The Benefits of Co-Branding for Franchisees
Co-branding creates multiple revenue streams, leverages expenses, builds stronger relationships and increases the ability to attract a broader audience with the same advertising dollars.
Over the years we’ve seen franchise concepts try co-branding with limited success. Success in co-branding depends on a few key ingredients including: synergies among brands, clarity to the consumer, ease of delivery of product or service and the ability to effectively integrate the brands’ business systems.
When co-branding works, the benefits for the franchisee and franchisor, as well as the consumer are vast. At Moran Family of Brands, we’ve been fortunate enough to see success with co-branding in our locations, both corporate and franchised.
Our vision to co-brand actually began in 1996 when we started to look at acquisitions outside of transmission repair industry. At the time, my father, Dennis Moran, felt that consumers would need and want to gravitate back to the days when you brought your vehicle to one repair facility for all of your repair needs rather than moving from one specialty center to another. He saw the need for automotive shops to become more fluid in the services they offered to their customers due to the increasing complexity of the vehicle. This began with an evaluation of our business models to analyze the modifications that would be needed to effectively co-brand. Next, we conducted beta testing in our company centers and opened our first co-branded location in 2001. We found that by co-branding the Milex and Mr. Transmission models, several positive points became apparent such as:
Multiple and Complementary Revenue Streams
Any franchise concept, whether it’s a taco restaurant or boutique clothing store, automatically adds additional revenue streams when they take on another brand. Now, making the large assumption that the co-branding relationship works from a consumer perspective, the potential for additional revenue for a franchise owner is great. Franchisees have the opportunity to steadily increase their revenue by adding an additional brand into their existing location. This creates more frequency of use and allows for stronger relationship building with the customer.
Franchisees have the opportunity to steadily increase their revenue by adding an additional brand into their existing location.
Furthermore, co-branding can create complementary revenue streams. Depending on the brand pairing, one brand may experience seasonality, in which case the other will balance out revenue. For example, we often see transmission repair spike in hotter months and then again in colder months. During non-peak months for Mr. Transmission, Milex balances out the revenue stream through the additional service offerings beyond the transmission. Most importantly an effectively run co-brand builds relationship and trust creating a one-stop shop that is capable of meeting all of the customers’ needs.
Increasing Market Share and Creating Competitive Advantages in Local Markets
Co-branding allows franchisees to enter a market with multiple purposes. Consumers know they can come to their location, in our instance, for services from oil changes, diagnostics, engine repair, brake repair to transmission flushes and repair. This allows franchisees to take a much larger market share than, for example, a single-location oil change business, which only has one reason for the consumer to come to their shop. This in itself creates a competitive advantage over all single-purpose, but competing businesses in a given market. Although they may have done their research, franchisees have the peace of mind knowing that their services transcend multiple categories of purpose for consumers’ needs.
Operating a successful co-brand can make it worth a franchisee’s benefit. First, operating two brands out of one location does not increase the overhead costs such as rent, utilities, and other expenses. Staff can be trained to work on both sides of the franchise, so there should be very little need to hire more staff just because there are more services or products offered. Marketing and advertising can also be shared, which is a huge advantage to the franchisee by reaching a broader audience. Advertising can be one of the more expensive startup costs for a franchisee and having two brands under one budget can be very effective. Therefore, the synergy of a co-branded franchise creates outstanding leverage for the franchisee.
There is always risk involved in starting any business venture. Franchisees are most likely opening a franchise because it’s inherently less risky than building a business from scratch. They’re signing on to open a name that already has proven success. However, there is always a level of risk involved. Co-branding allows the franchisee to diversify that risk.
Co-branding allows the franchisee to diversify risk.
Co-branding, if proven successful from a consumer perspective, provides franchisees with benefits that they will not see from just a single location. Co-branding creates multiple revenue streams, leverages expenses, builds stronger relationships and increases the ability to attract a broader audience with the same advertising dollars. For Moran Family of Brands, co-branding has proved to be a great way to expand our market share and continue growing our company.
Barbara Moran-Goodrich is president and CEO of Moran Family of Brands, a company that provides every aspect of the automotive aftermarket through six franchise brands and more than 145 franchise brands nationwide, including Mr. Transmission USA service centers (Mr. Transmission, Multistate Transmission, Dr. Nick Transmission); Alta Mere “Toys for Your Car;” and Milex Complete Auto Care centers and now SmartView Window Solutions. Find her at fransocial.franchise.org via the directory.