Saturday, February 13, 2010

Franchising & Socializing

I spent last weekend at the International Franchise Association's 50th Annual Convention.  This terrific gathering of the leaders within the franchising world is always an opportunity to have meaningful conversations about the industry and gather feedback on how the mashup of small and large business is progressing. 

As their franchisees go, so go the franchisor and its apparent that while some sectors are beginning to stabalize, others are still very much struggling.   Franchises with less immediately essential products, such as home improvement, are still struggling, looking for a stimulus to break the reduced spending status quo many homeowners have taken.  Others are using a variety of marketing & promotional tactics to maintain manageable sales levels.   This ranges from more aggressive retention efforts to more strategic use of coupons and discounts.

Being in the coupon business, the former, certainly is in our sweet spot and it's well documented that coupon usage, both traditional in direct mail, newspapers, and circulars as well as online & mobile, are growing at paces to levels that haven't been seen in years.   It's also becoming fairly well documented that this is the new norm.

As a mater of fact, we sponsored the opening luncheon and showed this short promotional video that calls out some interesting factoids.   The one that received the most response is that the term "coupons" is searched on Google more than "Britney Spears".

Besides the fact that all the attendees are very willing to share experiences & help one another within the franchising "brotherhood", The IFA Convention is very education focused.  Attending several of the technology tracks & round tables, it was interesting to note that there were NO sessions dedicated to "Search"  SEO and SEM were not present and accounted for.  Instead the focus was on "Social".  Social Networking, Social Media, Social Marketing, Social Social Social.  I would characterize the pulse of the attendees as is with most marketers: "We know social media is important, we're struggling to understand it, we don't know how to measure it, we're watching our competitors and we're trying to figure it out."

What adds a twist to this is that in many cases, the franchisee may be ahead of the franchisor is establishing an online footprint (and thus reputation).   Since it's so easy to create a Facebook fan page, a Twitter account, or any other online listing, there are many franchisees who are attempting to brand themselves outside of the franchisor's social & online media strategy, which may ave not completely established it.

While many franchisors are working on establishing their social media policy for their franchisees, the jeannie is out of the bottle in some cases and in others, the legal agreement between franchisor and franchisee was written before all of this became common place, so there are no established rules outside of use of brand or trademark restrictions.

That said, there are shining examples of franchised brands that "get it" and are effectively using social media (and online marketing in general).  Case in point is the relatively small and regional frozen dessert franchise, Tasti D-Lite.  Besides becoming a cultural icon, gaining free product placement or mentions in popular television shows such as "30 Rock" and a favorite among celebs, they are utilzing online media to support their loyalty card program as well as virally grow sampling opportunities to build new customers.   One of their most innovative tactics is tying their loyalty card into Twitter and location-based service & game, Foursquare.

Based on what saw last week, I believe we'll see incredible growth and investment in social media by the franchise community over the next year.   But will we see anything really innovative like Tasti D-Lite?

The other takeaway I want to share is the impact that support from the federal goverment would have on the economy if only they would open up credit to small businesses (franchise or not).   It's estimated that for every Billion dollars in small business loans, 34,100 sustainable jobs would be created and generate $3.6 billion in economic output.   It would only take $434 billion dollars to create enough jobs to hire all the unemployed people in the United States.

Now how much did we loan Wall Street and the Auto industry?

At the Conference, IFA President, Matt Shay said franchise businesses have been severely impacted by the lack of access to credit, which was down 40 percent in 2009 causing the industry to lose over 400,000 jobs last year.  While slow growth in 2010 is expected, the demand for lending to franchised businesses will not be met.   A $3.4 billion shortfall in lending to franchise businesses in 2010 will result in 134,000 jobs not created and $13.9 billion in economic output lost, according to data released by the International Franchise Association Educational Foundation.

“IFA appreciates the efforts to date by the President and Congress to support many of our recommendations to improve credit access,” Shay said.  “But, now is the time to put that support into action.  For example, immediately raising the SBA 7(a) loan program limit from $2 million to $5 million will help to create between 450,000 and 650,000 new jobs.”

If you're in the franchising business or even thinking about it, you should get involved in the IFA and mark your calendar for their 2011 Convention in Las Vegas next February.


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