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7 Tips for Managing a Franchise Marketing Fund in NZ 

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Franchising can be an excellent business model for those who want to own a business without starting from scratch. A common component of a successful franchise is a well-managed marketing fund. This article will take you through six tips for managing a franchise marketing fund in New Zealand as well as guidance for good governance. 

1. Understand the Franchise Marketing Fund 

The first tip for managing a marketing fund is to understand exactly what it is and how it operates. A franchise marketing fund is a pool of money the franchisor collects from franchisees to pay for marketing and advertising expenses. This obligation imposed on franchisees should be outlined in the franchise agreement. The franchisor usually manages the fund and uses it to promote the franchise brand, products and services. Franchisees may contribute a percentage of their sales to the fund or a nominal amount each week or month. These funds are then used to create marketing campaigns and pay for other forms of advertising that benefit the entire franchise system.

2. Create a Budget

You should create a budget to manage your franchise marketing fund. A budget will help you determine how much money you need to achieve your marketing goals. The budget should include all anticipated marketing expenses with details of what each marketing effort involves.

It is essential that you consider the size of the franchise system when you develop a budget. Likewise, you must consider the marketing needs of each location when you develop such a budget. For example, a franchise system with 50 locations may require a larger marketing budget than a franchise system with only five locations.

It is also important to create a budget that is realistic and achievable. It is better to create a conservative budget and exceed expectations than to create an unrealistic budget and fail to meet your goals.

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3. Implement a Marketing Plan

Once you have created a budget, the next step is to implement a marketing plan. A marketing plan outlines the marketing goals and strategies, as well as timelines for achieving these objectives. The marketing plan should align with the franchise’s overall business goals and target audience.

A marketing plan should include both online and offline marketing strategies. Online marketing strategies may include:

  • social media;
  • email marketing; and
  • search engine optimisation.

Offline marketing may include print advertising, billboards, brochures, flyers, vouchers, signage or displays for franchisees. Some networks utilise radio advertising and other forms of sponsorship to promote brand awareness.

It is important to track and measure the effectiveness of your marketing campaigns regularly. You can use analytics tools to track which campaigns are most effective. Such information can then be used to adjust your marketing strategies.

4. Engage Franchisees

Franchisees are an essential part of the franchise marketing fund. This is because they are often the ones who contribute to the fund and benefit from its use. Therefore, it can be a good idea to engage franchisees in the marketing process and keep them informed about the marketing initiatives.

Communication is key when it comes to engaging franchisees. You should regularly communicate with franchisees about marketing plans, budgets and results. It is advisable that you solicit franchisee feedback to gain insights into their marketing needs and preferences.

You may also choose to involve your franchisees in the marketing planning process. This might include hosting marketing meetings where franchisees can provide input and feedback on marketing strategies and tactics. This will help ensure that the marketing initiatives are aligned with the needs and preferences of franchisees.

5. Provide Training and Support

Training and support are critical for the success of a franchise marketing fund. Franchisees may have different levels of marketing experience and expertise. Therefore, you should provide training and support to ensure franchisees have the skills and knowledge to implement the marketing initiatives successfully.

Training and support can take many forms, such as webinars, online resources and in-person training sessions. As the franchisor, you should also provide ongoing support to franchisees. Your franchisees will likely need help implementing marketing initiatives. Further, your franchisees will likely look to you for assistance so they can overcome any challenges they may face.

The cost of these training sessions may be covered by the marketing fund, and as such, they should be open for all franchisees to participate.

6. Utilise Technology

Technology can be a valuable tool for managing a franchise marketing fund. There are many software solutions available that can help franchisors:

  • manage the marketing fund; 
  • track expenses; and 
  • evaluate success.

For example, a marketing automation platform can help franchisors create and manage marketing campaigns across the franchise system. Such a platform can also provide analytics and reporting to track the effectiveness of the campaigns.

7. Governance and Best Practice

There is no specific franchising industry law in New Zealand that determines how a marketing fund should be managed. However, advertising is still regulated by other laws

You should ensure that all marketing conducted on behalf of the network:

  • is accurate, truthful and does not misrepresent the brand or products/services;
  • includes any industry-specific disclosures relevant to your network;
  • does not improperly or unfairly bring any competitors into disrepute; and
  • does not use a third-party’s intellectual property without their consent.

The marketing fund should also be managed with proper bookkeeping of its income and expenses. As such, you should keep track of the marketing efforts and third-party costs. It is possible that you may decide to have the bookkeeping costs covered by the marketing fund. If this is the case, any reports or statements should be shared with your franchises. This practice helps promote transparency and accountability. 

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Key Takeaways

Managing a franchise marketing fund in New Zealand is a challenging but often important aspect of a successful franchise system. A well-managed marketing fund can help attract new customers, increase sales and strengthen your franchise brand. This will lead to long-term success for the franchise system. Some key tips for managing a marketing fund include:

  • understanding what a marketing fund is;
  • creating a budget;
  • implementing a marketing plan;
  • engaging franchisees;
  • providing training and support; and
  • utilising technology.

Any marketing done for your franchise brand, must comply with advertising laws and regulations. Further, your marketing materials should be properly prepared and accurate so you can avoid claims from third parties. Proper record-keeping of the marketing fund will help to ensure you can smoothly manage the fund. Moreover, by keeping accurate records of the marketing fund, you can more easily consult with your franchisees. You are also more easily able to then report to your franchisees on the fund’s progress.

If you need assistance setting up and managing a franchise marketing fund in line with corporate governance best practices, contact our experienced franchise lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.   

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Emily Young

Emily Young

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