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Do I Pay for Franchise Advertising?

December 22, 2020
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Advertising is one of the highest and most important costs when it comes to running a business. Advertising can range from traditional methods such as radio, TV, and billboards to digital marketing, which includes email marketing strategies, social media campaigns, and many other strategies associated with an online presence. Digital marketing is one of the most necessary areas to put your advertising dollars and efforts toward. Regardless of the type of business, investing in advertising means investing in your success. This holds true whether you start a business from scratch or you buy a franchise. The benefit of buying a franchise is that you aren't alone when it comes to paying for advertising.

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Advertising Benefits Associated With Buying a Franchise

Numerous benefits come with buying a franchise. Brand recognition and an established customer base are two examples, among others. That doesn't mean you don't need to advertise. You still want to keep your customer base while at the same time expanding it. If you are starting a new business, those advertising costs can go up significantly, but when you buy a franchise, you share the cost of advertising with the franchisor. Essentially, you get more bang for your buck.

When you buy a franchise, you sign a franchise agreement, an important document that outlines the franchisee and the franchisor's obligations. That includes advertising obligations for both parties. The advertising costs are usually worked into an ongoing fee paid by the franchisee to the franchisor, which goes towards advertising costs. Any additional advertising costs come from the franchisor. These advertising costs go toward national advertising for the franchise as a whole.

Additionally, franchisees can invest in advertising aimed specifically at their location as long as it is within guidelines set forth by the franchisor. All of these details are outlined in the franchise agreement. You can also discuss advertising responsibilities before you sign the franchise agreement.

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How Much Will Advertising Cost Me?

Earlier, we mentioned that the advertising costs are shared between the franchisor and franchisee in the franchise agreement document. The amount of the fee varies among franchisees. It's usually based on the monthly revenue of your franchise business. The Small Business Administration (SBA) article entitled Franchise Fees: Why Do You Pay Them and How Much Are They, you will most likely pay about 2% of your monthly income towards franchise fees. This fee, as mentioned, is only a portion of the advertising budget. It relates to marketing the franchisor does for the brand on your behalf. There is almost always a franchise marketing fee, and it is almost always non-negotiable. Also, you need a budget for the local marketing and digital marketing you do for your franchise. The SBA recommends that you allocate 7-8% of your gross revenue towards marketing efforts if you're doing less than $5 million a year in sales and your net profit margin, after expenses, is in the 10 to 12 percent range. These are suggested figures and might vary depending upon the needs and the abilities of your franchise. Just remember that this advertising is up to you, the franchisee, and in addition to anything you pay to the franchisor

Business Man Smiling Pointing to the Right Where It Shows a Franchise Business Recommendation From the Sba
The take-away is simple. If you are starting and building a business from the ground up, you are solely responsible for the cost of advertising and might be limited by a budget. If you buy a franchise, you've got advertising support in addition to the upfront benefits of owning a franchise we mentioned earlier, such as brand recognition and a built-in customer base. Franchising is more attractive to a lot of new business owners for these reasons. Whichever route you choose, expect to set aside a reasonable marketing budget, particularly as it relates to digital marketing. Companies like Sir Grout often employ digital marketing specialists like WebFindYou to handle their digital marketing efforts. WebFindYou provides an All-in-One Digital Marketing Technology that provides everything you need to maximize brand awareness with less hassle, reduced costs, and increased revenues. Hiring a company like WebFindYou can save you thousands of dollars while giving you the benefit of a solid marketing plan.

In their article The Importance of Digital Marketing to a Franchise, Sir Grout goes into detail about the methods they rely on and why digital marketing is such a big part of what they bring to the table for franchisors.

Business Man Working on Laptop and Graphic Showing Digital Marketing Components

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