Franchising is an appealing business model with plentiful advantages for prospective franchisees looking to get involved. Opening a new business, whether it be a franchise or independent business, can seem daunting. Franchising offers many advantages that simplify this process, making it easier for the business owner to achieve the career they desire. Franchising provides the advantage of a trademark, thorough business plan, initial training program, and national level marketing.
The advantage of working with trademarks
A key advantage of franchising is the benefit of operating a business with an established and publicly recognized trademark. One of the hardest aspects of opening an independent business is the establishment of a regular customer base. Customers are often reluctant to try goods or services that they do not easily recognize. That’s where many small business owners find great benefit in franchising, as they are able to rely on an existing trademark and brand name, encouraging a baseline stream of customers.
Understanding the basics behind trademark law and the steps needed to create a trademark can help new franchisees or small business owners develop and grow their business.
A key advantage of franchising is the benefit of operating with a RECOGNIZED trademark
What is a trademark?
A trademark is a symbol, word, slogan, or object that indicates the goods or services of a specific business or party. Trademarks serve an interesting purpose. In essence, trademarks allow customers to separate goods or services that they enjoy and recognize from those that they do not. These logos or symbols allow consumers to choose brands or services that they trust and respect.
There are different forms of symbols/slogans that can serve as a trademark. Many franchises have trade names. A trade name is a word or symbol that distinguishes a business from others. It is the legal name by which the business is known and recognized in contracts but also common, every-day interaction.
Another aspect is the trade dress, a less commonly known form of trademark. The trade dress is the collective elements that make up the look or feel of a service or business. The trade dress may refer to specific aspects of the business decor but it can also refer to the overall image.
Why do you need a trademark?
The trademark is a key marketing and advertising tool for any business, franchise or not. In the customer’s mind, trademarks create an almost immediate link between an image (the trademark) and the goods or services it provides. The Nike swoosh or checkmark immediately conjures images of sneakers or sports equipment. Similarly, the gold “M” shaped arches almost instantly trigger the savory taste of McDonald’s french fries. Creating these triggers or links in a customer’s mind is an extremely advantageous tool. For this reason, franchisees see a quick customer base after opening their location; people are already familiar with the services or products.
All franchisees receive a license or rights to use the trademark of their new franchise. These rights are outlined in the franchise disclosure document. Most often, the franchisor has the power to administer the trademark license or even owns the trademark themselves. Whenever the franchisee utilizes the trademark in their business transactions or to market their goods/services, it is legally required that they obtain this license in order to avoid any conflict.
How do you claim a trademark?
In the US, trademark rights are gained as the trademark is used. Business owners gain trademark rights by simply using the trademark and these rights grow or build the more frequently the mark is used. There is no required legal paperwork so long as you are the first service or business to use that trademark. These are also called “common law rights.”
Although it is not mandatory that a business legally register their trademark to protect the trademark rights, federal registration on the Principal Register of the US Patent and Trademark Office (PTO) can be advantageous. Federal registration of a trademark guarantees exclusive validity and ownership. Not to mention, registration gives the franchisor ownership of the mark across the country even though it may only be used in a specific state at the time of registration.
Creating a business plan
Both franchisors and franchisees need to create thorough business plans in order to succeed in their business. It’s easy for a franchisee to be overwhelmed with all of the steps and procedures behind the process of opening a new franchise location. Along with all of the support systems and training manuals that the franchisor provides, a clear and step-by-step business plan further simplifies the process. Often, the franchisor will provide some sort of outline and plan that assists the franchisee after opening.
The thorough business plan is an advantage for the franchisee
There are many elements that a franchisee must consider while creating their business plan. The task may seem daunting but there are several primary elements that the franchise business plan must include in order to fully benefit the franchisee.
Company Run Down
This portion of the business plan includes a summary or overview of the company. This part of the business plan is similar to Item 1 of the FDD. It provides an overview of the business, including all of the services and goods it provides. This provides the franchisee with a clear idea of where they’re starting from.
Local Market Analysis
It is helpful that a franchisee analyzes the area or territory where they plan to open their new location. What are the general demographics of the people living in the area? This analysis is extremely helpful for several reasons.
First, an analysis of the local market can help your location specify or tailor its marketing efforts. Certain types of people respond to certain types of marketing or advertising strategies. For instance, if you are opening a gym franchise and decide to temporarily offer free daycare to the new members. Yet, the demographic consists of mostly post-graduates, this marketing tactic may not be the most advantageous for the area.
Furthermore, an analysis of the local area can give the franchisee an idea of other businesses in the area. Some of these may be competitors, while others may be potential partners in marketing campaigns. Continuing with the example above, imagine a fitness franchise opens near a smoothie franchise. The two can coordinate marketing events or campaigns to mutually benefit.
This portion of the business plan works closely with the local market analysis; the two elements depend on one another. A thorough marketing plan depends on a developed local market analysis. Once that analysis is complete, the marketing plan can be tailored to attract the demographics of the area. It is crucial to consider the types of promotions or advertisements that the demographic would find appealing.
The franchisee’s selected management team plays a large role in the success of their franchise location. A crucial part of the business plan includes building a carefully picked team to help manage and run your location. While many franchisees choose to work hands-on at their location for a period of time after opening their franchise location, eventually the day-to-day operations will be handed over to this team.
Not surprisingly, this is where franchisees experience the most stress. Financing a franchise can be difficult if a step-by-step plan is not created. Much of the FDD provides the franchisee with a realistic idea of the different expenses associated with opening a new franchise location.
Getting help from the initial training program
The initial training program is a key benefit that the franchisee is given once they decide to open a franchise location. Franchisors provide extremely thorough training programs in order to introduce franchisees to all of the different aspects behind franchising. In fact, many franchisors even have their own “schools” of sorts. For instance, Kona Ice sends new franchisees to “Kona Kollege,” which is a multi-day training program. More often than not, these training programs take several days or weeks to fully immerse the franchisee in their new business.
To learn more about the initial training program and gain a better understanding of the process, check out this quick read.
Getting your business out there on a national, sometimes even global scale is crucial to its success. Combining national marketing and the use of a trademark can help in building a stronger brand and allow recognition from other parts of the country or the world. Identity is the driving force behind every franchise, which is why a franchise marketing plan must be put in place.
There a variety of mediums franchisees can utilize to promote their business. The traditional marketing methods include television advertising or radio commercials. More modern ways to promote a business include Internet advertising through social media platforms. Facebook, Twitter, Instagram, and LinkedIn are great platforms to use when you want to spread the word about your business quickly and efficiently. Businesses can also pay Google to run ad campaigns and display video content across millions of online pages. To learn more information on how marketing can benefit you as a franchisee, check out this write-up.
Trademarks, marketing, and training are all necessary to new franchisees looking to embark on any franchise opportunity. Franchises want you to thrive and are there to help you when you need it, but knowing what to expect before diving into a business and how you can prepare will work to your advantage.