Aggregate insights of 30 top franchise brand marketing ...ACKnoWLedGeMents 3 2006 St. Jacques BIG 30 Benchmark Report of Franchise Marketers We’d also like to thank the following

Aggregate insights of 30 top franchise brand marketing professionals on the unique characteristics of marketing a franchise brand

Michael and Philip St. Jacques

2006 St. Jacques BIG 30 Benchmark Report of Franchise MarketersFirst Edition

Aggregate insights of 30 top franchise brand marketing professionals on the unique characteristics of marketing a franchise brand

Michael St. Jacques President/Franchise RelationshipsSt. Jacques Franchise Marketing

Philip St. JacquesPresident/Creative DirectorSt. Jacques Franchise Marketing

Introduction 2

Acknowledgements 3

Report Methodology 4

Executive Summary: The Four Key Issues Facing Franchise Marketers 5

• Franchisee/Franchisor Communications 5

• Brand Positioning: Consumers PLUS Franchisees 5

• Expanding Into Areas With Little or No Brand Awareness 5

• Marketing ROI 5

Franchisee/Franchisor Communications 6

• The Challenge of Multiple Ownership 6

• Exercising Control, Reaching Consensus and Aligning Objectives 6

• The Core Issue: Communications 7

• How to Address the Challenge: St. Jacques’ Recommendations

for Improving Communications: 8

Build a Culture of Listening 8

Demonstrate Leadership 8 – 10

Brand Positioning: Consumers PLUS Franchisees 11

• Franchisees Add an Important Wrinkle to Branding 11


for Improving Brand Acceptance and Awareness: 12

Take Care of the Franchisee First 12

Soliciting Cooperation 12 – 14

Franchise Expansion Into Areas With Little or No Brand

Awareness Among Consumers and Franchisees 15


for Mastering Franchise Expansions: 15

Construct a Franchisee Profile 15

Moving Your Program From Lucky to Likely 15

Establish Your Unique Selling Proposition (USP) 16

Communicate the Potential 16

Greater Relevance is the Key 16

Plan Your Public Relations 16

Measuring Marketing ROI 17

• Confession: Metrics Not What They Should Be 17

• How to Address the Challenge 18

• Lenskold Group’s Recommendations for Measuring Franchise Marketing ROI: 18 – 19

ROI Measurement is First a Cultural Decision 19

Simple Truths. Complex in Practice 19

Your Franchise Marketing Performance Checklist 20

Just the Beginning – Expect More Exploration Ahead 21

About St. Jacques Franchise Marketing 21

Contents

www.franchisefame.com

“Marketing a franchise brand has many more internal

challenges.”

“The biggest difference is the decision-making

process…”

“Stakeholders in a franchise brand are external and their goals don’t always align with

corporate.”

Why a special report dedicated exclusively to marketing a franchise brand?

It all began with curiosity.

In early 2006, our firm commissioned an independent market research company to conduct

a study of leading franchisors to uncover their opinions on marketing (or advertising) resource

relationships, experiences and expectations. Initially, we were interested in the usual marketing

research issues: evaluating potential positions, determining levels of satisfaction, and the like.

But something extraordinary happened. Franchise brand marketing professionals at the highest

levels of their organizations proved eager to speak their minds. And when they did, they unveiled

insights that went far beyond agency relationships. Thus, we expanded the scope of the study

and through in-depth, one-on-one interviews, senior franchise brand marketing professionals

revealed their deepest marketing concerns – and why those concerns were important.

Here’s what we learned. Although individual responses and stories varied among industries and

size of organization, one common theme emerged repeatedly:

Franchise marketing is PROFOUNDLY different from non-franchise brand marketing.

Among all areas discussed, participants were nearly unanimous on the overall struggle

to remain competitive. And, specifically, how the following four major areas of concern

pose unique challenges to the marketing of franchised brands in this quest:

• Franchisor/Franchisee Communications: The franchise model makes franchisor/franchisee communications vital.

• Expansion: Fierce competition, a dynamic economy and brand clutter make expansion difficult.

• Brand Positioning: Franchisee needs to be as clear as consumers, if not more so, about the brand’s position and direction.

• Marketing ROI Measurement: Accurate measurement of marketing program impact to determine ROI at both the franchisor and franchisee level is elusive.

Participant challenges, plus our insights into methods to meet those challenges, make up the

body of the 2006 St. Jacques BIG 30 Benchmark Report of Franchise Marketers. It has been

both a formidable and a rewarding effort – one that merits our expressions of appreciation to all

study participants (who have requested anonymity) who went above and beyond the call of duty

to generously contribute their time, experience and thoughtful perspectives to this study. They

are the heart of this report and we are grateful for their involvement.

We encourage you to read the report carefully and invite your comments or questions. If

something raises your eyebrows – or your blood pressure – we’d like to know about it. Give us

a call or send us an e-mail and feel free to share your thoughts. We hope you enjoy reading this

report as much as we enjoyed compiling it.

introduCtion

www.franchisefame.com 2

Sincerely,

Philip St. Jacques Michael St. Jacques

President/Creative Director President/Franchise RelationshipsSt. Jacques Franchise Marketing St. Jacques Franchise [email protected] [email protected]

ACKnoWLedGeMents

3 2006 St. Jacques BIG 30 Benchmark Report of Franchise Marketers

We’d also like to thank the following contributors to the 2006 BIG 30 Benchmark Report:

• Rich Higginson, president of Princeton Research Group, who led the study

• Jim Lenskold, president of Lenskold Group and author of Marketing ROI: The Path to Campaign, Customer, and Corporate Profitability, who offered his insights into franchise marketing ROI and metrics

• Jonathan Kranz, principal of Kranz Communications, who helped us write our conclusions

• Jennifer LoBianco, Managing Director of St. Jacques Franchise Marketing, who continues to inspire and transform our company everyday

• Robert St. Jacques, CFO of St. Jacques Franchise Marketing, who contributed greatly with his guidance, support, (and budget) from the very beginning of the research project

This report would not be what it is without their considerable contributions.

Market Reach

Together, the participating

franchise brands represent

more than $23 billion in

annualized sales from over

63,000 franchise locations.

Our objective for this research was to reach senior marketing professionals to get a deep, qualitative understanding of their perspectives on marketing a franchise brand and identify the common thinking that extends across franchisors in many industries — a goal we could not accomplish with a survey approach. Initial recruiting began with more than 800 calls to relevant franchise brand marketing professionals. Out of the 155 contacts made, 33 executives met our criteria and agreed to complete our in-depth interviews. Hence, the “Big 30” report features the insight gained from dozens of recognized franchise leaders in their respective industries.

The Study Was Constructed to Investigate the Following Areas:

• What are the most important challenges facing franchise brand marketers? • What metrics are they responsible for? • What are the keys to successfully marketing a franchise brand? • Where do they get industry and franchise information? • What experience and expertise can, and should, advertising and/or marketing

resources bring to the table? • What are the distinctions between marketing franchise and non-franchise brands?

TitlesStudy participant titles included:

• Director – Advertising, PR, Marketing, etc. 10 • VP Marketing, Sales, Franchise Ops 10 • Brand/Marketing/Promotions Manager 5 • Chief Marketing Officer 2 • Sr. VP Marketing, Brand Development 3 • Sr. Director – Marketing 2 • EVP – Franchise Development 1

IndustriesFranchise industries represented by the participants included:

• Automotive Services 7 • Café 3 • Consumer Services 3 • Convenience Stores 1 • Family Dining 2 • Healthcare 1 • Hospitality 1 • Quick Serve Restaurant 8 • Real Estate 3 • Retail 4

In sum, the study reached important franchises representing a wide range of franchise industries including many of the largest players in their respective fields. Surprisingly, despite differences in industry and network size, participating franchise brand marketers identified consistent concerns that revealed marketing issues common to almost all franchisors, as the remaining pages demonstrate.

Here’s what we found.

rePort MetHodoLoGY


It’s the chicken-or-the-egg

dilemma: Regional and super-

regional franchises want

to extend their geographic

footprint and develop areas

without franchise outlets. But

low brand awareness among

consumers and potential

franchisees make it an uphill

battle.

Executive Summary: The Four Key Issues Facing Franchise Marketers

To complete the 2006 St. Jacques BIG 30 Benchmark Report of Franchise Marketers we compiled the interviews, analyzed the results and added our insights based on our 10 years as franchise marketing professionals – as well as insights from respected colleagues. The result is a practical guide to addressing the key challenges unique to marketing a franchise brand as identified by our participants.

Our conclusions focus on four key issues that were common among participants, regardless of the industry or network size. They are:

Franchisee/Franchisor CommunicationsParticipants identified franchisee communications – and the need for buy-in – as one of the most important challenges they face. As key stakeholders in any marketing effort, and in most cases, your primary distribution channel, working in cooperation with your franchisees can provide a distinct competitive advantage. In this section of the report, we suggest a variety of open dialogue tactics that can help you build stronger, more favorable franchisee relationships that facilitate more efficient program implementation as you go to market.

Brand Positioning: Consumers PLUS FranchiseesAlthough non-franchise marketers can concentrate positioning efforts almost exclusively on consumers, franchise brands must also make sure franchisees are clear on what your brand stands for. In fact, your position may only be as strong as your franchisees’ understanding of it. After summarizing what study participants had to say about the issue, we present a few best practices for involving franchisees more deeply in the brand.

Expanding Into Areas With Little or No Brand AwarenessIt’s the chicken-or-the-egg dilemma: Regional and super-regional franchises want to extend their geographic footprint and develop areas without franchise outlets. But low brand awareness among consumers and potential franchisees make it an uphill battle. For the potential franchisee, unknown equals increased risk. We’ve developed a set of practical tactics that can help you expand your reach through the knowledge you’ve gained in your established territories.

Marketing ROINo one metric emerged as a defining measure of success. In fact, several participants confessed they did a less-than-adequate job quantifying their marketing results. In this section, we discuss ways to improve measurement of your marketing program’s return on investment and emphasize models that demonstrate the marketing function to be the strategic asset it is to franchisor and franchisee management.

Let’s begin.

eXeCutiVe suMMArY


The Challenge of Multiple OwnershipWhen asked to identify their most pressing internal challenges, some participants mentioned limited budgets, limited resources, insufficient headcount and poor internal planning.

But these lagged far behind the single biggest internal issue raised and one unique to franchising: dealing with many franchisees. In fact, almost every

participant indicated that the key difference between non-franchise and franchise environments is the challenge of multiple ownership. Many expressed the view that

management by committee significantly delays marketing program implementation or changes in corporate direction.

Exercising Control, Reaching Consensus, and Aligning ObjectivesAccording to those interviewed, the sheer number of franchise owners make it very difficult for the franchisor to exercise control. Organizing numerous owners to reach consensus is difficult and, in larger networks, probably unlikely, or not practical. Several participants also noted the troubling disparity between the objectives of the franchisor (more revenue) and those of the franchisee (greater profits).

FrAnCHisee/FrAnCHisor CoMMuniCAtions

“�The�challenge�is�everything�is�independently�owned�and�operated.�It�is�hard�for�us�to�drive�the�ship�to�grow�business,�to�close�more�transactions.�Owners�don’t�have�to�listen�to�us�from�a�marketing�and�program�perspective.”

�“We�are�challenged�with�communications��breakdown�in�getting�information�into�our��franchisees’�hands.”

“�The�biggest�challenge�is�getting�franchisees�to�participate�in�our�programs.”

“�Getting�all�the�franchisees�on�the�same�page,�definitely.”

“�Getting�buy-in�from�the�franchisees�on�concepts.�Some�are�usually�early-adapters,��and�others�never�buy�in.”

“�We�are�over�90%�franchise,�so�it�is�a�challenge�to�convince�over�400�franchisees�to�do�the�same�thing.”

I n t h e p a r t I c I p a n t s o w n w o r d s :

“�In�[non-franchise]�the�people�you�influence�are�your�employees.�They�must�adhere�to�your�marketing�tools.�Franchisees�can�go�the�other�way.�It�is�a�pure�control�issue.”

“�[The�biggest�difference�is�in]�getting�buy�in�across�wide�range�of�franchisees�versus�dealing�with�a�board.��Most�are�small�business�professionals�who�are�very�opinionated.��It�really�depends�on�how�strong�your�CEO�is.�If�you�have�it�you�can�move�the�business�forward.�If�not,�it�is�more�difficult.”

“�Basically�it�is�the�lack�of�control.�We�don’t�dictate�what�the�franchisees�do.�They�would�never�stand�for�that.�Also,�there�are�less�common�points�of�decision�making.�It�is�much�more�difficult�to�get�consensus�in�franchise�marketing�position�than�in�typical�marketing.”

“�Marketing�a�franchise�brand�has�many�more�internal�challenges.�With�a�franchise�you�do�a�lot�more�of�your�selling�internally;��non-franchise�you�do�a�lot�of�selling�to�the�end�user.”


continued >


The Core Issue: CommunicationsParticipants consistently described franchisee communications as essential yet difficult, an ongoing struggle they continually address. Common communications tactics include:

• Regular emails • Regular phone calls • Weekly or monthly newsletters with programs and “success stories” • Regional and national meetings • “Franchisee Councils” and “Field Operations” of organized franchisees to gather

input on new programs and advertising, and to encourage further acceptance by other franchisees.



“�The�biggest�difference�is�the�decision-making�process�takes�one-tenth�of�the�time�with�a�non-franchise�brand.�It’s�also�easier�to�turn�sales�around�because�of�that.”

“�In�the�franchise�world,�it�is�really�management��by�committee.”

“�The�franchisees�don’t�always�have�the�same�objectives�as�the�franchisor.�Growth,�same�store�sales,�increased�revenues�per�sale�don’t�matter�to�the�franchisee.�They�just�focus�on�profits.”

“�The�stakeholders�in�a�non-franchise�brand�are�all�internal;�in�a�franchise�brand�they�are�external�and�their�goals�don’t�always�align�with�corporate.”

“�[It�is�critical]�that�the�lines�of�communication�are�open,�that�everyone�is�on�the�same�page�–�from�corporate�to�franchisees�to�customers,�that�successful�relationships�are�built.”

“�It�is�key�that�the�franchisee�relationship�gets�off�to�a�good�start.�You�have�to�understand�the�relationship�issues�and�address�them�up�front.�Communication�must�be�open�and�honest,�but�it�has�to�show�leadership�and�direction.”

“�We�do�a�lot�of�things�like�councils.�We�have�a�lot�of�meetings�with�them.�Other�things�we�do�are�just�feedback��mechanisms.”

“�We�conduct�surveys�periodically�to�ensure�they�are�happy�with�the�product�and�direction.�We�also�do�face�to�face�meetings�and�we�have�a�franchise�council�of�about�8-10�individuals.”

“��We�hit�everything.��We�do�email,�we�hold�regional�meetings.�We�have�a�formal�council�process.�And�

��then�we�use�the�mail,�intranet,�and�hold�meetings��on�a�regular�basis.”

“�We�hold�a�face�to�face�conference�once�a�year�to�share�the�state�of�the�business.�We�also�hold�two�regional�meetings�and�several�market�meetings�per�year.”

“�We�communicate�a�lot�online,�as�well�as�one-on-one.”

“�We�do�a�lot�of�one-on-one�communication,�email,�web�site,�field�support�from�the�agency.”

“�We�have�Field�Operations�Staff�which�interacts�directly�with�the�stores.”

“�The�challenge�is�in�marketing��programs.�We�have�a�once�a�month�mailer.�It’s�a�four�color,�nice�piece.�We�also�have�a�support�team�to�ensure�they�know�what�we�are�doing.�They�are�not�sales,�they�all�came�up�through�the�operations�ranks.�We�need�to�be�in�the�[establishments]�to�work�with�the�owner�to�ensure�profitability.”

“�We�utilize�many�different�levels�of�communication.�Email,�weekly�conference�calls�with�the�Marketing�Committee�(6�people),�monthly�meetings�with�a�council�(9�people).�For�the�system�at�large�we�have�a�large�annual�conference.��Also�we�have�a�company�intranet.”



“You never win this battle.

We are trying to put together

comprehensive easy to read

communications for [their]

businesses. We have hard

hitting messages on programs

and initiatives they can buy or

use to grow their business. We

also use franchisee councils.”

Leadership also means

a willingness to clearly

articulate a mutually

beneficial vision throughout

the organization, including

all franchisees.

How to Address the Challenge:

St. Jacques’ Recommendations for Improving CommunicationsThroughout the participant comments, one common thread unites the issues of control, consensus and alignment: the importance of strong franchisor/franchisee communications. When it’s effective, all parties benefit from a foundation of trust that leads to a more responsive, more mutually profitable business.

But When Communications Go Wrong...In the words of a client, “When the franchisees start pulling out the contracts and pointing to clauses, you’re done. The relationship is broken.”

As study participants put it, being a franchise organization requires significant efforts to sell programs internally. Without the trust that comes with effective communications, franchise management – and the implementation of successful marketing programs – becomes very difficult, if not impossible. We’ve found that the essence of a productive franchisor/franchisee relationship is an open dialog, rooted in respect and honesty, that acknowledges the concerns of all parties and welcomes their contributions. Toward that goal, we’ve learned the following:

Build a Culture of ListeningIt begins at headquarters. There are certainly procedures required of the franchisee as part of their agreement. However, a franchisor that attempts to force directives on franchisees may be creating unnecessary resistance in a primary, and often the only, distribution channel. Instead, respect the sanctity of the franchisees’ “independently owned and operated” businesses and actively solicit their input before formulating plans. Invite a select group into your planning process, even as you anticipate that some franchisees will be passive and others resistant. Although consensus may be impossible, by opening your ears and by making it clear to your franchisees that they’re heard and their contribution is valued, you increase the likelihood of reciprocity. They’ll be more likely to respect the wisdom you’ve gained through tried and true business practices.

Demonstrate LeadershipBy leadership, we mean that someone at the franchisor organization – and someone in a position of authority – must stand for the quality of franchisee relationships. Without this direct commitment, “communications” and “franchisee relations” may dissolve in a mist of vague directives, deferred responsibilities or continually postponed committee actions.

Leadership also means a willingness to clearly articulate a mutually beneficial vision throughout the organization, including all franchisees. Franchisees must be able to see, hear and understand the direction the franchisor wants and the kinds of collaboration it expects.


continued >


Together, leadership and a listening culture form the base for communications. Here’s how they may be expressed:

1) Include clearly-defined procedures for communications in the Operations Manual. You and your franchisees should be confident that there are standard operating procedures for making regular franchisee contact, for soliciting franchisee input and for communicating business changes, marketing programs or new initiatives.

2) Solicit franchisee “buy-in.” Perhaps you plan on launching a new product or

program or announcing a new franchisor owner or modifying operational procedures. Whatever the specifics, you can count on one thing: Change means stress. The bigger the change, the greater the potential stress.

Fortunately, you can mitigate tension, or even eliminate it, through a systematic

communications plan that explains the following:

• Why the change is being implemented • What the benefits of the change are to the overall organization • What franchisees are expected to, if anything, to implement the changes • When the changes will be made, including a schedule of events and deadlines

The more effectively you incorporate your franchisees into each step of your activities, the more likely you are to win their cooperation, avoid disruptions and achieve success.

3) Build a toolbox of practical communications tactics. In addition to developing the substance of what you need to communicate, consider incorporating a few best practices that can help you improve how you communicate. These tactics may include:

• Empathize with the franchisees’ point of view. You’ll build credibility by openly acknowledging their concerns and by demonstrating your understanding. For example: “I know many of you are anxious about our new advertising campaign and have concerns about its impact on your bottom line. We share your concerns. And in fact, I want to tell you what we’re doing to address them…”

• Apply research. Few things are as persuasive as hard numbers or independent data both qualitative and quantitative. You’ll find it easier to win adoption of your initiatives if you can support your claims with trustworthy facts and figures.

• Take the lead with franchisee advisory councils. These councils are comprised of a representative sample of franchisees who meet on a regular basis to discuss the most current and pressing issues. If you don’t have a council, don’t wait for the franchisees to form one themselves. By seizing the initiative, you can play an active role in building good will and establishing a cooperative tone. As a practical matter, be sure to set agendas before each meeting to discourage arbitrary comments that might otherwise derail the meeting into personal, not organizational, agendas.



The more effectively you

incorporate your franchisees

into each step of your

activities, the more likely

you are to win their

cooperation, avoid

disruptions and achieve

success.


• Make personal phone calls and visits. The personal touch encourages trust and reinforces your commitment to franchisee relations. It’s also a great way to keep abreast of their emerging issues.

• Make regularly scheduled conference calls. While less personal than direct appearances, conference calls are an efficient way to maintain constant contact with multiple franchisees.

• Enlist help from other franchisees. Turn early adopters into advocates. As franchisees, they have built-in credibility that can help persuade the other franchisees to lend their support.

• Use a successful franchisee as a case study to illustrate success. It’s one thing to say that an idea may work; it’s far better to demonstrate that is has already succeeded. Real-life success stories allow your successful franchisees to shine as heroes and are powerful proof of your program’s efficacy.

• Monitor the attitudes of managers who interact with franchisees. Your people on the front line represent your organization in the eyes of your franchisees. Be sure your managers truly reflect the values – such as respect and a desire to listen – you want to impress upon your entire

organization.

In our experience, a relationship platform that demonstrates leadership, a willingness to listen and an active effort to communicate will often mitigate tensions before they arise and encourage greater franchisee cooperation. A sound, cooperative relationship is critical when franchisees are your primary distribution channel.


Among study participants, appropriate brand positioning was most often cited as the most significant marketing issue – a way to distinguish their franchise from competitors, attract recruits and build loyalty with customers.

Franchisees Add an Important Wrinkle to BrandingAgain, the issue of franchisee cooperation emerged as an important distinction that separates franchise brand marketing from non-franchise brand marketing. Participants repeatedly stressed the importance not only of consumer brand awareness but also of the franchisee’s understanding and acceptance of the brand and of overall corporate direction. With the

BrAnd PositioninG WitH ConsuMers And FrAnCHisees

“�It�is�important�that�our�franchisees�understand�what�we�are�trying�to�accomplish�–�so�effective�communication�with�them�is�paramount�to�success.��It�is�important�that�we�stay�ahead�of�our�competitors�with�regard�to�advances�and�trends,�and�it�is�important�that�our�brand�is�positioned�well.”

“�It�is�also�important�to�balance�between�constantly�trying�to�satisfy�the�franchisee�while�also�focusing�on�the�end�user.��Sometimes�they�are�not�the�same�goals�or�needs.”

“�Holding�brand�identity�standards.��All�[locations]�are�independently�owned�and�operated.�The�customer�experience�is�different�from�one�to�another.�It�is�tough�to�

hold�onto�quality.�Franchisees�want�to�do�things�their�own�way,�which�can�get�litigious.”

“�It�is�critical�you�understand�the�franchisees�and�their�needs,�and�what�their�challenges�are.��Franchisees�never�liked�our�TV�ads.�Prior�to�the�2006�campaign�they�asked�for�one�of�them�[sic]�to�be�in�the�TV�ad.�We�have�never�done�that.�The�ads�should�talk�to�the�franchisee�and�their�employees�to�instill�a�sense�of�belonging.�All�prospecting�and�hard�work�is�done�at�the�field�level.”

“�There’s�an�intangible.�How�attached�they�[franchisees]�are�to�the�company’s�mission/mantra.�The�franchisee�needs�to�be�clear�on�the�brand�and�where�it�is�going.”


“�You�need�a�winning�concept.�You�have�to�have�customer�appeal�and�be�able�to�differentiate�yourself�from�the�competition.”

“�(1)�Brand�is�well�positioned;�(2)�Marketing�Team�supports�the�unit�and�understands�the�industry;�(3)�Strategic�planning�in�place�to�drive�the�brand�forward.”

“�The�brand�must�stand�for�something�unique�in�the�market�place,�so�when�it�is�seen�it�is�immediately�distinctive�to�our�customers.�There�must�be�a�perception�of�the�brand�and�what�it�stands�for.”

“�That�the�brand�is�well�positioned�and�that�there�is�differentiation�from�our�brand�to�our�competitors�and�the�customer�understands�that.”

“�The�most�important�aspect�is�that�the�brand’s�position�adapts�to�fluid�market�dynamics,�second�is�that�the�brand�is�well�positioned,�and�third�that�we�know�market�and�customer�data�better�than�competitors.�The�others�[issues]�are�far�below.”

“�First,�is�communicating�who�you�are,�why�you�are�different,�and�a�compelling�reason�to�use�your�brand.�Second�is�pricing�and�strategy.”

“�Maintaining�the�integrity�of�the�brand�–�including�consistency�from�store�to�store�and�region�to�region,�and�improved�customer�service.”



Unfortunately, we’ve

heard too many stories in

which consumer focused

brand positioning

communications were

developed at a significant

investment in time and cost,

then delivered to franchisees

only to be met with confusion

– “What’s this and what do

I do with it?”

franchisee delivering the brand experience, franchisee buy-in and consistency have significant relevance to the overall corporate brand.


St. Jacques’ Recommendations For Improving Brand Acceptance and AwarenessMost non-franchised brands position themselves to occupy a unique space in the marketplace and consumers’ minds among competing, alternative products and services. Franchised brands do this as well, but they face an additional challenge: The brand not only needs to be clearly positioned with the ultimate consumer, but also with the franchisee base.

That means you probably need not one but two communication programs: one consumer focused, one franchisee focused. Or, at least, your consumer focused brand positioning communication program should have a significant franchisee communication component.

Take Care of the Franchisee, FirstIt has always been our contention, based in experience, that if you take care of the franchisee, they’ll take care of the customer. After all, the franchisee’s livelihood depends on it. That’s why we believe the franchisee brand positioning communication is the more important of the two. Certainly, both consumer and franchisee awareness matter, but by giving greater emphasis to the franchisee, you leverage a partner who has a vested interest in getting the word out to their end customers.

When franchisees are clear on what the position is, how the consumer benefits, how their business benefits and what they need to do to communicate the position, the consumer will also get the message.

To succeed, the franchisee focused communication should not only communicate the position but should also include case-building information (that proves the value of the brand position) and instructional information (on communicating and fulfilling the position) as well.

Unfortunately, we’ve heard too many stories in which consumer focused brand positioning communications were developed at a significant investment in time and cost, then delivered to franchisees only to be met with confusion – “What’s this and what do I do with it?” Or worse, outright resistance, as in, “I’m not doing this.”

Soliciting CooperationTo build franchisee support, start early in the communications process with a tiered plan that brings franchisees along with buy-in opportunities at certain key decision points.

We have a client who is a master at this. We asked him to share a bit about his process with us.“As a conversion franchise system the ‘selling’ I have to do among my franchisees may be greater than that of a business format franchise where many franchisee procedures are spelled out.”

“Be that as it may, I basically treat any initiative I’m responsible for delivering like a product launch. I do a lot of research upfront to really understand what the needs of my franchisees are and correlate that with what will make a competitive difference at the consumer level.


continued >


“My primary stakeholders are franchisees.”“ We collectively consider the franchisees to be the largest stakeholder for any program we roll out, and if it’s good for the franchisee, meets program objectives, and is executed well, my upper management is satisfied.

“With that being said, my secondary stakeholders are:” 1. Our franchisees’ customers 2. My immediate management 3. Senior management

“ As well, if my franchisees see how they benefit, see how their customers benefit and the program is easy to implement, there is a greater chance of acceptance, utilization and therefore, benefit realization for all stakeholders.”

“ As a franchise organization, with my franchisees as our sole distribution channel, it is imperative I have them on my side to leverage the distinct competitive advantages a franchise organization provides.”

“Hand pick Subject Matter Experts.”“ A lot of new program ideas come from best practices of top performing franchisees so, depending on the size and scope of the project, I hand pick a group of franchisees from throughout the system who may have demonstrated success in the particular area we want to formalize and invite them to take part in my advisory board. They are truly subject matter experts. Not a random group. I want them as engaged as I am. And I want to learn something.”

“Here’s my rough roll out checklist:” 1. Understand needs among franchisee base 2. Discern market opportunity 3. Define objectives of program on consumer and franchisee level 4. Distill benefits for all stakeholders 5. Develop communication plan. This includes a phased communication program to

the franchisees with: a. Program description and benefit information b. Instructional elements for implementation in place c. Benchmarking the metric I’m trying to influence and d. Measurement tactics to gauge program impact 6. Present program, premise and anticipated benefits to selected advisory board,

senior management 7. Refine program based on discussion 8. Develop communication concepts 9. Consumer test position and concept execution 10. Revise concepts if necessary 11. Present plan and concepts to advisory board, senior management 12. Execute program at the franchisee level and consumer level 13. Monitor measurement gateways 14. Compare to benchmarks 15. Present results

“Constant communication with my advisors is key…”…throughout the program, and particularly at the beginning. This does a couple things.

1. It helps me understand what works on a local level.



2. It gets our top performing franchisees talking amongst themselves to polish the best ideas and practices and

3. It gives this group some ownership in crafting the program.

“ This last point is especially critical when launching the program system wide. I now have a core group of advocates who have taken pride in their contribution and really help sell it through their regions. I tend to focus my advisors on program content rather than how it’s going to be communicated although we’ve used advisory board member testimonials throughout communications we push out to the system.”

“Flexibility and anticipating change is also important.”“ I anticipate and plan for change at each level of feedback. I consider all feedback from this group as positive. Because positive or negative, it’s all directional, and it will ultimately make the program stronger.

“Keep it moving.”“ As important as collaboration, contribution and feedback are to the program, I also have to keep it moving and try to mitigate any factor that may derail the process. I have to think down the road a bit and have my program well researched, well thought out and structured before I start talking with franchisees.”

“It gets easier.”“ The first one was really a challenge, because I came into an environment where open dialogue was not the norm so suspicion and resistance of my franchisee partners to participate, let alone contribute, in any program was high. I really had to work to gain trust.”

“ With more than a few successful programs under my belt, working in cooperation with hand picked, ad-hoc advisory boards, program implementation is much easier and faster. And I get an invaluable source of front line data and feedback on what is going on the local level to not only help my programs be on target, but help give ideas on new ones.”

Risk and RewardYes, this will require more effort, planning, and possibly cost, and may introduce an element of risk – this is a franchise organization, after all. But the alternative consequences – low adoption, resistance and the appearance of imperious imposition of your will on the franchises – make careful communications planning more than worth the investment. Indeed, with speed-to-market and competitive pressures from franchised as well as non-franchised brands playing crucial roles in your program’s success, you cannot afford the time to do it over or play catch up.

And consider the rewards of effectively collaborating with franchisees: Leveraging an energized, even evangelical franchisee base working and communicating in unison with your consumer program to help bring your message to market.

Remember, your franchisee base can give you a significant competitive advantage. Soliciting their cooperation, as opposed to expecting blind obedience, only makes sense and makes your marketing objectives, your job and your numbers all that much better.

The Consumer is IndifferentUltimately, the consumer is the same for franchised and non-franchised brands and is indifferent to the challenges the franchise marketer faces in bringing a product or service to market. Whoever communicates and delivers the most value for their dollars wins the business.



“A lot of new program ideas come from best practices of top performing franchisees

so, depending on the size and scope of the project, I hand pick a group of franchisees from throughout the system who may have demonstrated

success...”

Franchise Expansion Into Areas With Little or No Brand AwarenessAs they looked toward the future, participants had to confront the challenges of expanding beyond the areas where they had already established their brands. While it didn’t emerge as the most commonly referenced challenge, it did present itself as one of the deepest: How do regional and super-regional franchises expand into areas with little market awareness for their brands?


St. Jacques’ Recommendations for Mastering Franchise ExpansionsFrankly, this shouldn’t be much of a surprise to anybody: Interest from potential franchisees tends to be greater in areas where consumer brand awareness is high and low to absent where brand awareness is low or nonexistent. But the areas where awareness is low may be precisely where you want or need to expand, especially when the areas with high awareness are already sufficiently developed.

Unfortunately, too many franchises take a passive approach to expansion, waiting for potential franchisees to demonstrate interest and raise their hands. But without an active effort to build brand awareness, there is no emotional connection with the consumer, therefore no connection with potential franchisees. And with no franchisees, there’s nowhere for consumers to become aware of and interact with your brand. So the

question becomes: How can you generate qualified leads and interest from prospective franchisees in low brand awareness territories? Assuming you’ve identified the most appropriate areas for expansion, the following are suggestions that can enrich and improve any specific brand tactic or sales support initiative you might employ.

Construct a Franchisee ProfileThere is a baseline profile of people who are interested in owning a franchise – a common financial, emotional and psychographic denominator if you will. But this is like saying ‘I want to buy a home’, or ‘I want to go to college’. Common denominators are satisfied through the attainment process and ultimate acquisition of the objective. However, there is a hierarchy of characteristics that influence and guide the decision process. For example, take the buying-a-home example.

The answers to which produce very different results for those who engage in the process. This is the same for franchise purchases. Many franchisors try to appeal to everyone. Evidence of this fact is the one-size-fits-all franchise descriptions on many of the franchise opportunity web sites. We would argue, however, that beyond the common denominators surrounding the allure of business ownership and minimizing risk there are hierarchical lifestyle, financial, professional and psychographic considerations that

point people toward one type of franchise and away from others.

Moving Your Program From ‘Lucky’ to ‘Likely’You want a clear picture of the type of people who are interested in not just a franchised concept but in your franchise concept. With a little detective work, you can begin to shape a profile of the most likely buyers who not only have the ability to attain, but be successful in operating your concept. When you truly understand who your best prospects are and what makes them tick, you can have a better idea where to look for them, avoid wasted time with tire-kickers and focus your communication and financial resources only on those prospects most likely to resonate with your concept.

In the partIcIpants own words:

“�We�are�a�top�franchise�in�our�key�market,�but�have�had�limited�success�in�other�DMA’s�because�of�having�few�[outlets].�We�don’t�have�a�lot�of�marketing�muscle�there…the�brand�has�no�consumer�positioning.”

“�We�need�to�figure�[out]�how�to�break�into�markets.�It�is�a�challenge�when�you�don’t�already�have�a�presence.”

“�The�brand�needs�to�be�well�positioned,�both�for�consumers�and�prospective�franchisors.��You�need�to�show�‘why�brand�X�vs.�Y.’��It�is�no�longer�competing�just�in�the�[Z]�industry.�We�need�to�show�it�is�a�turnkey�business.”

“�(Our�biggest�challenge)�is�how�we�open�new�markets�and�differentiate�our�brand.”

FrAnCHise eXPAnsion into AreAs WitH LittLe or no BrAnd AWAreness


1. There are common fundamental reasons a wide spectrum of people want to own a home.

2. Then there are many personal, professional and financial factors that prompt people to buy or sell homes.

3. Then there are finer decisions on where, when, what, how, how big, how much.

Who’s the best model for your profile? Your existing franchisees are a good place to start. Talk with the most successful of your group – the kind you’d like more of – to help you unearth the common themes for your profile:

• Their motivations to buy your concept • Other franchise concepts they considered and why • Lifestyle and personality data • Relevant financial and demographic data

An objective, research professional can be valuable in helping you get to the heart of the matter with existing franchisees and identify other prospect groups worth studying.

Establish Your Unique Selling Proposition (USP)Once you know who you’re talking to, you can determine what to say. To discover which qualities of your concept are most appealing, consider sponsoring a focus group or other qualitative research method. Qualitative research goes beyond raw numbers to tell you why people take action – precious information that can give you a distinct competitive advantage. Invest in studies like these to compare your concept offering to others and reveal who responds to what and why.

The resulting information, after analysis, is invaluable for establishing your USP. At the heart of all your brand communications, your USP uniquely positions your concept to your particular target. The goal is relevance. When you match those who are most likely to be interested in your concept with tailored communications that trigger their buying impulses, you have the seeds of a powerful lead generation program.

Communicate the PotentialReference the success of franchisees in established areas as proof of concept, then point to the ground-floor opportunity in the new area. Invite them to get in before the area is developed. A little urgency coupled with exclusivity – the feeling that they are chosen to receive this special opportunity – can be a powerful motivator. It also helps your concept break through the vast clutter of other concepts available and may counter the awareness of more well-known, competing and close alternative concepts in the area you’re trying to develop.

Greater Relevance is the KeyBy forming profiles, shaping your USP, inviting likely prospects into a conversation and emphasizing urgency, you are, in a sense, doing the homework for your prospect. Because your information will be tailored for greater relevance to the needs and interests of prospect, they’ll be more likely to remember you even as they review other concepts. You’ll also increase the likelihood they will ultimately return and apply to your concept for consideration. You go from hunting with a net to hunting with a spear.

Plan Your Public RelationsOf all the proactive outbound communication techniques you can apply to get your USP to your target audience, an effective public relations plan is among the most powerful. When executed correctly by an experienced professional, a strong PR program positions your story with editors, content managers and program directors of media outlets, encouraging them to include your content in their media. Effective PR plants the seeds among both your consumers and your franchisees, increasing the likelihood that your subsequent marketing messages will take root with both audiences. Plan on launching your PR campaign after your research but before deploying your communication program to help prime the geographic market for your message. Most PR programs require a significant amount of lead time (30-90 days) before you may start seeing pickup, so begin early.

Regardless of specific tactics, the primary point remains the same: You can’t afford a passive approach to expansion. Taking steps to know who you’re talking to and why and actively seeking them out can help build brand traction among potential franchisees, and in turn, consumers, in new territories.

FrAnCHise eXPAnsion into AreAs WitH LittLe or no BrAnd AWAreness


Confession: Metrics Not What They Should BeSome participants measured success by “softer” or more qualitative judgments such as brand awareness or franchisee feedback. Many of these participants expressed dissatisfaction with their measurement systems, acknowledging their weaknesses. One of the most perplexing issues for today’s franchise marketer is measuring the success of different marketing campaigns

MeAsurinG MArKetinG roi


“We�measure�year-over-year�financial�growth.”

“�Metrics�typically�are�sales,�units�and�margins.��[There�is]�some�measurement�on�the�side�of�increasing�franchise�sales.”

“�We�are�simply�measured�by�the�amount�of�product�we�put�out.”

“It’s�all�about�sales�being�up.”

“RevPAR�Yield,�operating�margins,�and�growth.”

“�First,�it�is�the�number�of�franchisees�we�add.�Then�we�look�at�the�development�of,�and�the�contribution�of�the�programs�we�implement.”

“�We�measure�the�direct�mail�response�per�1000�and�also�the�close�rate.�With�telemarketing�we�measure�the�leads�per�hour�–�and�again,�the�close�rate.”

Measurement and metrics attracted the most diverse range of response from all topics addressed in the study. For starters, no one metric stood out as a defining measure of franchise marketing success; instead, participants

pointed to a variety of traditional and nontraditional measures.



“�We�are�not�very�good�at�metrics�here,�but�we�are�making�great�strides.�We�need�to�be�more�focused�on�what�rings�the�cash�register.�Now�we�are�measured�through�brand�awareness.�This�can�impact�the�decision�(for�potential�new�franchisees)�to�use�us.”

“�We�have�a�poor�measurement�system.�We�are�measured�on�developing�on-time�and�on-budget,�media�efficiencies,�and�revenue�generated�by�media�spend.�We�also�get�evaluations�from�the�franchisees�...we�get�a�lot�of�feedback�from�the�franchise�community,�etc.”

“�Those�aspects�are�typically�not�measured,�but�we�do�conduct�national�surveys�to�determine�awareness�level.”

“�Obviously�sales�–�also�perception,�which�isn’t�precisely�measured.�We�look�for�accurate�brand�awareness�with�our�customers,�franchisees,�corporate,�and�workers.”

“�We�measure�our�sales�progress�to�our�expenditures�in�media�exposure.��Also,�we�take�into�consideration�the�responses/reactions�from�the�franchisees.”

and their impact on the bottom line. Our research shows that many franchise marketers use a loose gauge such as sales earnings or non-traditional measures such as new franchisees to benchmark success. As one participant put it, “We are simply measured by the amount of product we put out.”

How to Address the Challenge:St. Jacques frequently partners with Lenskold Group for their expertise in developing comprehensive marketing ROI processes, tools and measurements to help companies manage and deliver profitable marketing initiatives. We asked Jim Lenskold, President of Lenskold Group and author of Marketing ROI: The Path to Campaign, Customer and Corporate Profitability to provide commentary on this subject.

Lenskold Group’s Recommendations for Measuring Franchise Marketing ROIUnder the sheer weight of competitive pressures, measurements are critical for managing marketing profitability. As such, they must establish a connection to the incremental sales generated to help guide marketing decision making. The franchise relationship often leaves an information gap between the two parties that hinders measurement initiatives. Franchisees tend to have more detailed customer and sales data, while the franchisor has better insight into brand strength and media details.

There is a clear opportunity for marketing ROI techniques and measurements to align marketing objectives and performance between the two entities, just as it does with the marketing and sales organizations within a company. Techniques we see as worthy of consideration include:

• Partner in measurements – Whether it is for a one-time marketing measurement or on an ongoing basis, both parties can benefit from identifying what motivates customers to purchase their brand. Where data are too sensitive to share, third parties can manage the joint measurements.

• Co-operative analytics – Similar to the partnership in measurements, there is an opportunity for franchisors to work with franchisees to run sophisticated data analysis to provide new insight into customer lifetime value, segmentation opportunities, retention and defection patterns and growth opportunities. Some franchisors have access to complete customer and transaction data from their franchisees but many do not. A cooperative approach to analytics is an economical way to bring the collective data from all franchisees into a centralized analysis that would otherwise be too expensive for any single franchisee. The shared insight can guide global decisions at the franchisor level as well as regional and local decisions at the franchisee level.

• Measure with market testing (part of the broader category of experimental design) – This is one of the most valuable marketing measurement strategies, yet franchisees in concentrated geographic regions may not have the option to split their market to run comparative tests. The franchisor can win on several levels by running market tests in partnership with the franchisees. They benefit from (1) testing different marketing media, offers, investment levels, targeting, and integration between national and local marketing and (2) winning greater franchisee buy-in and compliance as they present new marketing initiatives with proven success in revenue growth.


continued >


• Deliver tools and processes for measurement – Another area where the economies of scale of the franchisor can support the individual franchisee business is in making better measurement techniques and analytic tools accessible. For example, we know of one company that is developing a marketing ROI planning tool to help its franchisees analyze and improve their local marketing campaigns. Improved success at the local level also contributes to the franchisor’s bottom line as well.

• Improve target segmentation – Targeting and segmentation are almost always the primary drivers of ROI for marketing. Franchise marketers can leverage measurements and analytics to customize marketing to (1) the unique needs, competitive environment and growth potential of different segments of franchise locations, and (2) the unique needs, value and influence potential of different end customer segments served by the franchisees. The better marketing initiatives appeal to the unique needs of both the franchisee and the customer, the greater impact that marketing will have.

• Correlate brand metrics to sales performance – Quite a few of the study participants indicate using brand metrics – in particular brand awareness. Metrics such as this are important as an initial indication as to whether your brand communications are working, but they also can be unprofitable because there is not always a correlation between these brand metrics and sales performance. Franchise marketers can use techniques such as regression modeling, causality research and brand effectiveness research to link these metrics to sales activity. Brand marketing is much broader than just awareness and should include insight into competitive position and brand experience. These steps are necessary to gauge the appropriate spending levels and ensure the company gets a positive return from its investment in terms of both organic growth and the impact on franchise growth.

ROI Measurement is First a Cultural DecisionOne of the overall themes for these recommendations is for franchise marketers to build and promote a learning environment – to have marketing ROI discipline become part of the marketing culture. Gaining insight into marketing effectiveness and establishing the process for sharing and applying that insight becomes a distinct competitive advantage and guides marketing decision making. In addition, marketing ROI discipline builds credibility with senior executives outside marketing and this respect can easily extend to its franchise partners. Information truly is power.

Simple Truths. Complex in Practice.In our formal exploration of marketing franchise brands we’ve reaffirmed some simple truths. Marketing a franchise brand is different. And it takes something different to remain competitive with non-franchised and franchised brands alike. Franchise brand marketers know the key to leveraging their assets, to unlocking the potential of their brands in the marketplace, lies in joining their marketing knowledge and skills with the fundamentals of a building, maintaining and growing sound relationships.



Quite a few of the study participants indicate using brand metrics—in particular

brand awareness. Metrics such as this are important as an

initial indication as to whether your brand communications are working, but also can be

unprofitable since there is not always a correlation between these brand metrics and sales

performance.

How do your franchise marketing efforts compare to those who participated in the 2006 St. Jacques Big 30 Benchmark Report of Franchise Marketers? We’ve compiled a quick checklist of ideas, activities, tactics and practices you may want to consider for your organization:

PerForMAnCe CHeCKList

You’ve created and now sustain a culture of listening.

Your franchise has a recognizable leader responsible for franchisee relations and communications.

Your operations manual included clearly defined procedures for communication and implementing change.

You actively solicit franchisee buy-in.

You have a communications plan for building buy-in.

You can demonstrate empathy with your franchisees’ concerns.

You use research, facts and figures to support your claims.

You lead franchisee advisory councils.

You make regular in-person visits or phone calls to your franchisees.

You schedule regular conference calls with groups of franchisees.

You enlist support from successful franchisees.

You use case studies to illustrate franchisee success.

You monitor the attitudes of your front-line managers.

You sell the brand to franchisees before you sell it to consumers.

You actively solicit franchisee buy-in for the brand.

You use your franchisee base as a competitive advantage.

You construct a franchisee profile as a recruitment model.

You create a unique selling proposition (USP) for your brand.

You use urgency to sell recruits on your franchise’s potential.

You use public relations to build awareness and positioning before you roll out communications.

You use structured measurements to quantify the success of marketing efforts on both your business

and your franchisees’ business.

You leverage measurements and analytics to drive strategic decisions and manage sales and franchise growth.

You include long-term brand health measurements (such as brand awareness and competitive positioning)

of your franchise relative to national, regional, and local competitors.

You work with a creative marketing resource that introduces you to new opportunities and effective franchise

marketing methods.

Franchisee/Franchisor Communications

Brand Positioning With Consumers and Franchisees

Franchise Expansion Into Areas With Little or No Brand Awareness

Measuring Marketing ROI

Marketing Relationships

Yes Sometimes Planning to Not really


If you want to improve your performance in any of these areas, it may be time to talk to the

professionals at St. Jacques Franchise Marketing to gather insights specific to your franchise brand.

Just the Beginning – Expect More Exploration AheadThank you for requesting and reading the 2006 St. Jacques BIG 30 Benchmark Report of Franchise Marketers. This study represents our commitment to researching and presenting the most effective techniques for growing profitable franchise organizations through marketing.

In fact, consider this report the beginning of a sustained pursuit of franchise brand marketing exploration. We’re already planning a follow-up to the 2006 BIG 30 Benchmark Report to kick off this fall in addition to other research initiatives.

If you’re responsible for marketing a franchise brand and would like to suggest a topic for study or to comment on this one, we encourage you to give us a call at (973) 829-0858. Ask for either Michael or Philip St. Jacques (x103 or x102).

Thank you for any investment you make in our report.

About St. Jacques Franchise MarketingSt. Jacques Franchise Marketing is a leading firm specializing in creative franchise marketing solutions that help address the distinct challenges associated with this market’s overall business growth. St. Jacques’ team of seasoned marketing and creative professionals apply their expertise in developing strategic marketing programs and initiatives on behalf of leading franchisors to help keep their brands consistent, innovative and competitive. St. Jacques, founded by twin brothers Philip and Michael St. Jacques, has been crafting successful marketing programs and advertising campaigns for many top franchise and traditional brands for more than 15 years.

Just tHe BeGinninG


18 Cattano Avenue

Morristown, NJ 07960

1-800-708-9467

www.franchisefame.com

©2006 St. Jacques, Inc. No reproduction can be made without written consent from St. Jacques, Inc. All rights reserved.

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Aggregate insights of 30 top franchise brand marketing ...ACKnoWLedGeMents 3 2006 St. Jacques BIG 30 Benchmark Report of Franchise Marketers We’d also like to thank the following