For many entrepreneurs (especially those who don’t have a ton of franchising experience), the idea of owning and operating a successful franchised business may appear to be too risky or unaffordable. National brands like McDonald’s and Hampton Hotels have become beacons of franchising success, but they also require significant capital and experience. Less known concepts that serve niche or growing markets, such as Gigi’s Cupcakes or Koko FitClub, might require less money and expertise, but also come with the risks of any new business, including low brand awareness and a limited advertising budget that can’t do much until the concept matures.
In fact, the risk factor that franchise-seeking entrepreneurs seem to be the most concerned about is the strength and effectiveness of a franchisor’s marketing prowess. Indeed, this may be the case because brand marketing is often beyond the control of any single franchisee. But I believe that this legitimate concern is more grounded in the fact that entrepreneurs are all marketers at heart. We all understand that no matter how desirable our products or services may be, and no matter how well we manage our operations and customer service, the most surefire way for a franchise to become successful is by building and maintaining a strong brand reputation with marketing and advertising strategies that positively influence the purchasing behavior of consumers.
For the majority of this century, the power of marketing and advertising programs was directly correlated with the size of a company’s advertising budget. Businesses with a lot of money could hire the most talented agencies, create the most compelling campaigns, and buy the most influential media to proliferate their messages. Television, radio, magazines and newspapers (or what I call “traditional media”) have always been the most effective ways to reach the most number of people; and because such valuable media could only be purchased by the larger and more established businesses that could afford them, it became increasingly difficult for newer, smaller concepts to build their brands and expand their customer base.
Of course, there are a number of franchise systems that have become notable exemptions to what appears to be an ironic world in which only successful businesses can succeed. But such exemptions are driven by disruptive ideas, new business models, abundant talent, or quite honestly, sheer luck. Most successful franchise system have remained that way because of their unwavering commitment to strengthening their brand with effective and influential advertising. The inability to cultivate a strong brand reputation is a big reason why some franchised businesses operate like mom-and-pop amateurs, while others are beneficially mistaken for well-run corporate stores.
Traditional media has been effective because television, radio, newspapers and magazines have, for the longest time, represented the most relevant and ubiquitous channels to command the attention of consumers. Television and radio, for example, were the only ways we could indulge in entertaining content, so we had to watch commercials. Newspapers were the only way to stay on top of current events, so articles were adorned with ads of all sizes. Because the general philosophy of traditional media is to reach as many people as possible, traditional media isn’t cheap. And even if a business wanted to focus its ads on a specific segment of consumers, it could only do so by advertising to an entire city or county, or perhaps by loosely communicating to people based on the types of magazines they read. Even with such demographic targeting, the cost to purchase media to reach such a filtered audience was still high because of the large number of impressions such a targeted ad still reached. Even if the ad were affordable, there was no guaranty that they wouldn’t get lost in the clutter of localized advertising that provided advertisers with very few levers for control (just consider all of the irrelevant junk mail you receive). In short, this conundrum boiled down to the simple fact that effective marketing was expensive, and effective brand building through effective advertising was available only to those franchise concepts that could afford it… at least until now.
The past few years represents only a fraction of the amount of time franchising has been around, but it is also a time when social media disrupted the ways in which we communicate, share ideas, and engage with content. Companies such as Facebook, Twitter, Pinterest and Instagram have become such dominant platforms for information sharing and engagement that instead of just being names, they have quickly become descriptive verbs that identify our preferred modes of communication. These interactive and media-rich social channels have significantly decreased the exclusive importance and relevancy of traditional media, and have become fluid environments in which consumers of all ages now spend an increasing amount of both personal and professional time. Unlike television or radio, these social platforms have become immersive, wide-reaching forums in which information can be shared in all directions with nearly anyone we want, including friends, family members and public figures that many of us would trust more than the advertisements of an impersonal corporation.
Social media has also made information sharing more accessible, relevant and meaningful. Anyone with a phone or computer can access a social network made up of people, brands and content with like-minded preferences. This is why consumers will continue to replace television with on-demand programming or YouTube, and opt to receive news from Twitter instead of the daily newspaper. Whereas, in the past, consumers were introduced to brands and products only through television commercials or printed advertisements, they now discover them in a more meaningful way through sites like Facebook and Pinterest. Consumers now trust the opinions of their colleagues more so than brand advertisements.
All of this means one thing: the model for effective advertising has dramatically changed. In the old world, television commercials and print advertisements were essentially the only effective way to influence consumers and build a brand. This is how many of today’s top franchises have achieved – and continue to maintain – success. In today’s world, technology has given birth to another, equally effective (if not more so) advertising and branding system comprised of interactive forums where content like Yelp reviews has the potential to achieve a lot more than a television or radio commercial.
The increasing prevalence of social media is very meaningful to the franchising world because it completely changes the rules of marketing and advertising – and therefore branding – for both franchisors and franchisees. Television, radio and other forms of traditional media are no longer the only ways to influence consumers. In fact, some would argue that for many companies, traditional media is no longer the preferred way to advertise because social channels like Facebook and YouTube offer more attractive marketing opportunities with better demographic targeting and higher, more measurable ROIs. And since advertising on social media is significantly more affordable and controllable, franchised businesses finally have access to powerful advertising tools and platforms without having to purchase expensive traditional media which only larger, well-funded companies could previously afford.
This is why I believe that we are currently at the beginning of a very exciting time for franchising. Social media empowers both smaller franchise systems and single-unit franchisees to design and execute the same types of effective marketing campaigns that their larger counterparts are implementing in their current efforts to cultivate and strengthen their brand reputation. It doesn’t cost anything to create a Facebook brand page, and it’s free to tweet. All that may be required is creativity and determination. And even the paid social advertising solutions are highly controllable, affordable and more effective, which means the size of an advertising budget may no longer be such an important driving factor in the success of a business.
The operating parameters of a business that entrepreneurs can control (like excellent customer service and consistently high product quality) may finally become more and more important in determining the strength and quality of a brand, especially as consumers rely upon these metrics to forge their opinions of companies and their products or services. After one understands the powerful impact that these opinions can have on a brand’s reputation, it becomes evidently clear just how social media can level the competitive playing field for many small business owners, and make franchising that much more exciting.
Dan Kim is the Founder and Chief Concept Officer of Red Mango, a leading national frozen yogurt and smoothie franchise with over 200 units. He regularly engages with his 1.7+ million followers with his Twitter accounts @dankimredmango and @redmango, and has a combined Facebook fan base of nearly one million fans for /redmango and /dankimredmango. He is also active on his personal Facebook account, fb.com/frozenyogurt.
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