A Primer on B2B Franchises

By Rick Bisio -

Franchise Consultant & Creator of The Educated Franchisee.

When I work with people who are considering buying a franchise, I sometimes ask them to list the first five franchises that come to mind. Usually all five are business-to-consumer (B2C) franchises such as restaurant or mailbox type franchises.

The purpose of this article is to let you know that there's another whole world out there! Business-to-business (B2B) franchises, which provide services to businesses, rather than to individual consumers, are one of the fastest growing sectors in franchising. Products and services range from temporary personnel placement to commercial window cleaning. They include sign companies, computer support, business coaching, printing, marketing services, logo apparel and on and on.

For many potential franchise owners a B2B franchise can be the perfect fit. Many people who leave the corporate world to buy their own franchise have spent years promoting their products and services to other companies or to other departments within their own company. They are comfortable and skilled in this type of environment. They enjoy professional business relationships. They are good at structuring solutions.

B2B franchises frequently need less physical infrastructure than B2C franchises. They are usually scalable and many B2B owners appreciate that the business is generally open Monday through Friday, during traditional business hours.

A B2B franchise may be less expensive to get into than other types of franchises and may have lower operating expenses. In many instances, overhead is lower and marketing is more targeted, which is typically less expensive than marketing to the masses.

One item that can keep overhead down is the amount a B2B franchise pays for rent. While retail space can be pricey, most B2B franchises are located in office buildings, where space is less expensive. Some B2B franchises are even home based. For example, an IT firm might actually be an association of high-level IT subcontractors, who travel from their own homes directly to the customer's site.

Some B2B franchises do require retail space. For example, a staffing firm that needs to be accessible to numerous potential employees might be located in a retail location; an auto parts store that caters primarily to auto repair businesses could also be open to the public.

As you can see, there are tangible advantages to owning a B2B franchise. But there can also be disadvantages. If you do not have a strong business background you may have trouble working effectively with business people, who tend to be busy and to-the-point. B2B franchises tend to work with a smaller number of large customers, rather than many individual customers. The loss of one customer can make a large dent in your top line. And since competition in the B2B arena tends to be sophisticated, you have to be at the top of your game.

But if you have strong business experience and are one the scores of people looking to take the next step in franchise ownership, don't overlook B2B! It could bring you enjoyment, monetary rewards, and some weekends off!

The Educated Franchisee is dedicated to franchise education through the sharing of franchise information.

Our objective is –

‘To create educated franchise buyers that have clearly defined objectives and are able to recognize the right, or wrong, franchise when they see it. An educated franchise buyer will move into the franchisee role with their expectations properly set and will have a heightened potential for success within the franchise system creating a win/win for all involved.

To get more franchise information about how to stack the deck in your favor you can -

• Visit our website at www.educatedfranchisee.com   
• Purchase one of our franchise books - The Educated Franchisee or The Franchisee Workbook
• Contact us at info@educatedfranchisee.com.

Evaluating a Franchisor Marketing Program

By Rick Bisio

Franchise Consultant & Creator of The Educated Franchisee

One of the many benefits of joining a franchise is the marketing that is made possible when you’re part of a large organization. As I say in Chapter 6 of my franchise book, The Educated Franchisee, the marketing power of a franchise system has the same advantages as a business with a dozen locations in a market. The franchisor is significantly more efficient than any individual franchisee can be. Professional marketing materials are expensive and valuable, so having materials provided by the franchisor is a key resource that works to your advantage.

The marketing should drive customers to the franchisees without having to hire and manage an outside marketing firm. A consistent marketing message helps build the franchise brand across the marketing area. Because all the franchisees pay into the marketing fund, the franchisor can hire a strong marketing firm and afford larger media buys that an individual franchisee probably could not afford. And because a large franchisor has enough marketing volume, the franchisor can negotiate national pricing agreements and deliver saving to the local franchisees.

So Why is the National Marketing Program often Problematic?

The marketing program is commonly an area of conflict between franchisors and franchisees. Sometimes, the conflict is warranted. Many times, it’s not.

Consider this.

• Marketing programs are funded by mandatory contributions made by franchisees. Some franchisors require a fixed amount; others charge a percentage based on the gross sales of the unit, but either way, it’s required of all franchisees.
• Even though we all see ads, direct mail pieces, etc., most of us really have no idea what goes into creating, executing and monitoring these programs. But we think we do.
• It’s always difficult to spend money on something you have little or no control over and perhaps especially hard for the entrepreneurial individuals who gravitate to franchise ownership.
• It’s easy to second guess, and look at the expense, without considering the absolute necessity of a strong franchise marketing program.

That said, marketing is an art as well as a science. Some programs are effective and some are not, so you do want to do your best to evaluate the program and make sure it will work before you sign any franchise documents!

Here are some questions to ask the franchisor: 

• How much marketing will the franchisor conduct in your market? How are marketing dollars allocated? Ad dollars go a lot further in rural Wisconsin than they do in New York City.
• Is your market a typical market? If the majority of the materials are aimed at a certain demographic, and your market is made up of a different demographic, how will that be handled?
• Are franchisees responsible for any marketing, and if so, what components? Is the price of those components included in the mandatory marketing contribution?
• What percentage of the marketing budget is spent on image advertising vs. call to action advertising?
• What elements of the program are most effective?
• How is the marketing program evaluated, and how often? Are results shared with franchisees?
• Is the marketing program fully transparent? Will the franchisor provide you with an annual accounting of both the income and the expenses of the national advertising program?
• Ask the franchisor if s/he will send you copies of their ads and promotional pieces during your franchise investigation. Most franchisors will send items that are in the public domain.

Here are some questions to ask the franchisees: 

• Do they keep track of how their customers find them? If so, what percentage is from the marketing program (vs. word of mouth, driving by, etc.)?
• Which tactics work best? Electronic marketing? Television ads? Direct mail?
• What things – if any – would the franchisee change about the marketing program?

The bottom line. 

Perhaps the simplest measure is this: If you talk to a number of franchisees, and most are unhappy with the marketing program (for reasons other than cost), you will probably be unhappy as well.

Conversely, if most franchisees feel the program is working (even if they think it costs too much) it is probably an effective franchise marketing program that will be an important factor in your future success!

The Educated Franchisee is dedicated to franchise education through the sharing of franchise information.

Our objective is –

‘To create educated franchise buyers that have clearly defined objectives and are able to recognize the right, or wrong, franchise when they see it. An educated franchise buyer will move into the franchisee role with their expectations properly set and will have a heightened potential for success within the franchise system creating a win/win for all involved.

To get more franchise information about how to stack the deck in your favor you can -

• Visit our website at www.educatedfranchisee.com    
• Purchase one of our franchise books - The Educated Franchisee or The Franchisee Workbook
• Contact us at  info@educatedfranchisee.com.