Franchise? Digital Marketing Questions You Should Ask.
Are you considering buying a franchise? If so, you will be faced with a lot of questions. Should you even start a business? If so, is franchising right for you? Which franchises will meet your professional and personal objectives? Does the franchisor have a viable digital marketing strategy that will help you be successful in your business?
When you evaluate owning a franchise, you encounter a unique buyer and seller relationship. The seller — in this case, the franchisor — agrees to support you with assets and services such as training. The potential buyer — you — agrees to pay the franchisor on an ongoing bases for those assets and services. So it’s vital for you to understand what you get in return for this ongoing investment.
My goal is to arm you, the potential buyer, with the digital marketing topics you should at least explore with a franchisor:
- What digital assets will be provided by the franchisor?
- How is digital marketing budgeted?
- Does the franchisor have a “digital test kitchen”?
- How much control will you have over your website and social media?
What digital assets will be provided by the franchisor?
When you buy into a franchise, you buy into a heavily-regulated business model. You agree to pay the franchisor certain fees, and in return your franchisor agrees to provide services (e.g., training) along with the rights to use certain franchise assets. Those assets allow you, as a franchise owner, to leverage the franchisor’s brand marketing.
The question is: What digital assets will the franchisor provide? The more the franchisor provides, the less you need to spend your time and money to create.
For example, your most important asset is the use of the franchisor’s logo. The logo will be prominent in all your marketing, and you will need to use that logo to be consistent with the overall franchise branding. Will that logo be provided to you in a format suitable for digital use as opposed to print? Does the franchisor provide branded email templates? Will they provide a website and social media platforms?
Also ask the franchisor if they provide a creative service you can use to have your digital (as well as print) assets modified.
How is digital marketing budgeted?
A franchise business model will typically have two (or more) levels of marketing budgets. For simplicity, let’s assume two. The first is level is a national ad fund that will be spent on nationwide and regional advertising spots on TV, radio or digital channels. Spending decisions for national marketing budgets are typically made by the franchisor for the benefit of all franchisees. The other marketing budget is a budget that will be spent locally, which can fund local advertising spots such as TV, radio, digital, print and billboard. You, the franchise owner, determine the local budget.
With the national budget being spent on your behalf, a good question to explore with the franchisor is what their typical national marketing portfolio consists of. What percentage is television ads? What percentage is print? What percentage is digital?
There’s really no wrong answer, except if the national budget contains no allocation for digital initiatives.
Because franchisors can negotiate with scale, which inaccessible to you as an individual owner, the franchisor is in a better position to arm you with digital tools. Ask if tools are a part of the national budget. If the franchisor gives you access to digital tools, that’s a big positive.
The second budget level, local marketing, is completely up to you. You determine what amount to budget and how to spend that budget. A digital marketing budget is like all marketing budgets — some of your investments will provide a good return, others will not. Focus your energies on understanding what will be effective in your specific market.
Does the franchisor have a “digital test kitchen”?
This question centers on how the franchisor takes a portion of the risk out of your digital marketing. How will you get digital training and support? Will they give you some guidance on effective strategies in your local market? A good franchisor should have some strong ideas about what social media platforms should work for you.
Good franchise systems have a way to test and vet new ideas. Whether that’s a process change or a technology change, all franchises need to test the new idea before implementing the new idea with all franchise owners. The testing usually takes place in a “test kitchen.” The goal is confirm whether the new idea works before they roll out the change.
Digital marketing, almost by definition, is new — so how does a franchisor test various digital options? For example, are Pandora Radio ads effective? What do you do with Twitter? It really doesn’t matter what a franchisor determines successful. What’s more important is that they’ve tested the new idea.
If the franchise you’re considering has a method to test new digital marketing ideas, that’s perfect. If they don’t, just be warned that you, as a franchise owner, will be responsible for that risk. If that’s the case, you’ll have to invest — and waste — your own money to learn what works. I’m a big fan of learning from my digital mistakes, but I would prefer for the franchisor to bear the burden of the more-costly mistakes.
How much control will you have over your website and social media?
To me, this is the most important question to answer when you’re evaluating a franchise.
Here are the two extreme answers. The first is that you have 100 percent control over everything. Control is good, but you should be receiving something in return for paying your franchise fees. Along with the other things we’ve discussed, the franchisor should be providing your website and social media platforms. So, 100 percent control is bad because it defeats the purpose of having a franchise.
The other extreme is that you have no control over your digital presence. This answer is a very, very bad answer. If you have no control over your website and social media, you have no ability to use those marketing channels for local marketing. I like when I can leverage digital assets from the franchisor. But I love being able to market locally through my website and social media. I love local digital marketing because I can achieve marketing scale at a very low cost to my business.
If a franchisor does not allow you any control over your digital platforms, you should select another franchisor.
Buying a franchise is a complicated, but important decision. Education and due diligence are the keys for success. Read all you can and speak with — or better yet, work with — a professional franchise broker who can help you with these serious decisions. Ask the franchisor hard questions about their digital marketing offerings. If you believe digital is the future for all business, you’ll benefit from gaining this understanding from the franchisor prior to signing the franchise agreement.