When we work with Franchisors, a strategic discussion around centralization or centralization of marketing inevitably occurs. While there are merits to both approaches, this article, provided by ZenithRise Group, a marketing agency located in California, argues for the centralized approach with some allowance for decentralization.
Let’s first define what we mean by a centralized and a decentralized approach. A ‘purely’ centralized approach is where the Franchisor: (1) sets the annual marketing plan and overarching marketing strategy for its network to follow, (2) produces the creative imagery and messaging for its ad placements, (3) generates the media plan and (4) executes, measures and monitors marketing performance against marketing and business objectives that have been set. And by and large, in this situation, the Franchisees are expected to follow overarching Francishor guidance. In fact, they are contractually obligated to do so (or should be in properly crafted Franchise Agreements).
Here are some critical reasons why we believe that marketing should be centralized:
1. Intimacy of brand knowledge lies with the Franchisor.
Marketing is about communicating the brand’s position, its value and its benefits to the target. And ultimately, the Franchisor knows its brand the best. In fact, this knowledge and vision for the brand is what the Franchisees bought into in the first place (i.e. the Franchisees bought into the Franchisor’s dream). As such, because of this intimate familiarity with the brand’s positioning, its values, and its intended emotional connections with target audiences, Franchisors need to control the narrative around the brand.
2. The risks of non-centralization can impact not just one location, but the entire network.
With the accessibility of social media and digital media to anyone anywhere in the world, any divergence (at best when Franchisees exercise ‘creative liberty’) or misrepresentation (at worst in the case of disgruntled or rogue Franchisees) from the brand’s positioning and values can have negative consequences not only for the location that releases the marketing message, but for all locations in the network. That’s a significant reputational risk. Centralized control of the message mitigates against this risk.
3. The investment efficiencies that come with planning and execution.
When working across the network, Franchisors are able to generate product, creative and media strategy that can apply nation-wide. The nuances of each location can be reflected in messaging
(e.g. local phrases, etc.) and creative (e.g. unique location-based imagery). While these individual nuances are important to ensure that Franchisor’s message resonates in the locations of its Franchisees, by and large, there are efficiencies in planning for national marketing plans and campaigns.
The more compelling efficiencies, however, can come in execution. Whether it’s production of physical marketing assets (e.g. Out of Home signage, print collateral, even video assets) or buy of digital media nationally (with the option to geo-target the message to individual locations), a larger ‘buy’ generally allows the Franchisor to incur savings and pass these savings on to its Franchisees in the form of reduced monthly marketing fund fees
4. Rich data-driven marketing planning and execution.
Franchisors have access to performance data from all of its Franchisee locations. In addition they have access to the the demographic and psychographic data that defined entry into those locations in the first place (ie. when the Franchise was awarded). When this data is consolidated and then segmented or aggregated for trends, the insights can be very powerful. For example, certain products may perform better at certain locations and warrant product-specific campaigns. Or there may be certain seasonality in an area of the country that warrants over-communication of certain services. Regardless, the data set that Franchisors have to draw from make for more optimized campaigns.
5. Access to resources that may be cost-prohibitive for Franchisees to incur on their own.
With a larger budget, Franchisors can generally invest in agencies, legal review, and other marketing resources that Franchisees cannot afford to invest in individually.
6. The ability to unify a digital marketing presence.
With a larger view to the network, access to higher quality resources, and larger data sets to base decisions upon, Franchisors are able to more harmoniously connect the pieces of the marketing puzzle, specifically SEO to Social Media to customer acquisition via Marketing Automation.
Of course, as wit most things there generally isn’t an absolute answer. Franchisees are a critical part of distributing the brand in the marketplace and in many cases know their local customers with far more intimacy than the Franchisor ever can. This localized knowledge should be accounted for as much as is economically possible within a finite marketing budget. This could mean adjustments to messaging and creative to reflect local nuances, investment in certain media (e.g. local magazines) that reach audiences more intimately, and especially presence at local events to showcase the Franchisee’s business and the Franchisor’s brand. These opportunities are important to recognize and account for by having a component of each Franchisee’s required marketing budget be labelled ‘Localized Marketing’ at the discretion of the Franchisee.
For the reasons above, however, we believe that a model that leans strongly towards centralization is the optimal approach for the long-term success of both the Franchisees and the Franchisor.
