This series helps brand-side leaders build a stronger group of franchise operators and agency-side account managers understand the needs of their clients. Hopefully some franchisees might be interested too.
Growing franchisors: Early on, convince your franchisees of the value of a brand.
The typical franchisee usually starts out with a college buddy or in-law saying, “You gotta get into this, it’s a no-brainer, a goldmine. Do you have $500,000 to spare?” At that point, they either have a relationship with a bank or bring partners in. Generally, a new franchisee is heavily leveraged. They build one store. They rely on family and friends to get by. They struggle and eventually go broke, or they build more and start realizing operational economies of scale. Some make the mistake of trying to add more stores in more markets, rather than building out one market before they move to another.
Franchisees: Don’t let your franchisor push you to build more stores, before you strive to develop out an entire DMA (Neilsen-defined Designated Market Area) to truly gain traction. Critical mass creates mass media efficiencies and helps stave off competition. Some CEOs get wrapped up in numbers to tell investors. More stores in more states sounds great, but ask franchisees who got caught up in the Boston Chicken debacle of the 90s.
In 1993, Boston Chicken was one of the hottest IPOs of the decade. Over-expansion, coupled with questionable management had Boston Chicken falling into bankruptcy in 1998. It since reorganized and rebranded to Boston Market, and was acquired by McDonald’s.
Marketers can talk about aided and unaided awareness, about reach and frequency, whatever. The biggest driver of a QSR restaurant brand’s awareness is lots of stores in lots of places. Overall, distribution is probably the biggest value a franchisor brings to a franchisee’s investment. Multiple store locations nationally (or even globally) enhances the value of a franchisee’s units.
So, now, it’s time to talk brand. A brand is much more than a logo or a sign. But what is it exactly? Here’s what Google says:
- a type of product manufactured by a particular company under a particular name. “a new brand of detergent”
- an identifying mark burned on livestock
In this case, we’re talking more about the first option. That said, I’ve worked for some brands that would love for employees to “brand” the “brand” somewhere visible.
Remember the old story from Marketing 101?
A family is sailing on a weekend outing. Let’s say we’re in the mid-1800s. They haven’t ventured out too far but, out of sight of the shore. John Boy shouts, “Look Dad, there’s big boat out there.” Dad picks up his telescope and looks at the horizon. A big ship. A big mast. Flying a black flag with a skull and crossbones. Constant bearing, decreasing range. A collision course. Pirates.
What does the father think and feel?
- We’re all going to die.
- They’ll take all of our stuff, burn the boat and sink it.
No questions asked, no bargaining. That’s what pirates do. What’s the first thing Dad does? He throws up over the rail.
That’s the power of a brand. Brands are more than just a funny commercial or a clever tag line. A brand is a promise. A promise that conjures immediate and powerful emotions, just like that pirate flag. A promise that carries distinct expectations. Franchisors need to build those promises.
Franchisors: Show them the power of behaving like a brand.
Speaking from my experience with QSR and Casual Dining Restaurant (CDR) chains, there’s a very distinct point where the chain’s size makes the execution of an idea more important than the idea itself.
When a program that is just okay is launched perfectly, supply chain and distribution centers are set. Packaging issues are ironed out. Store-level communications have been conducted. All crews are trained properly. Point of purchase is up. All points of consumer contact are in go mode. You hit the switch on media. Then you watch good things happen.
Conversely, an excellent, completely groundbreaking and game-changing program that doesn’t deliver on the marketing and advertising promise will actually hurt a brand in the long run. I worked with a restaurant brand that was in a 10-year comparable sales funk. We created completely new positioning, along with mass advertising. We made the mistake of not refreshing operations and products to match the new brand promise.
When we launched the media, sales spiked quickly and then just as swiftly, fell to a level lower than before the campaign. Consumer research revealed that our existing customer base really liked where they were dining and what they were being served. The issue was they were growing old and dying. The brand needed new blood. Fortunately, new marketing brought in younger customers. Unfortunately, the menu was not innovative and the service was mediocre at best. Word of mouth then, and social media today, was very damaging. I’ve always said that all marketing or advertising can do is bring a customer in once. The rest is all about operations. Today, the restaurant brand only operates about a quarter of the restaurants it did 10 years ago. In another 10 years I predict it will be akin to Howard Johnson’s.
When a brand’s efforts at the corporate level are synced with operation efforts at the franchisee level, it can achieve real growth. New customers and loyal customers. A new product, a new look to stores, a new ad—they all have a multiplying factor beyond just the total number of units. The power of thinking as a brand is something that should be constantly reinforced. (Our Brand JuJu Index identifies your brand’s greatest strengths, vulnerabilities and opportunities so you can focus your resources on actions that make a difference and get real results fast.)
That point of franchisor leadership, based on tests and data, combined with senior-level instinct and ability to pull the trigger, usually creates huge success. It creates value that builds loyalty and preempts competitive threats.
We all know that value is a multidimensional construct. Here’s the latest and greatest formula that I think most marketers agree with:
Value = (Functional + Emotional + Experiential)/Cost (Price + Time)
Every variable in that equation is important.
Brand compliance is critical.
There are always naysayers; franchisees who think they know more than their franchisor. The fact is, some do. Those are the folks who need to get involved with advisory committees and voice their opinions in a positive, process-driven way. The bellyachers don’t usually get anywhere. Good brands with good leadership weed them out. Their peers don’t want to meet them at the hotel bar after the meeting. Some VP from the home office with a blue-chip MBA and sparks shooting out of his/her ears says something like, “If you want to run your stores like that Jimmy, you need to pull down our signs and put up a ‘Jimmy’s Restaurant’ sign. Let me know how that works out for you.”
With a little luck and lots of hard work, a QSR brand can thrive. If it has good operators, running good restaurants, then market share grows. In trade areas where it operates, it will become the QSR choice for more than one occasion. At this point, a QSR brand may be ready to spread out regionally and maybe even nationally. But, be cautious. Remember the Boston Chicken parable.
This is another small piece of what I know to be true in the QSR franchise business. It’s crazy, it’s fun, it’s fast-moving, competitive and it can be incredibly rewarding. As I said in Part 1, it’s generally about smart folks and their family. Folks who have come from humble beginnings. Fun people, again, generally. Franchisees represent the salt of the earth. To me, they’re the perfect example of what the American Dream can mean. If you’re meeting a franchisee for the first time and want to get to know him or her, here’s my advice. Just ask one simple question, “How did you got into the business?”
The answers to that question, I’ve come to find, come in the form of:
- A great story, funny sometimes and sad other times
- A story they love telling. After all, it’s about their success
- A story that will give you invaluable insights into their personality and what’s important
Here’s my advice to franchisors:
Don’t forget the value of brand localization. You might get your hands dirty. You might have to spend some “windshield time.” You might have to hire people. In today’s ever-changing media landscape and over-saturation of restaurants, the key brand differentiators will always be product quality, service quality and relationship to the local market.
Here’s my advice to franchisees:
Participate and voice your opinions. Join some committees. Continue to demand support from your franchisor, and spend incrementally to support your local markets. If your franchisor isn’t providing resources and guidance, find it for yourself.
I recently talked with one of the biggest franchisees in the country regarding what his franchisor provides. It turns out face-to-face meetings have become too costly, and have been replaced by massive conference calls. Technology now provides portals to access ad slicks, social media content and media templates. What he’s looking for is help. Someone to sit down with him and his boss and talk strategy.
Coming next in Part 3 – Engage Hyperspace
- Effective and efficient media strategies
- Outsmart vs. outspend with proven regional strategies
Greg Haflich is a 35-year marketing veteran with agency and client-side experience. Some of the brands he’s had an impact on include: Rent-a-Center, Chrysler, Applebee’s, Sam’s Club, KFC, Pizza Hut, On the Border, Krispy Kreme, Sonic, Subway, PF Chang’s, Pei Wei and Shoney’s.
Callahan is a brand strategy and digital marketing agency in Lawrence, Kansas—34 years strong—with expertise in the chain restaurant, beverage, pet and home & garden categories. It drives sales for clients using a wide range of tools, including traditional advertising, in digital spaces with a nationally acclaimed social media team. Callahan proprietary brand health tool—the Brand JuJu Index—was launched in summer 2016 to help clients outsmart vs. outspend the competition.