Your franchisees pay 3% and have never seen where it goes

⏳ Read time: ~6 minutes

This week: why franchise marketers keep getting replaced, what happens when franchisees see where their levy goes, and the week ChatGPT stopped reading Reddit for restaurants.

In Australia, marketing is probably the highest turnover role in any franchise brand.

CEOs and CFOs think changing the marketer every 12 months will lift performance.

A lot of the time, it doesn't.

Bob McKay had me on his Franchise Whispering podcast a couple of weeks ago. I returned the favour this week.

Bob founded McKay Advertising and Activation in the US in 2005.

Franchisees nicknamed his agency the franchise whisperers, and food brands are now his focus.

His explanation for the turnover problem is simple.

CEOs and CFOs don't understand how complicated marketing is now.

Most franchise marketing teams have two to five people.

They spin plates. They can't do anything well.

Bob's team goes into a brand and connects the marketing to the point of sale system.

Many times, franchisees see where their 3% went for the first time.

Bob's words for the reaction: "I see where my 3% went and I actually made 5x on it."

Some see 3x on top of their 3%. Some see 5x or more.

One brand he took over last year has over 100 US locations and is coming to Australia.

His team started on 1 October. By 10 October, the brand could see ROI through online orders and in-store purchases.

The brand had never seen its ROI before.

Ten years ago it was radio, TV and outdoor.

Bob's line: if a CFO or CEO had a bad day, you were gone.

Now his agency reports ROI back to the CMO straight away.

Bob says a byproduct is that his data keeps CMOs in their jobs.

It also changes the franchisor-franchisee relationship.

Bob describes his agency as the marriage counsellor between the zor and the zee.

He calls it the activation bridge. Three stages:

There's no national campaign.

Every location gets its own campaign in a one to two mile radius. For one brand that's over 280 campaigns.

His numbers for a US restaurant:

25 to 60: competing restaurants within one mile

100,000: people in the target audience around each location

2,500 to 5,000: people a new store aims to capture in the first 90 days to six months

That location then emails and texts those people every week.

Bob's view: the CFO used to be the natural next CEO because they knew the books.

Today the CMO has the pulse on the consumer.

What they want.

What the next innovation should be.

He's the first person I've heard say it. The Marketing Against the Grain podcast put out a video recently saying the CMO role is dead.

I agree with Bob. With this data in place, the marketer holding the customer insight becomes the most valuable person in the business.

Bob's team noticed a change about three weeks before we recorded.

ChatGPT dominates restaurant questions in the US.

On a Monday, about 15% of its restaurant information came from Reddit.

By Friday, zero. It had switched to Yelp.

I was glad to hear it.

Reddit is a bad place for franchise questions.

Search "is buying a Jim's franchise a good idea" and people with no idea about being a franchisee answer it.

Then those answers show up in AI search.

Bob's agency has met Yelp six times since the change.

He admits he has no silver bullet yet. So he doesn't charge clients for the AI search work. In his words, they're learning on the client's dime.

Compare that to agencies here guaranteeing a franchisor shows up in 200 ChatGPT prompts.

The reports they send are wildly inaccurate.

If your CEO asked tomorrow what the marketing fund returned last quarter, what number would you give?

My full conversation with Bob covers the activation bridge, why franchise marketers keep getting replaced, running hundreds of local campaigns at once, and how his agency survived 2020.

Bob had me on Franchise Whispering a couple of weeks before this. Two conversations, both sides of the table.

Listen to my episode on Franchise Whispering

FranFeast episode 3 is out now.

Glenn Walford and I open on the headlines, then run through what we noticed at the Melbourne Franchise Expo.

Guests this episode:

Also in this one: why franchise buyers should know who owns the brand they're buying into, why community engagement has to reflect the local community instead of a cookie-cutter plan, and my AI tool of the week, Claude Design.

Joel

PS. Bob on referrals during COVID: everybody wanted them and nobody was giving them. He picked up the phone instead.

I helped grow Jim's Group from 3,709 to 5,800+ franchisees with content. Not agencies.

One hour on the right problem changes your franchise growth. Leads going cold, building a video library, getting franchisees on camera. You pick.

$400 AUD for 60 minutes.

I run workshops and talks for franchisor teams, marketing teams and franchisee events. Reply with what you need.