How Do Brand Marketing Funds Really Work?

Part of our job here at FranNet is to get you prepared for what to expect if and when you choose the entrepreneurial path in life. Having a franchise of your own can be a challenging, though, if you don’t know what to expect. That’s why, in this edition of FranNet’s blog, we’re going to tackle the subject of how franchise brand marketing funds generally work.

As you peer into the not-so-distant future at your new franchise digs, you may be wondering, “How will I attract customers to my location?” Fortunately for us, in our industry, marketing and advertising are yet another built-in aspect of owning a franchise. There are several different variations on exactly how franchises operate marketing and advertising (“brand”) budgets, but they generally align in categories based on size and influence.

If your franchise is part of a large, established and well-known outfit, chances are you’ll pay some form of collective dues (through royalties or percentage of gross sales) to fund marketing and advertising outreach efforts. Outreach is set up this way to ensure brand consistency and trademark protection. Keep in mind that the business formula, amount, and responsibilities of both the franchisor and franchisee should be clearly spelled out in your franchise agreement.

If your particular franchise is an emerging brand, you may have a different marketing and advertising outreach formula to follow. In such a situation, you as a franchisee would receive guidance or an outline of expectations from the corporate office and your materials and plan would be subject to prior approval. Again—just to make sure all ships sail in one direction, so to speak. 

Franchises will vary widely when it comes to any independent use of marketing and advertising outreach, but it’s a safe bet that they will always err on the side of caution when it comes to protecting the brand and its reputation. While you may think you have a well thought out idea and plan when it comes to involving or aligning your own franchise with a slick outreach opportunity, it may not line up with what corporate has in mind for protecting their image. This is fairly common sense stuff, but we’ve lived to see a lot of examples that did put a brand’s reputation at risk.

Typically, if a franchisee has a hyper-local event they’d like to put some money behind, prior sign off is usually a formality, provided that it meets with the brand’s standards. High school homecoming or 5k fun run? Yes. Biker rally? Not so much. Unless, of course, you happen to be operating a franchise that caters to specifically to this market. You get the picture, right?

One last topic we’d like to touch on involves digital outreach, in which case we’re talking about websites and social media accounts. This is an area that has received quite a bit of attention from franchise brands due to the near-instant nature of posting information which could be seen by millions in just a few minutes. You can expect quite strict controls to be in place, whether the franchise operation is well established or not. Social media fails to affect all sizes of franchise opportunities and many brands have gone to great lengths to prevent such occurrences. In most cases, the franchisees are usually prohibited from creating a separate website of their own, with the brand taking over your Internet presence via their main domain name.

As you can see, brand funds are a well thought out consideration for franchisees and will likely play an integral part of your business operations. Just make sure you have a full understanding of how the outreach works and who retains responsibility for each line item. That’s called managed expectations for a reason.

Let’s chat! There’s a local FranNet consultant right in your market who knows that market inside and out – knows the personality of the market – knows the competitive landscape. FranNet has a great track record of assisting individuals on their path to entrepreneurship, and one of our franchise experts would love to provide you with guidance free of charge. Sound like something you might be interested in? Get started here and find your local consultant right now!

Oct 17, 2017