Operating a franchise often involves the payment of quite a few fees, royalty fees being the largest and most obvious. However, it is the advertising and marketing fees that tend to garner the most aggravation and distrust among franchisees. These fees, usually ranging between one and seven percent of sales, can be used to fund both regional and national marketing campaigns. The ill feelings generated by advertising and marketing fees tend to be particularly prevalent with small franchise owners, wherein the utilization of such fees are not as apparent as with larger chains with national advertising campaigns. For this reason, advertising and marketing fees often appear to be waste of money and create a point of conflict between franchisors and franchisees.
It is worth noting, however, that, depending on the franchise, the market, the intended audience, and a multitude of other factors, effective marketing may result in something other than television or radio commercials. Indeed, there are a myriad of marketing techniques that do not require enormous investments in traditional media. Targeted search engine marketing, for example, provides cost-effective advertising that is more narrowly focused than thirty-second ad buys on network television.
It should be further noted that franchisee involvement in advertising and marketing decisions varies from franchise to franchise. Generally, however, franchisors insist on absolute control over how advertising and marketing fees are spent, thus creating another bone of contention. Regardless of whether the franchisee has any influence in the allocation of these fees, it is important to know how the fees are being used. Therefore, franchisees should take the time to understand the marketing strategy of the franchisor as well as obtaining an annual accounting of how the advertising and marketing fees have been allocated. Doing so not only ensures that the money is being used for the appropriate purposes, but also assists in alleviating some of the tension that invariably arises from this contentious fee.