your franchise agreement before you submit the request so you know what you can expect from your franchisor and what is within his rights to keep to himself.


Your Franchisor Will Likely Always Collect Advertising Fees

You might notice that your franchisor mentioned collecting advertising fees in the franchise agreement, but they haven’t been collecting this fee. This is actually pretty common, especially in smaller franchises and you should just keep yourself aware of whether they’re charging the fee or not as the company grows in size. Many franchisors reserve the right to eventually charge for advertising, but may not do it from the start. The agreement should state the exact amount of the advertising fee or the maximum along with the conditions that will cause the fee to be charged. Beware any time you see the advertising fee described as ‘reasonable’ or not at all. You might also experience your franchisor specifically asking for a boost in funds from time to time in order to help local advertising campaigns. To protect yourself, look at the fee caps and read over all guidelines regarding the advertising fee, including the maximum that you can be charged.shutterstock_180329147


Advertising and Marketing Fees in New Franchises

If you’re working with a smaller or newer franchise, note that most franchisors set up an advertising fee that is much smaller than needed. This is done usually out of inexperience or the lack of idea on how much advertising can really cost. It’s not unusual for the price of advertising fees to go up. If your franchisor later tries to raise the cost of your ad fee and presents a good reason for it, try to work with them on how you can meet them in their need, especially if your wallet is already tight.


Continue Reading More From the Franchise Series 10:

  • Creating an Effective Marketing Plan for Your Franchises
  • Methods to Keep Your Franchises in Front of Your Audience
  • If Your Franchise Doesn’t Have National Advertising
  • Franchise Advertisements Will Effect Your Public Relations
  • Respecting the Customer Base of Your Franchise Company
  • Maintaining Good Relationships as a Part of Franchise Business
  • Franchise Impressions Set By Non-Products In Your Business