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What to do when franchisees go rogue

As franchise organizations expand, they oftentimes find it makes sense to allow franchisees some freedom in how they market the brand. But knowing how much freedom to give, however, poses a challenge as a panel of franchisors shared during this week's Fast Casual Executive Summit.

Kathi Woolsey, of Visualogix, questions Ashley Wilson of Your Pie, Matt Friedman of Wing Zone and Justin Bartek of The Halal Guys about rogue franchisees. Photo by Willie Lawleess.

October 15, 2019 by Elliot Maras — Editor, Kiosk Marketplace & Vending Times

When a brand signs on a franchisee it generally expects them to represent the brand according to the company's established operating and marketing practices.

However, in many cases, the franchisor quickly learns that a franchisee does not always comply with the expectation, especially in situations where a franchisee operates in a market characterized by unique customer preferences.

So, as franchise organizations expand, they oftentimes find it makes sense to allow franchisees some freedom in how they market the brand. But knowing how much freedom to allow, however, poses a challenge with few easy answers, as a panel of franchisors shared during the Fast Casual Executive Summit taking place at the JW Marriott in Austin, Texas this week. Kathi Woolsey, director of business development at Visualogistix, a provider of marketing material, moderated the panel, "Controlling your marketing: are your franchisees going rogue?"

Franchisee input needed

The panelists all agree franchisees should have a say in the company's menu calendar.

"We can't create it in our office. It really needs buy-in from franchisees," said Matt Friedman, CEO and co-founder at Wing Zone, a wing restaurant franchisor. "Franchisees must have a say," he said, and that's why his company has franchisees meet on a quarterly basis to discuss the menu calendar.

Your Pie Franchising LLC, a pizza franchisor, has established a five-person advisory board to suggest new products, said Ashley Wilson, marketing director, adding that franchisees have suggested local oriented menu items.

The Halal Guys, a global brand, relies on franchisees for menu suggestions, said Justin Bartek, international marketing manager for the brand. That's because franchisees often know their local community better than anyone. For example, products that are popular in Jakarta and South Korea will likely not work in the U.S., he said. Media decisions also require local consideration, he added. In South Korea, it makes sense to run digital advertising in the subways as they are widely used by consumers.

Franchisor guidelines also needed

Yet despite some freedom franchise organizations require franchisees to follow certain marketing guidelines.

Wing Zone, for example, encourages franchisees to follow the company's direction on POP, print and digital materials, Friedman said. The company refers to these initiatives as "invests" in its text messages to franchisees.

"It really is about communication," said Friedman. While the company works to create buy-in from franchisees, the franchisees are expected to follow the calendar directives. "It's a system, it's a franchise; stay with the plan," he said.

While The Halal Guys' franchisee council is encouraged to give feedback, franchisees are expected to follow the company's marketing directives, Bartek said.

Since he joined The Halal Guys, Bartek has been working to centralize the brand's social media posts, the one area where franchisees have taken some liberties. Bartek said franchisees tend to go "rogue" more on the operations side than on the marketing side. 

Sides must find middle ground

Friedman volunteered that if franchisees want to create their own marketing message, the franchise organization should try to understand what they want and need.

He said franchisees are receptive to franchisor-driven advertising incentives. His company has been able to secure 60% participation among franchisees on company-driven advertising. The company provides the franchisees data on the advertising effectiveness, he noted. "You have to be able to provide that (data) that or they'll fall off the program," he said.

Franchisees will also support corporate LTOs, Friedman said, providing they are current. If corporate fails to introduce a new LTO, the franchises will not stop offering the most recent one. "We know we've got to roll into the next one," he said.

Your Pie Franchising has gained support from franchisees by offering a marketing content portal that franchisees can access, Wilson shared. In addition, the company posts social media postings three or four times a week, which Wilson said most franchisees appreciate. Franchisees can post their own social media messages about topics other than Your Pie products, she added.

Marketing channels pose challenges

The panel session also included a discussion on marketing decisions. Asked what marketing channel is most preferred, Bartek said digital. Wilson agreed, noting digital media makes the most sense when marketing funds are limited.

Friedman, however, offered a different view. Regardless of what marketing channel a company uses, be it point of purchase material, the website or mobile, he said it's important to have content that conveys the brand's marketing message. "I believe in investing in creative," he said.

Asked if traditional media, such as TV, direct mail and billboards, is still effective, Wilson said direct mail has proven very effective in rural markets, but not in urban markets.

Friedman said billboards work for announcing new restaurants.

The panelists said they are spending between 1% and 2% of revenues on advertising. Friedman said his goal is to grow this to 4%.
 

About Elliot Maras

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Elliot Maras is the editor of Kiosk Marketplace and Vending Times. He brings three decades covering unattended retail and commercial foodservice.