How Franchise Brands Should be Spending Their Development Budgets in 2020 According to FranNet Consultant Mark Roger

A graduate of Indiana University-Bloomington, Mark Roger has over 18 years of hands-on business consulting experience, including extensive recruitment and outplacement, human resource management and change management implementation. In his work as a consultant with FranNet in Indiana, Roger has advised closely with business owners on start-up, right-size  and succession plans. 

Additionally, Roger worked alongside the Kelly School of Business at Indiana University to open an entrepreneurship center and runs a program at the Carmel Library called Entrepreneurship Carmel for people who are thinking about business ownership. 

1851: How did you first get into franchising?

Roger: I’ve been working with individuals to establish small businesses since 1993. Five years ago I started teaching with FranNet, the grandfather of all business franchise consultants. FranNet works closely with the Small Business Administration, which puts us in a unique position, especially nowadays, as most people finance a franchise with some version of an SBA loan. 

My wife would call me a serial entrepreneur, as I love to start businesses and franchising has always been my forte. Recently, I opened a flagship Hand & Stone Massage and Facial Spa in Indianapolis. With my FranNet hat on, I represent franchise brands such as Massage Heights and Elements Massage, but after all these years I decided to finally sell myself a franchise business. 

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

Roger: It is always safe to assume that about 20% of a company’s gross revenue needs to be set aside for ongoing marketing and social communications. Nowadays, franchise development marketing is more than just putting ads in a newspaper or even designing a website. For example, I have a survey service with my Hand & Stone franchise that allows me to target my ideal audience—surveying is a great tool that can provide very important information about how an audience and clientele is responding to a service, as well as what that service is lacking. Finding out how a brand’s audience is responding to a business is essential to figuring out the next step. 

One of the most important methods is to always worry about the next client. That is one of the biggest challenges new owners face—because they fall in love with the business and want to do the work every day, they forget about the next day’s work. A business owner needs to learn quickly that one person can’t do everything and that they will need to outsource. For example, it is often much more productive to hire an expert to create your business’ webpage or social media presence than to do it on your own.

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

Roger: It is not about franchisors spending less, it is about redirecting where they spend. Nowadays, as millennials become a large fraction of the customer base, most businesses are looking for a societal component to appeal to the generation’s social concerns. A business may end up driving more sales by matching donations to a local charity than it would pumping funds into its marketing budget. Remember, there are customers who may support your franchise based solely on how it contributes to the local community. 

I used to own a high-end consignment store in Indianapolis where there were three nonprofits that customers could donate to after their consignments were sold. This system drove a ton of traffic, as customers would come to our store specifically to support their favorite not-for-profit. If a business invests in community engagement, it may be able to reach a larger number of people for the same marketing budget. 

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

Roger: The smart brands realize the importance of repeat customers and spending more money to create a desirable experience that will draw customers back. For example, I am constantly working on how to improve my clients’ experience at Hand & Stone, whether it be adding mirrors or upgrading the towels. A business must show its clients that it is available and meeting their needs. Consequently, a lot of franchises are moving toward more niche, boutique experiences to tailor their business toward the customer’s desired results. 

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

Roger: One area franchisors often overlook is client education. I’ve always believed that the more a client knows about a service or product’s quality, the easier it is to sell. People are smarter than we think, and they need to be educated on why a product works before becoming interested. Franchisors are often so worried about other things—whether it be membership dollars or store-wide sales—that they put client education on the backburner. Providing a potential client a piece of company literature upfront is a priceless asset.

One of the reasons I chose Hand & Stone is because we have a rule that all reading material in the lobby is about the services we provide. From the moment they come in the door, our goal is to prioritize our client's well-being by educating them on our services. If a customer comes in with specific concerns, they need in-depth education if we ever expect them to invest in our results. 

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

Roger: The trick is to know where a customer resides on a local level—what demographic your brand is serving and where they live. For a lot of franchisors right now, Facebook’s demographic is very popular. If I deal with a lot of men and women between the ages of 35 and 55, I may invest in Facebook advertising or I may send a mailer because that age group is generally homeowners. Does your company’s clientele watch TV, read periodicals, or spend time on social media? Should your franchise advertise on the Waze app or in a print magazine? How and where your company spends marketing dollars is important to communicate your brand’s uniqueness and value proposition in the marketplace.