We’ve all heard horror stories about contentious franchisor/franchisee relationships, and the role franchisee owner cooperatives can play in those scenarios. For the franchisor, pitfalls include decentralized control, potential shifts in the business model, and difficulty managing brand and franchise standards. Franchisees face obstacles like cumbersome decision making, increased reaction time to market forces and differing viewpoints on business strategy.

Regrettably, we often overlook the significant advantages co-ops can create for both owners and brands. This is especially true with regards to operations, media purchasing and brand consistency.  When approached correctly, all partners can avoid these risks and create thriving, dynamic partnerships. By leaning into the co-op structure, franchisors can benefit as much as franchisees.

Use Co-ops to Share Lessons-Learned

Franchisors should take the lead in guiding franchisee partners as they structure their co-op agreements. One of the key benefits is creating a system where lessons-learned can easily and quickly be shared among operator owners. With input from the brand, franchisees can improve business efficiency and avoid common mistakes others have made. Peer support is beneficial especially for first-time franchisees. A co-op can also foster collaboration between owners and a sense of mission cohesiveness with the franchisor.

Maximize the Media Spend

Depending on the franchise agreement, operators may be individually responsible for all or part of their media budget. Co-ops provide a relatively simple way to leverage “buying in bulk” to drive ad rates lower. Many times, the brand may provide funds to augment franchisee allocations, further stretching the media spend. Always take into consideration the power of increased awareness for less money when structuring agreements. Again, the franchisor should lend their expertise and help guide the franchisee in building their media plans.

Use Co-ops as a Conduit to Brand Consistency

By default, a cooperative centralizes communications and enables the franchisor to be highly consistent and efficient in communicating brand standards. When structured properly, the co-op can provide an effective vehicle by which to monitor promotions, paid and earned media as well as social and event marketing, ensuring brand consistency throughout.

Collaboration is the Key to Success

It is essential that franchisors take a collaborative approach with their owner partners when a co-op is proposed. By being active and engaged from the start, franchisors not only retain control over the business model and the brand, but they also set a tone for better business decision making. 

We recommend the following steps to ensure success for everyone:

• Understand the role of the co-op. Is it marketing and media buying? Local or national in scope? Will it collectively negotiate with vendors and suppliers? Does it infringe on the business plan or the brand voice?
• Get involved early to ensure financial transparency and oversight. Understand the impact of the co-op on the entire business. Being party to the co-op agreement ensures the interests of the franchisor are protected and understood by everyone.
• Focus on results. Outline performance goals and hold franchisees accountable. Use the opportunity to support them with local market insights and awareness of national trends. Remember, a high tide lifts all boats.
• Collaborate, collaborate, collaborate! Be sure to make the brand’s expertise essential to these entrepreneurial partners. Listen to their particular insights and offer lessons-learned when appropriate. Work together to solve competitive issues and market challenges. Collaboration builds trust, an often overlooked, extremely valuable asset in the franchise world.

At Curious Jane, we help franchisors with more than just marketing and franchise development. We are a business strategy partner and have been helping franchise brands connect with consumers and partners for over 20 years. Let us know how we can help.