Leveraging Brand Relationships
Business organisations with strong brands more often than not have a sustainable point of differentiation and greater financial leverage than those without. Therefore, the effective management and development of the brand has become one of the major determinants of profitability, as brand names can transcend national boundaries extending brand reputation earned in one market to other markets. Within franchising, the benefits accruing from working with reputable brands drive franchisee’s intentions to stay and contribute to brand building activities. Effective management of brand equity also enhances customers’ willingness to pay a premium price, whilst attracting new and retaining loyal customers. For instance, this is evident in the demand for franchise branded products/services such as McDonald’s, Hungry Jacks, Boost Juice, Aussie Home Loans etc.
Brand management within franchise business systems is a multifarious issue that poses many challenges. Thus, maintaining a consistent and unified brand image across the franchise network can be a daunting task, as neither the franchisor nor the franchisee has complete control over the brand management process. Whilst contracts can be used to try and uphold brand consistency through standardised marketing activities and quality controls, local marketing activities are usually executed by franchisees. However, some franchisees at times have little incentive to safeguard the franchise brand equity if there are no negative repercussions on their short-term profits. Hence, the million dollar question, “How to effectively manage and promote franchise brand equity?” remains unanswered. As a result, there is a need to understand factors that can enhance franchisees’ identification with the brand or to effectively manage the relationship between the franchisee and the franchise brand – a process referred to as franchise brand relationship management (BRM).
Using both interviews and survey data from franchises in Australia, our study points to the need to adopt an integrated approach in establishing, maintaining and enhancing relationships between the franchisee and the franchise brand. Respondents indicated that brand relationships should be managed at both the recruitment and implementation stages. During recruitment a more proactive approach is needed to ensure the recruitment of franchisees whose cultural values fit with the values and goals of the franchise brand. During the implementation stage, franchisors need to promote brand alignment in franchisees through the management of six components of BRM.
COMPONENTS OF BRAND RELATIONSHIP MANAGEMENT IN FRANCHISING
Information sharing – plays a crucial role in determining the success of franchise relationships through open, honest and frequent information exchange. Franchisors need to communicate important market information that affects franchisees such as up-to-date technology, suppliers’ pricing strategies, product information etc. Franchisees on the other part need to constantly update franchisors on their performance and local marketing activities.
Brand architecture – refers to the role of the brand and the nature of relationships between brands. Accordingly, franchisors need to design and implement a brand portfolio strategy that maximises sales for franchisees as well as franchise brand equity.
Franchisor support – the success of franchisees depends on the support provided by the franchisor. Thus, well-developed initial and on-going support enhances franchisees’ willingness to maintain consistent operational standards, reduces opportunistic and free-riding behaviour.
Exercise of power – in franchise channels, power is the ability of the franchisor to influence the decisions made by the franchisee and can involve use of coercive or non-coercive. Respondents suggested that use of non-coercive power tends to reduce conflict and enhance franchisees’ satisfaction as well as brand citizenship behaviour.
Conflict resolution – the ability of parties to resolve conflicts quickly reinforces cooperative behaviour that can result in reciprocation, a crucial ingredient in franchise markets. Bonding – high levels of bonding increase commitment which is crucial in relationship building. Bonding can be structural i.e., contractual agreements or social bonding which is an outcome of social interaction between franchisees and the franchisor. Interestingly, social bonding was found to drive brand citizenship behaviour more compared with contractual bonds.
The major aim of BRM is to enhance franchisees’ emotional attachment to the brand to promote positive brand evaluations and attitudes and reinforce extra-role or brand citizenship behaviour (BCB). BCB is the extra-role behaviour by franchisees (not enforced in the contract) aimed at enhancing brand identity. BCB is mainly driven by brand commitment – a psychological attachment to the brand, which influences one’s willingness to exert extra effort towards reaching the brand goals. However, one of the major challenges in franchising is how to configure franchise relationships so that franchisors can stimulate impulsive cooperation, creative actions and voluntary behaviour in franchisees. Our results also suggest that a more preventive approach in managing BCB is critical to the success of franchise businesses. Thus, franchisors should be more proactive in recruiting franchisees that have the right attitude towards the brand and a stronger cultural-fit with the values of the brand. As reiterated by one respondent:
“If they (franchisees) don’t share the passion and vision of the brand, doesn’t understand and support the strategy, the relationship is unworkable. Make sure you select the right people into the business in the first place, probably this is the most important issue and ensure that people are coming into the business for the right reasons not just to make money.”
Another factor that was identified as being crucial in promoting franchisees’ positive attitude towards the franchise brand was brand communication. Experts also felt franchisors should ‘lead by example’, as franchisees become constructive when the franchisor is supportive. Overall, five key issues that enhances brand citizenship behaviour were identified as (i) open and transparent franchisorfranchisee relationship, (ii) ensuring a two-way communication and that the franchisees’ voices were heard, (iii) well-documented operational procedures to ensure compliance, (iv) encouraging involvement of franchisees in decision-making, and (v) providing adequate training and support to enhance franchisee capabilities. Franchisees’ behaviour towards the brand has important implications for brand equity, since the extra efforts exerted by the franchisees are crucial in enhancing brand-related goals, thereby increasing brand equity. According to our study franchisees’ BCB can be expressed as (i) helping behaviour, (ii) brand enthusiasm, and (iii) brand endorsement.
DIMENSIONS OF FRANCHISEE BRAND CITIZENSHIP BEHAVIOUR
Helping behaviour – is the positive attitude, friendliness, helpfulness and empathy towards internal and external customers, taking responsibility for tasks outside of those expressed in the contract if necessary, such as, following up on customer complaints and taking positive action.
Brand enthusiasm – involves undertaking extra initiative while engaging in brand-related behaviour, for example local area marketing (LAM) through charity and sponsorships. Such behaviour can involve franchisees attending brand development training programs and annual conferences.
Brand endorsement – involves recommending the brand to others, such as friends and family. Thus, in franchise channels, franchisees should accept the brand values and ‘live the brand’ both within the firm and when interacting with external consumers.
The study indicated that effective BRM can foster positive BCB that in turn is likely to enhance brand equity attributable to franchisees – namely franchisee-based brand equity (FBBE). FBBE refers to a set of assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a franchisee. Three dimensions of FBBE were identified namely; franchiseeperceived relationship value, franchisee perceived brand image and franchisee-perceived brand loyalty. In terms of relationship value, results suggested that satisfied franchisees can derive both tangible and intangible benefits over the lifetime of the relationship. Franchisees also tend to believe that they are getting more value for money out of the partnership when they are satisfied with the support provided by the franchisor. The attainment of a positive brand image can influence franchisees’ brand associations that in turn lead to positive attitudes that enhance brand equity. Lastly, the study revealed that BCB promotes franchisee brand loyalty such as positive word of mouth, renewal of contracts or adding more units of the same franchise brand.
In summary, the study suggested that franchise brand building anchored on strong and positive brand relationships is perhaps the best way of doing business in such complex and freedomconstrained marketing environments. Generally, if franchisees re ‘happy’ the positive attitudes are likely to enhance positive perceptions towards the brand. Eventually, the resulting effects will spill-over to end-consumers, thereby enhancing the brand equity across the entire franchise network.