The reasons for rebranding a franchise concept can vary. The concept may have outgrown its original mission or vision. Perhaps the brand image has become outdated or the company may be going after a new type of customer.
There’s a lot of thought that needs to go into rebranding before it actually happens. Whatever the reason, franchisors need to ask themselves the right questions before moving forward. When weighing the pros and cons of rebranding in the franchising industry, some of the key considerations include:
1. Will we alienate our customers?
When consumers find a brand they like, they often become loyal customers. Loyalty is the key to generating revenue. Consider this:
- 43 percent of customers spend more at brands they’re loyal to
- 84 percent of adults are loyal to retailers
- 65 percent of a company’s business comes from existing customers
You need to weigh whether rebranding your franchise concept will have a significant impact on your loyal customers. This is an instance when you truly need to know your customers – to gauge whether they can live with the changes.
2. Can we attract new customers?
Sometimes franchise companies alter their identity to go after a new customer demographic or target market, which potentially could increase revenue.
Pabst Blue Ribbon, an American beer established in 1844 and sold at a low price point in the United States, rebranded itself for the Chinese market, where the popularity of craft beer is skyrocketing. Because PBR was unfamiliar to that overseas demographic, the company capitalized on the curiosity of Chinese beer drinkers by renaming the beer “Pabst Blue Ribbon 1844.” Its advertising conveyed sophistication, showing a redesigned bottle of the beer next to a champagne glass with wooden kegs in the background. A bottle of Pabst Blue Ribbon 1844 sells for $44 in China.
3. Can we afford to rebrand?
Rebranding is expensive. You’ll need plenty of capital to spend on advertising and marketing to inform consumers about the change with your brand. Your brand’s voice and subsequently the content will need to change. You may have to add marketing channels, too.
If rebranding your franchise concept includes a redesigned logo, new color scheme and font, you will eventually have to change signage at every location in order to maintain brand consistency. Anything with your brand name on it – menus, drink cups, apparel, uniforms, etc. – will have to be replaced.
4. Will we stand out among the competition?
Sometimes consumers lose sight of a franchise concept in the sea of competitors, and the franchisor will decide to rebrand as a way to differentiate itself. If your logo is generic, your franchise company’s name is unremarkable, your differentiators really are not any different than those of your competitors, it’s probably time to take a new approach and rebrand. But, you’ll need to think about the above-mentioned considerations before you do.
5. Could a partial rebrand make the most sense?
When your franchise brand is large and well-established, you have more to lose, potentially, when you rebrand. Think about the time, energy and money spent on building brand awareness and expansion into multiple markets. Uprooting all that with a rebranding could cost you more in lost business. Consider partially rebranding to maintain recognition and customer loyalty, as well as everything else you’ve established during the years of growth.
Dunkin’ Donuts went through a partial rebrand by dropping Donuts from its name when they became a serious competitor to Starbucks. Dunkin’s coffee sales had been outpacing their doughnut sales for years as consumers sought out healthier food options. They continue to sell a wide variety of doughnuts, but they’ve also diversified their food menu by adding hot breakfast sandwiches. The franchise brand, established in 1950, has more than 11,300 locations worldwide, including more than 8,500 in the United States. The franchise was moving beyond doughnuts and needed a name that reflected that change, but with a system that large, a partial rebrand made the most sense.
6. How will rebranding impact our franchisees?
This is one of the most important questions you’ll need to ask yourself before deciding to rebrand your franchise concept. If your franchisees lose customers due to the rebrand without attracting new ones, it may not only result in lower royalties for you but could also significantly slow franchise development. If rebranding causes franchisees to lose revenue, they’ll become unhappy. You’ll likely receive low marks from current franchisees when franchisee candidates speak with them during their due diligence stage. Raising franchisee marketing and advertising fees to promote the rebranding campaign will draw additional ire. And any incremental costs like new signage will only add fuel to the fire.
On the other hand, if your rebranding strategy allows franchisees to retain most of their loyal customers and attract new ones, you can look forward to receiving high validation marks and possibly increased interest from potential franchisees interested in owning a franchise unit or multiple units.
Rebranding the right way first requires a lot of thought and strategizing. It’s a monumental undertaking that can have negative or positive consequences, so think through the strategy carefully.
With 30 years of franchising experience and more than 800 franchise owners representing over 1,250 locations for five brands, Winmark Franchise Partners can help emerging and established franchisors decide if rebranding is the right strategic move and how best to rebrand their franchise concept. Contact us here or at (844) 234-8520.