The Franchising Brand: Built To Last A Lifetime!
In the following article, Stephen Sharry discusses the essential but often poorly
understood concept of brand
One of the greatest assets that any business has is its brand. In large corporations and
listed companies, brands are more and more appearing on balance sheets as a tangible asset.
Some companies even specialise in marketing known brands and the ownership of the brand or
licence forms the major asset of the entity. However, with small to medium business the
brand is an intangible asset that contributes to the daily operation in a number of ways.
Small to medium business (SME] usually start with an unknown brand or market presence and
then commence a process of developing brand value over time and level of operation. Brand
awareness is a function of exposure usually achieved through advertising, and the depth and
volume of business transacted.
The first, advertising, is relatively easy to achieve. Just throw several million dollars at
a clever ad agency, mount a large scale television campaign and its done. Not quite - even
television advertising relies on penetration through repetition overtime. Reinforced by
other support channels such as print media, that''''s just cost another couple of million.
Customer service, distribution of access to your services and the quality of your product
all contribute to the awareness and success of any SME. The level of business transacted and
the number of clients also have an impact on brand awareness. Unless you are selling a
product to a very narrow customer base you need to distribute your product to as many people
as possible. The more customers that use your product, have a memorable experience and
repeat the process, the quicker you will achieve high local brand awareness. This whole
process can take several years and as most SME's are locally based, the process is ongoing
as the client base shift in and out of the locale.
Franchising is different as it offers the entrepreneur the opportunity to enter the market
with an existing and known brand that has already accumulated millions of dollars of
advertising and a high level of awareness. This reduces the time taken to generate local
awareness, providing clear advantage in maximising return on initial investment. As most
franchise brands are national or international, it has additional benefits in reducing the
time required to create awareness in customers shifting into the Locale or trade area.
Depending on the level of brand awareness, most people entering the franchisee's area will
already have knowledge of the brand thereby giving the franchisee the 'foot in the door' in
selling to those customers. The ongoing development of the brand and maintenance of
awareness is then largely in the hands of the franchisee. All local advertising and profile
building activity contributes to brand awareness and links this awareness to the franchisee
site. This is why advertising is so important to the business of the franchisee.
Each individual franchisee has a responsibility to build awareness and to contribute to the
brand by providing quality product with quality customer service. This then has a threefold
effect. Firstly it increases the business and profit of the franchisee, secondly, it builds
brand value specific to the local area and thirdly, it passes brand value on to other
franchisees as clients relocate.
This is why franchising, particularly in real estate, is such a Long-term commitment. Once
brand awareness has quickly been entrenched in an area, the intangible asset value to the
franchisee increases with every exposure and with every single transaction. This value
adding benefit is not limited to the franchisee but shared by the franchisor and all other
franchisees in the network.
Once the brand has achieved entrenchment, it is much easier to transfer this awareness to
another franchisee if ownership changes. The value of this entrenched brand awareness is
often reinforced where an office closes and reopens, even after a year, and customers have
not really noticed the change other than the office is in a different Location. Customers
will comment that 'Raine & Home have moved' after nine months even though there was no
presence for six months. This can largely be attributed to the long (often years) sales
cycle in real estate.
This means every franchisee has to give very careful consideration to changing brands or
closing an office as it is just another way of handing all the hard work already achieved
over years, to another person for no return. Once an opportunity appears in an otherwise
competitive landscape, an eager entrepreneur will pick it up. It is always better to sell an
established business with its current brand intact than to walk away from the asset and have
someone else walk in and capitalise on your years of hard brand building work at no cost.
By Stephen Sharry of Which Franchise? Magazine
If you would like more quality articles about franchising then check out Which Franchise? Magazine
Other news articles from the same month
April 2006
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