By Lori Karpman
Rebranding or refreshing of a brand’s appearance, while exciting for the franchisor is unsettling for franchisees. All they hear is that an additional investment of funds is going to be required.
The ideal time to roll out a new “look” is during a period of mass (franchise agreement) renewals. At the time of renewal franchisees are obligated to invest additional capital to refresh their stores to the current brand image. By this time they have recouped their original investment and are able to make another. Since periods of massive renewal are rare most franchisors find themselves with staggered renewals over the course of a couple of years. In order to have some consistency amongst the stores non renewing franchisees are generally required making smaller investments and complete smaller changes during a specified time period. This right is provided for in the franchise agreement. Note that special consideration must be given to franchisees within the first 5 years of their term as depending, they may not have recouped their initial investment yet. It is wise to provide a clause in the franchise agreement stating that the franchisee must save a predetermined sum each year in a “renovation fund” so funds will be available at renewal for rebranding.
Franchisors have an obligation towards the franchisees to keep up to date, not only in the products and services they sell but also in the public image they project. The décor must be timely and in line with current design standards, colors and materials. As a franchisor it is not just essential to continually reinvent the brand, it is negligent not to. When rebranding both parties want to roll out the new image as soon as possible; the franchisor wants a consistent appearance across its market and the franchisee wants the increase in revenues that a fresh new look promises. The financial participation of the franchisor will also determine how quickly the roll out gets done. Often the franchisors of bricks and mortar franchises cover the cost of new exterior signage since signage is the most visible component of a corporate image. This is an extremely win-win arrangement as signage is high cost and allows the franchisee to use their funds for the interior. In non traditional/ non brick or mortar franchises, franchisors will typically cover costs for new marketing materials, promotional items, stationary, etc.
A Franchisee Advisory Council is the best way to ensure a more efficient and less confrontational roll out across the system. The Council, created by the franchisees who vote for other franchisees to represent them, will evaluate the rebranding strategy and communicate with the franchisees at large. Council members should be representative franchisees of the franchisees by regional and years in the system. Each representative is responsible for the two-way communication between the Council and its constituent franchisees, relaying their questions, comments or concerns. The number 1 reason franchisor initiatives of all kinds fail is because the franchisee “was the last to know”. The majority of the time franchisees only learn of new initiatives once the franchisor has finalized the details. Incorporating the franchisees into the decision making process results in franchisees who “buy-in” to new initiatives because they have had the chance to participate in the decision making process. Franchisors with Advisory Councils will admit that the information they receive from franchisees is invaluable and has often caused them to change or tweak their strategy based on franchisee comments. Though 100% buy in is fiction, using this method does guarantee the greatest acceptance possible and allows the franchisor to rely on the fact that the Advisory Council agreed to the Plan even though not all franchisees agreed. At the end of the day it is the franchisor that will make the final decision but the franchisees had a chance to be heard and their ideas considered.
Rebranding is essential in any franchised brand at least every 7-10 years. It is how it is planned for that will determine the ease of implementation of the rebranding strategy. Using staggered implementation and recommendations from an Advisory Council are two of the best ways to reduce the stress and anxiety of the process and achieve the highest acceptance amongst franchisees.
Lori Karpman, CEO Lori Karpman & Company