How Franchise Brands Should be Spending Their Development Budgets in 2020, According to Citrin Cooperman’s Michael Iannuzzi

Michael Iannuzzi is co-leader of Citrin Cooperman’s franchising practice. He has had the opportunity to work with and advise various franchisors and multi-unit franchisees of different sizes and industries on a number of diverse matters such as franchise performance representations, franchisee unit matrix, FDD financial and narrative presentation, advertising fund structure, corporate restructuring and asset protection. One of Iannuzzi’s primary responsibilities is managing the domestic audit of one of the largest QSR franchisors in the world. His consulting and advisory services focus on various areas such as corporate structure and formation, domestic and international strategic planning, tax strategies, cash flow/budgeting, and long-term profitability analysis.

1851: What's working for your clients in 2019 that you recommend spending on in 2020?

Iannuzzi: I don’t think anyone can deny the impact that social media has had on advertising and marketing your business over the past number of years. The question is, what form of social media do you use and how often should you use it? LinkedIn has been working for a number of franchisors that I know, who use it to promote their business and to build their brand. I have seen many franchisors close deals and find business partners via LinkedIn. I have also seen franchisors have success with Facebook and Instagram, using them to focus more on the end-user/customer experience. Franchisors should continue to engage the right social media firms to manage their social media accounts or bring someone in to manage the activity, while continuing to pay for the targeted ads on these platforms.

1851: Where can franchisors lighten their budgets or remove spending from?

Iannuzzi: We are in a relationship-driven world with many forms of media begging for our attention. I think franchisors should redirect the massive sponsorships or one-time large costs and evaluate where their audience is and how they should reach them. If they have a budget of $25,000, they should ask themselves if they’d reach more people by spending it on a single event or if they’d be better served out in the market, traveling for road shows and meeting potential franchisees face-to-face and sharing their story. Advertising is a necessity and you should understand where the funds are going and how they are being used.

1851: What's the biggest trend you're seeing when it comes to franchise development budgets and spending? 

Iannuzzi: Over the past few years, I have seen a very big increase in younger brands using consulting networks for lead generation and franchise sales and development. There are websites out there that source consulting groups to drive leads. Usually, these groups like a certain type of concept and you should evaluate if they are the right fit for you. I am also a believer in training people in-house to promote the brand and assist the company in driving leads. There is no reason why someone internal, at any position, can’t assist in driving leads, even if you are ready to bring a full development team in-house. 

1851: What's an area in which franchisors commonly overlook or spend too little?

Iannuzzi: An area that is overlooked is training your employees to use LinkedIn to promote the brand from within. Even if you don’t want to pay for its targeted ad service, there is a tremendous amount of posting and blasts that you could do for free—that is, multiplied by each one of your employees sharing and reposting your message to their contacts, allowing the reach to be massive. I also think old-fashioned end-user customer interaction is overlooked. The more people you speak with and check in on their experience with, the greater your chance of success. As a franchisee, you want to make sure everyone is focused on making the customer experience as successful as possible. At the franchisor level, you want to train your employees to know the brand and the positive impact it has on people’s lives. 

1851: Where do you advise franchisees to spend their marketing budgets on the local level?

Iannuzzi: I think community involvement is huge and franchisees should be all over their local community by sponsoring local events like kids’ sports teams and being involved with the chamber of commerce and other community events. The franchisor and franchisee should consider having charitable days and hold events at their locations, which will increase customer traffic and build good will within the community.