How to Create a Franchise Marketing Fund

Sara Thomas

How to Create a Franchise Marketing Fund 1

What a 90s kids’ show can teach us about the power of cooperation.

Every business owner knows the importance of a strong, strategic marketing plan. But what if you’re a franchisee or a small business owner with just one or two locations and a limited (or nonexistent) local marketing budget? 

As a child of the 90s, my mind goes to the popular TV show The Mighty Morphin’ Power Rangers. The show revolved around a team of scrappy teens who fought against all manner of baddies using their martial arts skills. When the baddies got too big to battle in hand-to-hand combat, the Rangers would combine their powers and morph into a giant mecha-monster called Megazord. Baddies big and small were laid to waste. No one stood a chance against the Megazord.

Why not take a page from the playbook of a corny 90s kids show and form your very own marketing Megazord? By combining forces with your fellow franchisees, you can create a powerful ad fund that you can use to place local media and drive traffic and sales for the entire co-op.

What is an advertising co-op fund?

An advertising co-op is a collection of businesses with a common goal, banding together to create a joint advertising fund. The fund is then used to achieve the marketing goals of the co-op as a whole. Franchisees under the same brand are a natural fit to form a co-op since they have the same marketing goals. 

The size, goals, bylaws and structure of each co-op varies and is decided on by the members, usually through voting. The method by which you manage the actual money in the ad fund is also up to the co-op. Everyone who contributes to the advertising fund should have a say in how the funds are spent, and all the decisions of the group should be made as close to a consensus as possible.

Why would franchisees form a co-op, anyway?

For some franchisees, it might not make sense to form a co-op. You might already be contributing to a national marketing fund as part of your franchise agreement, and are happy with its results. However, national buys can be broad in scope, and not as surgical as a smart local store marketing (LSM) plan. Why settle for “good enough” when you could be creating tailored, powerful, geo-targeted marketing?

If any of these statements apply to you, forming an advertising co-op could help:

-I want to drive traffic to my store or website, but my brand’s national advertising is more about increasing awareness.

-I’d like to supplement my franchisor’s media plan with something more tailored to my location.

-I want the flexibility to feature custom promotions and messaging in my advertising.

-I think I could get better service and a more customized strategy by working with a local ad agency, or local media partners.

-My region isn’t well-served by my franchisor’s media mix.

Think local

A lot of the typical marketing issues faced by multi-location franchisee groups can be solved through local store marketing. As the restaurant and retail worlds grow more and more fragmented, and the fight for market share gets harder, a powerful local store marketing plan is critical. 

A local ad fund gives your co-op access to geo-targeted media channels that are often out of reach for single operators. Media budgets for channels like broadcast TV, cable, radio, OTT, paid search, and paid social become more manageable when supported by the contributions of multiple locations. With an advertising co-op, you have the power and freedom to decide what your media mix should contain.

Where does the money come from?

There are a few ways that advertising co-ops get funded. Oftentimes, the co-op members agree to contribute a percentage of sales into the fund each month. You can adjust the percentage to fit your concept’s sales volume, the number of co-op members, and any other unique factors. 

Or, a co-op may choose to have their members contribute a flat monthly fee. You have flexibility to create a contribution schedule that works for everyone in the co-op.

Potential complications

Before you take steps to forming your own advertising co-op, it’s good to be aware of some common snags advertising co-ops often face.

First, review your franchisor agreement to make sure that there are no rules against forming a co-op, or placing your own advertising. If you need clarification on what’s allowed and what’s not, the safest path is to check in with someone in your corporate marketing department.

Another thing to consider: who will steward the actual fund? Every successful co-op has a responsible and trustworthy manager tracking the flow of money into the fund, and making sure all vendors are paid on time. This is vital to keeping your co-op in good standing and your co-op ad fund in the black. The person in charge of the fund should provide regular, transparent reporting that all members of the co-op can easily access.

Most importantly, a co-op needs to be able to come together as a group and make decisions that everyone can agree with. That sounds simple enough, but when your business is at stake, tempers can run hot. Be sure to establish well-defined rules and guidelines that everyone agrees on before your co-op fund has a single dollar in it. Everyone who joins the group should read and sign off on the bylaws before joining the group.

Strength in Numbers

You don’t need access to mecha-dinos or magic crystals to upgrade your franchise marketing plan. If you’re willing to put in the time and effort to establish a marketing co-op, you’ll add a powerful level-up to your advertising arsenal. Talk to your fellow franchisees and see what’s possible. No spandex costumes needed.

Need ideas on how to market your franchise? Contact us. Our team can help you grow guest counts and sales with a customized, ROI-focused local marketing plan.