Franchise marketing plan

As more and more entrepreneurs adopt franchising as a business model, franchisors should draw a franchise marketing plan laying down specific guidelines to achieve one or more marketing objectives.

By Rajeev B Sharma | May 18, 2010

When a company decides to franchise its business, the questions that normally arise are: what should be its marketing plan, how to get the right franchisee, and what yardsticks be adopted to recruit a new franchisee. In fact experts believe that the marketing plan is the most important part of a franchise business plan.

The marketing plan is a written document that lays down the plan of action and specific guidelines to achieve one or more marketing objectives. The important features

of a marketing plan are:

  • It is a formal plan and hence has to be in a written form.
  • Marketing plan is a part of the overall business plan.
  • Solid marketing strategy is the foundation of a well written marketing plan.
  • Marketing plan can be for a product or service, or a brand or a product line.
  • It contains a list of actions.
  • The plan is for 1 to 5 years' duration
  • And finally a marketing plan should be clear, quantified, focused, realistic and agreed by all the parties concerned.

A franchise marketing plan means to conduct a search for an astute franchise, and enter into a franchise agreement. It's a plan focused on product, audience, awareness and delivery. It enables you to present on paper a well-thought out model - how you plan to enter the market and what methodology you would adopt to gain recognition and preference.  It also includes why you think, it is the good time to start the franchise business. All above devices constitute your franchise marketing plan.

Subsequently, we should also know the elements of a franchise marketing plan. I would prefer to elucidate this by using elements of Kotler's Classical Ps of marketing. All the 8 P's are very much relevant in the Indian context. The 8 Ps can sometimes divert attention from the customer, but the framework they offer can be very useful in building the action plan. The 8Ps are:

  • Product: A franchisor needs to discern which of his products can be franchised. Is there a need for your product/services? One should take a realistic view of the opportunity. 
  • Place and Distribution: A franchisor should be able to select place/places where he could open outlets and apply distribution strategy. He should be able to decide whether to go for an individual franchise or for a master franchise at specific places.
  • Price: Pricing is very important. The franchisor should aptly decide whether to wear a premium tag or play price game.
  • Promotion and advertising: This can be divided in two categories - above the line and below the line. We should devise ways to reach out to the target group effectively, and use appropriate forms of media, like radio, TV, Internet, brochures etc.
  • People and organisational structure: People represent the business. The organisational structure should be designed based on the nature of business. It should essentially constitute a support structure for the franchisee business.
  • Physical environment: In many businesses it is called 'look and feel of the outlet. What it basically means is the ambience created to service the customer. The same would largely depend on the nature of product or services.
  • Process: This also means the best practices created to make the business scalable and profitable. The processes should be created to sell and service the customers and the franchise.
  • Packaging: The last 'P' applies to franchisors, who are franchising concepts where physical products are involved. Here, the decision to package the products becomes important.

The 8 Ps constitute a useful framework to decide how the company resources will be manipulated to achieve the objectives.

Although the detailed plans will cover each of the 8 Ps, the focus will vary, depending upon your organisation and its specific strategies. A franchise organisation can be categorised into three categories, viz., prospective franchisors, emerging franchisors and mature franchisors. We discuss below the marketing plans for each of these categories:- 

Franchise marketing plan for prospective franchisor

A typical prospective franchisor is a small and medium business, foraying into   franchising. He has the profitable, scaleable and duplicable business model which he wants to expand through franchising. As this franchisor is a first timer, he should implement all the 8 Ps of marketing plan, with special focuss on 3 Ps, namely:

  • Promotion and Advertising: As usually, at this stage, an SME company does not have a big brand name, and finances are tight. It is always a catch-22 situation between how much to spend, what should be the returns on marketing spend and which medium to use. In the internet age it is recommended that companies should use internet intelligently. Other efficient media for a prospective franchisor is direct marketing tools like exhibitions.
  • Product: A franchisor's decision about launching a product is very significant. All the products may not be franchisable, even if a product is franchisable, it needs to be modified to suit various regions and countries, e.g., a vada pav franchise may run in Mumbai but it may not run in Bihar. Similarly an idli franchise may flop in south.
  • Price: The decision about pricing is crucial for a first time franchise. Whether to wear premium tag or allow discount should be decided after an intensive market study of the product.  

Franchise marketing plan for emerging franchisor

An emerging franchisor is one who has a good franchise system now, and is desirous to go national from being a regional player. This franchisor is also looking forward to fast track growth and is desirous of a sound franchise recruitment plan. For such a franchisor there are four focus areas:

  • Place and Distribution: The franchisor should carefully select the areas for expansion. For example, if a training company wants to expand its presence from north India, it should decide which next state it should step in. It would make more sense to go to west - adjoining north, rather than heading to extreme south. It should also decide on expansion model, whether master franchise, multiple outlets or single outlet franchise.
  • Price: As the entry is being made into a new region, a survey needs to be done of competition, price acceptance and product preference in the region. One may have to go for multiple price points for the same product in different regions.
  • People: The entry into the new region demands study of people's tastes, preferences and customs. Accordingly, the franchisor may have to bring in appropriate changes in his products/services to make it acceptable to the local people, as also bring in changes in the organisational structure. I have observed that south based stock market companies have not been able to penetrate into north India.
  • Process: As now lot of franchise recruitment and support will happen from a distance. If the processes of recruitment, on-going support and after sales are not set and implemented, it can lead to failures or franchise disputes. A case in point was coaching classes franchise 10 years back they were all regional based and were not able to go national. 

Franchise marketing plan for mature franchisor

This franchisor is a leading name in the industry; has 50, 100 or 1,000 franchisees in the country; is present across the country, and is desirous of going international. It now needs to prepare itself for international market. Though it is recommended that all the 8 Ps be observed, the following 4 Ps demand extra consideration.

  • Product: There is some times a lot of difference in the product for Indian market and international market. In fact the product may have to be adopted for each country separately. When Indian IT training companies were looking at expanding internationally 12 years back, they had to translate books in local language like Chinese, Spanish etc.
  • Place and Distribution: The decision as to which countries and territories to enter, is a crucial decision again. Lot of factors like competitive edge, support system, local laws of land, etc, have to be considered. A miss in this decision can lead to failures and it can be a costly affair too.
  • Promotion, branding and advertising: As the countries of entry are new a decision on all the three, along with cost consideration has to be taken. In many countries brand name has to be reconsidered or registered locally before using it.
  • People: This being the most important area of consideration, support structure, organisational structure, placement and location of people has to be decided. Also, it should be clear whether we will export people to new countries or we will employ locals for managing the business.

During the course of my 15 years stint in five industries, while I franchised more than 2,000 franchisees, it has dawned upon me that a formal, written marketing plan is essential, as it provides an unambiguous reference point for activities throughout the planning and implementation period. This, typically offers a unique forum for information and productivity focused discussions between various managers. 

The author is Country Head Wealth Management & Investment Banking, Unicon Financial Intermediaries P Ltd

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