Your Franchise Marketing Budget: 6 Ways to Spend It Right

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A truly strategic franchise marketing budget will let you grow your network in the fastest and most efficient way.

This article will show you how to think about your proposed budget from several different angles:

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Firstly, you'll think strategically about your resources and what you hope to achieve with them. Secondly, you'll work from the top down to create a proposed marketing spend per additional franchise location acquired.

Finally, you'll think from the bottom up as you consider the ways you'll spend your proposed budget on the different activities which make up a successful franchise marketing campaign.

But first, let's take a look at how to develop your franchise's budget for advertising activities:

1) Analyse what you have and what you want

We start by going back to basics. The simplest way to look at your budget is, of course:

  • To look at what you've got
  • To decide on what you want to achieve

As an experienced business owner, you'll know that figuring out how to plan your franchise marketing budget is finding a way to achieve your goals while only utilising your available resources.

Download here an example of marketing budget plan PDF for franchises Download

2) What is your long-term goal?

It's the second part of the above thinking that makes the handiest place to start: what do you want to achieve?

This needs to be a numerical figure for turnover, business value, or some other metric that you prefer as a tool of measure. Then add a timeframe - a long-term one. Say several years.

Now figure out how many franchise locations you'd need to add, and how large their royalty payments would need to be made your goal a reality.

This should be a straightforward amount such as: "20 new franchises paying £30 000 fees each."

Now you've got something to work with.

3) Break it down

Once you've got your basic figure, you can divide it by the number of years you've set as your goal timeframe to see how many franchise locations you need to expand by in a single year. Let's say you've planned to achieve your goal within 5 years...

In our example above, this would mean you only need to expand by four additional franchises per year in order to be on target.

Breaking your goal down into smaller, more manageable objectives like this is good practice in order to institute checkpoints to make sure you're on track to achieve your overall target.

4) What's the cost of acquisition for one franchise?

When developing the marketing budget for your franchise business, the most important figure will always be the amount you need to spend on marketing to acquire one new franchise location.

Franchise costs

If you've been marketing your franchise for a while, you'll have your own data to base this figure on. If not, consult the averages of your industry. Outside of developing your budget, in fact, a comparison of these two figures (industry standard and your own spend) can let you know how cost-effective your online marketing currently is.

Once you know how much you'll need to spend on marketing to acquire a single new franchise, simply multiply that by the number of franchise locations you need to expand by in one year to get a decent figure for your annual franchise marketing budget.

You can then compare this with the figure you generated when breaking down your goal above.

Download here an example of marketing budget plan PDF for franchises Download

5) Double-check your figures with different methods

In addition to the above-outlined methods for building a marketing budget for franchises, there are at least two other fairly simple techniques you can use to produce a well-reasoned figure:

a) Use a percentage of your sales figure

This is a popular technique mainly for its simplicity. The figure for sales you use can be past or projected future sales or sales units. Once you've got that figure, consult the average spend for your industry (this is usually somewhere between 5-7% for established franchises) to see what your advertising budget will be.

There's one major advantage to using this method:

If you end up having reduced sales in a certain period, your advertising budget will automatically shrink in order to compensate.

You can perform a more precise calculation by starting with larger percentages (perhaps double) and multiplying by the ratio of your production costs to your selling price, and then subtracting your facility costs.

b) Use a percentage of your total budget

This is another simple method for working out your advertising budget:

Using a percentage of your overall budget. This is usually given as somewhere between 10-12%, depending on your industry.

Such is the importance of online marketing for franchises that many experts recommend that a start-up in this field use as much as a quarter to a third of their overall budget on initial advertising.

By combining these methods together, and then adjusting for your industry, and your market's existing knowledge of your brand - a well-known franchise will need to spend significantly less on marketing than a newcomer - you can get a figure for your marketing budget which fits in neatly with the classic 1-10% of annual sales adage about fixing the size of your advertising spend.

6) How to plan your franchise marketing budget - your strategic approach

Part of any well-planned franchise advertising budget will, of course, be the streamlined, targeted, and effective nature of your marketing plan itself.

In order to make sure that you're not wasting your money, it's important to carefully strategise how you're going to conduct your campaign. There are many aspects to consider, including:

Download here an example of marketing budget plan PDF for franchises Download

a) Creating buyer personas

This simple-sounding but highly effective technique involves the creation of an "ideal buyer" - the perfect type of person who would be attracted to your type of product or franchise. By thinking about every aspect of this fictionalised person's life, you'll be able to properly target your advertising.

You won't just be looking at their age. You'll be thinking about their buying habits, their browsing habits, their wealth, their technological aptitude, their overall education levels, their motivations, how they feel about your competition - their reading habits, even!

Anything that will give you insight into how your buyer thinks.

This isn't a replacement for traditional and modern market research methods, but it can form an ideal complement to them. For example, if your target audience is young adults, your campaign might have an intensive social media focus. This is because you know your ideal buyer is consistently engaged on these channels.

b) Prioritise channels

Through your buyer persona creation and market research, you'll have built up enough knowledge of your audience to be able to prioritise the channels you select as being the primary tools of your campaign.

Channel priority

Though it can be tempting to think that engaging with your audience across all channels will surely be the best approach, you'll only end up wasting your budget. Certain channels will show themselves to be most effective at allowing you to engage with certain audience demographics (social media for younger people, for example).

Channels which perform less well with your target demographic are simply channels through which you will pour money without being able to get a decent return on your investment.

c) Always prioritise your website

Without an effectively designed website, a modern business is left out in the cold. More to the point, without a website which lets you appear on the first page of Google's search results, your business might as well be based in the arctic.

Knowledge and experience of professional Search Engine Optimisation techniques is the absolute minimum you'll need for website design. You'll need in-depth knowledge of Online Reputation Management and profile building practices in order to keep your profiles strong, and skills in content creation in order to keep your presence exciting and engaging for both Google and other search engines, and your audience.

Download here an example of marketing budget plan PDF for franchises Download

Almost every aspect of your work advertising your franchise - both online and offline - will feature or connect to your website in some way. So for this reason, it's absolutely critical that your website is optimised, on-brand, and open for business.

d) Consider PPC if suitable for your audience

PPC - or Pay Per Click - advertising is highly effective at selling to certain demographics when conducted properly. It should always be considered for inclusion in your franchise's digital marketing budget.

e) Look at your general strategy

Depending on the type of professional you consult when developing a digital marketing budget for franchises, you'll hear different recommendations regarding what your primary focus should be:

  • Lead generation through online marketing
  • Public relations and publicity
  • Social media engagement
  • Video content creation

The list goes on.

The key point though, is that while you do need to prioritise based on what your market research and buyer personas tell you about your audience and the best ways to engage with them, having a team - or outside professionals - who can do all of the above and more, is going to be key to running a truly effective marketing campaign.

Conclusion

This article should have shown that while all good franchise marketing budget plans contain certain elements, there's no one fixed way of doing things.

Just look at the big names to see for yourself:

  • Apple spends 7% of its revenue on sales, marketing, and general admin
  • Microsoft spends 18% of its revenue on sales and marketing
  • Twitter spends 44% of its revenue on sales and marketing

Depending on your market penetration, the existing strength of your brand, and the industry you're in, your marketing budget could be anywhere from 1% of your sales to 20-30% of your overall budget.

But by properly planning your budget and your campaign, you can make sure you're using what you've got to get what you want to achieve.

Get the Most Out of Your Franchise Marketing Budget

Local Fame is the best way to get the most bang for your advertising buck. Why?

Because here you'll find a team that knows franchising inside and out. Meet with experts in SEO, online marketing, offline marketing, social media, online reputation management, content creation, review handling, website design, and much more.

With years of experience in all industries, Local Fame will get you more customers. Check out a FREE report on the current effectiveness of your online advertising now, without obligation. Or give a professional a call today for a cost-free chat.

Download here an example of marketing budget plan PDF for franchises Download

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