HM F Elec 8

Franchising

Module 2: Beginning your Search: The Power of Brand

Introduction
Brand is the franchise system’s most valuable asset. Consumers decide
what and whether to buy at a particular location based on what they know, or think
that they know, about the brand. Unless they have a relationship with the local
franchisee, they probably don’t give any thought to who owns the business. In
their minds, they’re shopping at a branch of a chain. In the consumer’s mind,
brand equals the company’s reputation — the experience they expect to get.
Franchisors spend a lot of time, energy, and money developing their brands so
that consumers know what to expect before they, even come in the door. A good
brand communicates a message to the customer. When you see an
advertisement for a Wendy’s hamburger, you immediately associate it with your
experience of ordering and eating a Wendy’s hamburger. You may think of a
“Cheddar Lovers Bacon Cheeseburger,” or maybe a baked potato or the
freshness of the product. Maybe you think that the line moves just a bit faster, that
the service is better, or the staff is friendlier. You may remember seeing Dave in
that last commercial or think back to Clara Peller and her sidekicks Mildred Lane
and Elizabeth Shaw in the “Where’s the Beef?” ads. (“Where’s the Beef?”
registered the highest consumer awareness levels in the advertising industry’s
history. It stole the show at the 1984 Clio Awards, winning three of the industry’s
highest honors, and was voted the most popular commercial in America in 1984.)
The experience of visiting a Wendy’s, supported by the message in its advertising,
communicates to the public just what Wendy’s is.
You can visualize and almost taste the experience.

Brand recognition is part of what a franchisee hopes to get when

purchasing a franchise. A good brand is immediately familiar in consumers’ minds.
With a well-known brand, you don’t have to build brand awareness in your market.
The franchisor and the other franchisees have taken care of that for you. This is
one of the major advantages of investing in a larger, well-established franchise
system. Smaller systems with limited brand recognition can’t deliver that until you
help them grow. Ongoing advertising and marketing programs help ensure that
the brand remains strong and growing. And if the franchise system is successful in
making the brand mean something positive to the consumer, that success means
possible increased sales for you.,Brands are not born fully grown. Almost every
start-up franchisor begins with some local brand recognition (it may be only a
neighborhood) and has to grow that brand to achieve regional or national status. A
company can provide the best dry cleaning in town, have a system for one hour
service, be loved by its customers, and yet only be known locally. For start-up
franchisors with limited brand recognition outside of their home market, this is an
issue. Franchisees in markets where the franchisor’s brand has little or no
consumer recognition use advertising and promotions provided by the franchisor
to build brand recognition in their market. Those franchisees that must build brand
recognition need to spend more on advertising and promotion and may require a
different message than franchisees who enter a market in which the franchisor’s
brand is well known.

Learning Outcomes
At the end of this chapter the students should be able to:
1. Understand the concept of branding and its impact in business.
2. Identify the different criteria in selecting and investigating a franchise
3. Practice skills in reasoning and creative thinking in choosing and
investigating options when beginning a business

Learning Content

I. WHAT ARE YOUR OPTIONS WHEN YOU BEGIN YOUR

BUSINESS?
Once you make the decision to start your own business, you need to decide
whether you want to be an independent business owner or a franchisee.

Options for beginning a business:

✔ start a new business
✔ buy a new franchise
✔ buy an existing franchise
 II. HOW DO YOU INVESTIGATE YOUR OPTIONS?
Regardless of whether you choose to become an independent business owner or
become a franchisee, research is the single most important activity in making your
decision. Without adequate information, you may end up making the most costly
decision of your life.

Steps for beginning a business:

✔ What business?
✔ Is there a market?
✔ Can you afford it?
✔ Can you make enough money to make it worthwhile?

What Business Should You Start?

“Find something you love to do and you’ll never have to work a day in your
life.”
—Harvey Mackay
Sometimes people start a business because they think they’ll make a lot of
money, only to find out that they do not enjoy the business. The adage, “know
thyself” certainly applies here. You should start a business in an industry that you
will enjoy for the next 10 to 15 years.

Ask yourself:
✔ What do you like to do? (interest and hobbies)
✔ What do you know how to do? (experience)
✔ What do you do well? (special skills and talents)
✔ Which industry(s) involve your interests and use your skills and talents?
(For ideas, refer to IFA’s Franchise Opportunities Guide’s listing of industries
in the table of contents or visit www.franchise.org)
✔ What products or services could you sell in this industry(s)?
✔ Would you rather sell a product or service?
✔ What products or services would you like to sell the most?

Determine If There Is A Market

All successful businesses must:
✔ satisfy a need or
✔ solve a problem or
✔ respond to a trend

Before starting any business, determine if there is a market for your product or
service.
Conducting market research:
✔ How many potential customers are in your area?
✔ Will your product or service sell?
• What need does it satisfy?
• What problem does it solve?
• What trend or fad does it address?
✔ What should the appropriate pricing be?
✔ Who are your competitors?
✔ How many competitors do you have?
✔ What do they offer?
✔ How will your product or service be unique?
✔ What marketing niche can you capture?

Determine If You Can Afford To Start A Business MAKE PROFIT POTENTIAL

YOUR MOST IMPORTANT CONSIDERATION!
In order to start a business, you have to have money!
In order to stay in business, you have to make money!
The single most common reason new businesses fail is that they did not have
enough money to begin
with! Don’t forget the old business adage: “It takes twice as long and costs twice
as much!”
Costs to consider:
✔ Estimate your start-up costs:
• location design and construction
• professional fees
• equipment and fixtures
• furniture
• opening inventory and supplies
• insurance
• Pre-opening labor
• Opening advertising and promotion
✔ Estimate how much working capital you will need (the money you will need until
the business
becomes profitable—include your living expenses, if necessary)
• salaries
• insurance
• utilities
• advertising
• rent
• interest on a loan, if applicable
✔ Brainstorm where you might be able come up with money:
• yourself
• family
• friends
• savings and investments
• a partner
• selling personal assets
• loans

Determine If You Can Make Enough Money To Make The Venture Worthwhile
✔ Estimate the profit potential for the business:
• income
• expenses
• profit (income – expenses)
✔ Think about the amount of time and energy it will take to make the business
successful.
✔ Make a decision as to whether you think you can make enough money to make
the entire venture worth your time and energy!

III. HOW DO YOU INVESTIGATE A FRANCHISE?

Like starting any business, buying a franchise involves a risk. Studies show that
successful franchisees:
✔ conduct their own marketing research
✔ use their own financial and legal advisors
✔ develop thorough marketing and business plans
✔ have prior work experience
Prospective franchisees must devote a vast amount of time researching the
franchises available and evaluating
the strength of the franchisors.

Find out what franchises are available:

✔ Read directories:
• The Franchise Opportunities Guide
• The Executives’ Guide to Franchise Opportunities
• Bond’s Franchise Guide
• The Franchise Annual
• Franchise Handbook
• How Much Can I Make?
✔ Read articles and ads in business publications Attend trade shows and
expositions:
• IFE (International Franchise Expo) is sponsored by the International Franchise
Association (IFA:
202-628-8000 or www.franchise.org) and is the world’s largest gathering of
franchise companies.
• The U.S. Small Business Administration and Small Business Development
Centers (SBA:
www.sbaonline.sba.gov/sbdc/)
✔ Conduct research on the internet:
• Federal Trade Commission — www.ftc.gov/bcp/menu-fran.htm
• Small Business Administration — www.sba.gov
• International Franchise Association – www.franchise.org
• Entrepreneur Magazine — www.entrepreneurmag.com
• Franchise Update Magazine — www.franchise-update.com
• IFA Franchise Opportunities Guide – www.franchise.org
• Franchise Handbook — www.franchise1.com
• Source Book Publications — www.worldfranchising.com
Evaluate the strength of the franchisor:
✔ Investigate the franchisor’s history:
• How long has the franchisor been in business?
• How many current franchisees are there?
• What is the failure rate of the franchisees?
• Are there any pending or past lawsuits and what have they been for?
• Does the franchisor have a reputation for quality products or services?
• What is the franchisor’s financial health (get its Dun & Bradstreet rating)
• credit rating
• profitability
• reputation
• What are the earnings claims and profit projections?
• On what are they based?
• Are the projections based on franchisor or franchisee-run units?
• How long have the units used for projections been in business?
• What is the background of the principals/management?
• What is their business experience?
• Have they personally had any bankruptcies?
• Have they personally had any recent litigation

IV.WHAT ARE THE CRITERIA FOR SELECTING A FRANCHISE?

Before buying any business, you must carefully consider many factors that are
critical to your success:
✔ costs
✔ training and support
✔ your abilities
✔ franchisor’s experience
✔ demand and competition
✔ expansion plans
Costs:
✔ How much money will this franchise cost before it becomes profitable?
✔ Can I afford to buy this franchise?
✔ Can I make enough money to make the investment worth my time and energy?
Your Abilities:
✔ Do you have the technical skills or experience to manage the franchise?
✔ Do you have the business skills to manage the franchise?
Demand:
✔ Is there enough demand in your area for the franchisor’s products or services?
✔ Is the demand year-long or seasonal?
✔ Will the demand grow in the future?
✔ Does the product or service generate repeat business?
Competition:
✔ How much competition do you have, including other franchisees?
✔ Are the competing companies/franchises well established?
✔ Do they offer the same products and services at the same or lower prices?
✔ Is there a specialty or niche you can capture?
Brand Name:
✔ How well known is the franchise name?
✔ Does it have a reputation for quality?
✔ Have any consumers filed complaints with the local Better Business Bureau?
Training and Support:
✔ What kind and how much training and support does the franchisor provide?
✔ Do existing franchisees find this level of training and support adequate?
Franchisor’s Experience:
✔ Has the franchisor been in business long enough to have established the type
of business strength
you are seeking?
Expansion Plans:
✔ Is the franchisor planning to grow at a rate that is sustainable?

V. BRANDING

Branding is one of the most important aspects of any business, large or small,
retail or B2B. An effective brand strategy gives you a major edge in increasingly
competitive markets. But what exactly does "branding" mean? How does it affect a
small business like yours?

Simply put it this way, your brand is your promise to your customer. It tells them
what they can expect from your products and services, and it differentiates your
offering from your competitors'. Your brand is derived from who you are, who you
want to be and who people perceive you to be.

Are you the innovative maverick in your industry? Or the experienced, reliable
one? Is your product the high-cost, high-quality option, or the low-cost, high-value
option? You can't be both, and you can't be all things to all people. Who you are
should be based to some extent on who your target customers want and need you
to be.

The foundation of your brand is your logo. Your website, packaging and
promotional materials--all of which should integrate your logo--communicate your
brand.

Brand Strategy & Equity

Your brand strategy is how, what, where, when and to whom you plan on
communicating and delivering on your brand messages. Where you advertise is
part of your brand strategy. Your distribution channels are also part of your brand
strategy. And what you communicate visually and verbally are part of your brand
strategy, too.

Consistent, strategic branding leads to a strong brand equity, which means the
added value brought to your company's products or services that allows you to
charge more for your brand than what identical, unbranded products command.
The most obvious example of this is Coke vs. a generic soda. Because Coca-Cola
has built a powerful brand equity, it can charge more for its product--and
customers will pay that higher price.

The added value intrinsic to brand equity frequently comes in the form of
perceived quality or emotional attachment. For example, Nike associates its
products with star athletes, hoping customers will transfer their emotional
attachment from the athlete to the product. For Nike, it's not just the shoe's
features that sell the shoe.

Defining Your Brand

Defining your brand is like a journey of business self-discovery. It can be difficult,

time-consuming and uncomfortable. It requires, at the very least, that you answer
the questions below:

 What is your company's mission?

 What are the benefits and features of your products or services?
 What do your customers and prospects already think of your company?
 What qualities do you want them to associate with your company?

Do your research. Learn the needs, habits and desires of your current and
prospective customers. And don't rely on what you think they think. Know what
they think.

Because defining your brand and developing a brand strategy can be complex,
consider leveraging the expertise of a nonprofit small-business advisory small
development business center

Once you've defined your brand, how do you get the word out? Here are a few
simple, time-tested tips:

 Get a great logo. Place it everywhere.

 Write down your brand messaging. What are the key messages you
want to communicate about your brand? Every employee should be aware
of your brand attributes.
 Integrate your brand. Branding extends to every aspect of your business--
how you answer your phones, what you or your salespeople wear on sales
calls, your e-mail signature, everything.
 Create a "voice" for your company that reflects your brand. This voice
should be applied to all written communication and incorporated in the
visual imagery of all materials, online and off. Is your brand friendly? Be
conversational. Is it ritzy? Be more formal. You get the gist.
  Develop a tagline. Write a memorable, meaningful and concise statement
that captures the essence of your brand.
 Design templates and create brand standards for your marketing
materials. Use the same color scheme, logo placement, look and feel
throughout. You don't need to be fancy, just consistent.
 Be true to your brand. Customers won't return to you--or refer you to
someone else--if you don't deliver on your brand promise.
 Be consistent.  it involves all of the above and is the most important tip. If
you can't do this, your attempts at establishing a brand will fail.

Example:

by Unknown Author is licensed under

Jollibee and several variants of the mark are registered trademarks in the
Philippines and many other Asian countries, and also in the United Kingdom of
Great Britain and Northern Ireland, the United States of America and Europe.
Today, Jollibee Foods Corporation uses six different brands (including “Jollibee”
for its core fast food business; “Greenwich” for its pizza and pasta chain, and
“Chowking” for its oriental food outlets). It owns many trademarks including “Bee
Happy”, “Yumburger”, “Chickenjoy” and “Amazing Aloha” and has registered all of
its logos, some of them in several countries. Jollibee Foods Corporation relies on
a franchising model for the operation of about half of its outlets in the Philippines.
In order to protect the company’s high quality and service standards, potential
franchisees must conform to a specific profile (self-driven entrepreneurs with good
management skills, good community standing and excellent interpersonal skills).
Successful franchising applicants undergo a three-month, full-time Operations
Training Program (BOTP) at a designated training restaurant; this program is
supplemented with other programs, which are designed to enrich the franchisee's
management and analytical skills, and are necessary in order for the franchisee to
run a successful restaurant operation. Support for franchisees does not end there
however: Jollibee also provides advice and assistance with restaurant layout and
design, equipment specifications, furniture and fixtures, and construction
management. Jollibee field personnel provide consulting services once the outlets
are operational. Additional support to franchisees is provided in the form of
creative advertising and marketing programs, product development, and
manufacturing and logistics facilities. The Jollibee Word, Logo and Mascot are
registered trademarks of Jollibee Foods Corporation.
Definition of Terms:

Brand.  is an identifying symbol, mark, logo, name, word, and/or sentence
that companies use to distinguish their product from others. A combination
of one or more of those elements can be utilized to create a brand identity
Brand strategy. is how, what, where, when and to whom you plan on
communicating and delivering on your brand messages
Equity. It is the difference between what your business is worth (your assets)
minus what you owe on it (your debts and liabilities.
Logo. Is a graphic mark, emblem, or symbol used to aid and promote public
identification and recognition. It may be of an abstract or figurative design or
include the text of a name it represents as in a wordmark.
Trademark. Legal protection given to a brand name

5. Teaching and Learning Activities

1. Visit website of a well-known franchise business in the country and
identify the strengths of the brand.
2. How can trademark, trade name, trade dress and logo can be helpful in
attracting potential market?

6. Recommended learning materials and resources for supplementary

reading.
www.licensing.org.
https://www.investopedia.com/terms/b/brand.asp
https://www.entrepreneur.com/article/77408
https://www.realcommercial.com.au/news/equity-guide-small-business-
owners
https://en.wikipedia.org/wiki/Logo

7. Flexible Teaching Learning Modality (FTLM) adopted

 Online (synchronous): Sedi, FB Messenger, Google Meet. Google
Classroom, Edmodo
 Remote (asynchronous): Module

8. Assessment Task
 Quiz/Assignment/Recitation
Assignment:
If you are to put up a business, would you choose a self-concept business
or a franchise business, why or why not?

9. References (at least 3 references preferably copyrighted within the last 5

years, alphabetically arranged)
Beshel, B. (2001) An Introduction to Franchising, New Yok Avenue Law Suite 900,
Washington DC: IFA Educational Foundation
Boroian, D.(2008) Franchising your Business, 20200 Governor’s Drive, Olympia
Fields IL, USA: Francorp , Inc.
Manasco, J. et al.(1993) How to Buy and Manage a Franchise, Rockfeller Center
1230 Avenue of the Americas, New York, New York: Francorp, Inc.
Murray, I. (2006) The Franchising Handbook: Cambrian Printers Ltd, Aberystwyth,
Wales

ISUCab-IBM-InM-065
Revision:0
Effectivity: January 4, 2016