Virtually every franchise system has marketing spend divided into the National Advertising Fund (NAF) and recommended local spend. We all know that the brand awareness, creative, web, in-store, etc. that NAF pays for does not do enough to drive the extraordinary sales volume at the local level that franchisees dream of, and that allows franchisors to rapidly grow their franchise systems. We also know that local spend, that last mile marketing that builds on top of the national marketing efforts to usher local consumers in the door, is poorly policed.
The two fundamental problems, poorly policed local spend and reactive communications structures that don’t transparently communicate where the NAF is spent, can both be mitigated with partners and better communication. First, let’s talk about partners.
Arrest the Problem With Partners
Some theory suggests that the structure and inputs must be drastically changed. Instead of building up the National Advertising Fund with meager inputs from franchisees of 1-2 percent of revenue, the franchisor should take more (5-8 percent) and eliminate the ambiguity of suggested yet required local marketing spend by collecting and spending it on local marketing for them. Obviously, this would be a pretty hard sell for any franchisor if not downright impossible due to the existing FDD (Franchise Disclosure Document). Even when the FDD is not an impediment, competing interests between franchisee and franchisor, and at times even franchisee doubt regarding the franchisor’s central planning competency, are an obstacle. To mitigate common franchisee-franchisor friction, a neutral vendor can provide the necessary transparency to local marketing spend any franchisor would want.
Many franchisees do not use a neutral vendor / channel marketing software that gives both franchisor and franchisee full transparency for co-op marketing funds, local spend requirements, and that offer a variety of pre-configured marketing plans proven to work. This helps alleviate the fundamental problems of policing the local spend requirement while offering preconfigured road-tested marketing programs. A bright light can also be shown on where NAF dollars are being spent on the network’s behalf.
Besides A Neutral Partner, How Else do I Make My Franchisees More Amenable to Change?
The idea is to create cooperative inertia within your franchise system, which results in franchisee buy-in and you as franchisor being able to implement robust local marketing spend and tactic controls to a welcoming franchisee base.
- Communicate with ultimate transparency how the NAF is being spent for franchisees, its intentions, and its results. Explain exactly how the NAF spending ties in with the local marketing programs that are available to franchisees over a channel marketing software platform and highlight which programs have even higher ROI possibility because of co-op funds provided.
- Package the local marketing programs in Market Automation Platform (MAP) Playbooks that correspond to current NAF spending and clearly communicate the intricacies of the “Play.” My colleague Gary Ritkes recently published an article on MAP Playbooks.
- Set up a separate Marketing Task Force of franchisees (distinct from the regular advisory committee) to evangelize the channel marketing software so it looks less like a scary top-down technology implementation from the franchisor.
- Highlight with testimonials the franchisees that are having success with local marketing programs in a detailed way: how long it took the franchisee to get the program to market, what their time investment was, how it impacted their sales, and total ROI of the program.
- Take ideas from the bottom up. Your franchisees have better real-time knowledge of how marketing messages and products are being received by customers than anyone. Make it effortless for them to communicate that intel back to base before it gets lost.
Any franchisor knows that the relationship between franchisor and franchisee is not just professional, but personal and delicate. The franchisor has the livelihoods of their franchisees in the balance of their central planning and marketing creativity efforts. The more transparent and organized marketing spend is, the more malleable franchisees will be towards franchisor lead marketing efforts.