The Co-branding Franchise Trend
Borrowed from the brand management term “Co-branding,” this technique has been used for numerous brands to complement each other.
What is Co-branding?
This term has relevance to franchising when it involves two, three or more brands in the same geographical location that complement one other in a manner that gives each greater revenues, greater operational efficiency, or greater profitability by working together.
Co-branding is most commonly found in the fast food and restaurant businesses, as these types of businesses often face problems operating in certain times or seasons and could benefit from the assistance of other services to justify their overhead or operating costs.
For example, a frozen yogurt franchise may face problems making significant sales during the winter season while their expenses remain the same the year round. However, by siding with a franchise such as a gas station, the franchise finds that it may have certain impulse buying customers even during the winter season.
Ultimately, there could be a number of reasons why co-branding is pursued. A few of those reasons include:
a) The products complement each other: An ice-cream and frozen yogurt stall would complement a deli or sandwich shop. Similarly, a tailor would complement a department store.
b) Costs can be shared: If there is free space available at a store, it can be used by some other product offering company and can be used as a sample room. Normally in large malls and superstores, companies provide their products for display under their own brand name and this way they are saved the expense of creating their own stores, while the superstores have new varieties available for display.
This strategy can be applied to any number of combinations and depends on the creativity and realization of the market needs. Nowadays we experience co-branding all the time, as we have delis present with gas stations, ice cream being offered at fast food outlets, car washes working alongside gas changing stations and countless other permutations and combinations. The major factor here is that there should be relevance between the two types of businesses; if they're totally unrelated in product or customer base the co-branding strategy would be unlikely to yield positive results.
Allied Domeq Retailing USA, a large franchising company, has recently adopted a three-brand opportunity which would best illustrate the example of co- branding strategy.
- They have Dunkin Donuts as their first franchise brand, which attracts the breakfast crowd and some late-night eaters who are attracted by the donuts, bagels and coffee offered.
- They have a second brand, Baskin-Robbins, which has a wide variety of ice-cream and yogurt flavors and other cold desserts which cater to the needs of the lunch hour until closing time for the outlet.
- The third brand, Togo’s Sandwiches, a sandwich and salad concept, attracts heavy business during lunch hours and to a lesser degree at dinnertime.
By combining these three concepts, Allied Domeq Retailing has created an offering that can satisfy customers from morning to night, meaning the franchisee has the ability spread his or her rent / real estate overhead out across a larger base of sales rather than a narrow window of morning, midday or evening.
Follow the System
While these franchisees might think they are helping the brand, in fact it’s just the opposite.
How to Fund Your Franchise Acquisition
Even if you have all of the required start-up capital sitting in your bank account, and even if you have mentally prepared to invest a considerable sum into a franchise, you may be wary of risking your very bottom dollar for the new venture. There are alternatives, including raising debt or equity funding, but both of these options come with a set of benefits and drawbacks that you'll need to weigh carefully before committing to any particular path.
Steps to Select and Protect a Valuable Trademark
The first thing to keep in mind when selecting a trademark is that not all words and names are capable of being protected as trademarks. No one business owner can claim exclusive rights in generic terms and logos, because all business owners need to be able to use these in order to identify their goods or services. Thus, a residential painting franchise likely could not claim exclusive rights in the name “Painting Pros”, because this is simply a generic description of the services that the business offers.