Commercials

Well the good thing is – this does NOT apply to us! Also one of the reasons I picked HB was the lack of sales-based royalties. Been there, done that. Advertising royalties often go higher than you think, although the national rates published appear low. For example with our Subway franchises we were required to pay 2.5% weekly to advertising on the national level – but – the kicker is that local markets soon realize that equates to minimum exposure and elect to pay more to ‘support’ the campaign regionally. Once the local coop votes – majority rules – then all have their rates raised within the market. Our rates for the Central Texas region were at 5% paid weekly (2.5 nat’l + 2.5 local). This was in addition to any other local level stuff you wanted to do. Many franchises publish minimum rates for such royalties, but the reality is most go higher! Sales reports are submitted electronically, and the royalties are sucked from your account via ACH immediately! And this was in ADDITION to an 8% regular royalty!! Many weeks our total royalties for a week exceeded $1500!! It’s like a legal MAFIA!! We do NOT want that, trust me!! Thank You for the HB system!!!

I realize how well we have had it Gordon…and appreciate it very, very much. And Ron, the advertising fees were taken out of the overall percentage paid, I believe. I worked for Service Master and it was a terrible mess inside the office. They lost their franchise about a year after I left.

I’m down!

If corporate does implement a franchise advertising fee then I’m ok with it. Jeff, it sounds like you were not in favor of the way Subway ran their national advertising. Subway doesn’t not equal Heaven’s Best. I’m quite sure that our advertising would be much different than that of Subway. Different demographic, different advertising model. I think that we could structure our advertising in such a way that it would greatly benefit all operators.

As I stated in an earlier post to this thread, I like the current arrangement we have, which allows us to manage our advertising locally and at the pace we feel comfortable with.

I think it is easy to get excited about a national ad campaign and have the idea that it would be great. However, I have learned that advertising people rarely know any more than I do about marketing/advertising. I ran some ads early on that produced virtually zero response and they were laid out as my representative recommended. I get calls all the time from advertising reps (we all do) and I have recently (last 6 months or so) started accepting most of their invitations for lunch and to listen to their pitch. I also started asking questions about their background and experience. I have only met one with very much experience (more than a year).

In a previous career, I was part of the leadership of a small company (nearly $70 million in the bank and millions in revenue) and watched it spend a small fortune on marketing staff and advertising. Did we ever see decent results from our ads? Usually not. If we had, I might not be typing this now. Of course I’m happy to be here, but I might not have researched self-employment and Heaven’s Best.

How many of you have seen the supposedly wonderful statistics concerning ROI (return on investment) from advertising? If it was as easy as those statistics would have you believe, we wouldn’t have this thread going because we would all be rolling in the dough from our ads;)

Another question – overall, how many of you are really happy with your advertising results? If you are, I am happy for you. If not, why would you want to send a bunch of money to Rexburg and hope our corporate office doesn’t get taken advantage of by a smooth talking advertising salesperson?

In order for Cody and his staff to stand a decent chance of getting good service for their money spent, they would have to hire one or more high-powered marketing person(s). I wonder how many really successful marketing executives would want to relocate to Rexburg? (No offense Cody – I like Rexburg, but it isn’t the big time for an upwardly ambitious marketing/advertising person). If they found a willing soul, they would easily command six figures+ if they are really good with a proven track record.

As Jeff Miller said, it would take loads of money.

Also, how many times have we heard Cody talk about how an ad works well in one location and not at all in another city? I don’t know how much that proves to be true, but I’ve heard it from Cody a lot. So then, perhaps we would require many variations of ads or many completely different ads for different areas of the country. I suspect there are actually underlying reasons for the inconsistent results we all see, such as average income, age demographics, amount of competition, etc. If it is even possible, it would require a detailed study (as in expensive) to figure out those reasons. Back to Jeff’s point – loads of money!

As a small business owner, I have come to think of the advertising as a necessary evil similar to insurance. However, you get peace of mind from the insurance money you pay. All I get is stress from the advertising money I pay. I have yet to receive a really nice return from an ad.

There is nothing exact or scientific about marketing/advertising. There is a lot of instinct, guessing, luck, etc. that goes into good results. We all know it takes a lot of trial and error to find what works. I have no interest in sending a bunch of money to Rexburg so that they can begin their search for some magical ad. If we ever head down that path, there will be no stopping. At least we can take pause and re-group now concerning our ads. If we begin sending an advertising royalty and let Rexburg handle a bunch of money for us, there won’t be a pause if they stumble – we will continue to send our money.

Let’s take the new website project as an example of a centralized effort that affects us all. Based on posts to this forum, I gurantee we are not all happy with the new site from a content perspective. Also, look at how they actually performed the transition – on our live server – can you believe it? Tyler at his ripe old age of ?? (I would guess early 20s) knows better than to do that. Tyler’s gut instinct to bring the new site up on a test server, check it, review it, etc., then cutover to it live was exactly what they should have done. But the outsourced staff, with superb credentials that they showed Cody and staff I’m sure, blew it. We all survived the transition of course, but we weren’t all happy with the results.

(Side note to Cody: Please don’t take this as a gripe about the new web site or how it was handled. With my background, I have seen that kind of transition so often that I simple chuckle now. Unfortunately, most paid techies don’t have Tyler’s instincts. I’m just using the new site as an example of how a centrally managed project at Rexburg stands very little chance of pleasing all of us operators.)

I would expect to see a similar marketing effort if Rexburg begins handling our advertising royalties for us. They would be wined and dined by several marketing companies with supposedly wonderful credentials, they would select someone from among the contenders, and then we better start praying. I would be willing to bet a lot that the end result would not please a real high percentage of us. Perhaps some of us would be happy to be sure, but I would expect to see this forum at a new level of activity that we have never experienced and not all of it positive.

Also, we are not all interested in growing bigger. Sure, we all would like to see Heaven’s Best expand and continue to grow as a company and franchise system. However, many of us only want to be a one man (or woman) van or one family van. Many of those same operators are doing just fine concerning their revenue. Why would they want to begin sending in an advertising royalty. I personally want to have several vans out there, but I know that is not true for a large percentage of our operators.

One last note – of those (Gordon and Jeff – hope I didn’t miss anyone) who have actually been there/done that with respect to being in a franchise system and contributing advertising royalties and have posted to this thread, none of their posts was positive about it.

Thanks for listening!

Mike

The two companies in my area that have national ads behind them are Stanley and Serv-Pro. They are at the bottom in my area and change owners about once a year! National ads and billboards are very expensive and when mandatory advertising expense starts running too high and you have NO control you can’t make enough money and you go belly up!
The ideal company, in my opinion, (with profit being the #1 goal) would be to grow business every year and decrease all expenses every year.

That’s exactly right! Our system is great the way it is. It would be a good idea however if corporate wanted to invest in developing and producing a radio and a tv spot which we could then utilize – perhaps even for a “users fee” (which would recoup the investment of production). These types of ads could allow for a ‘tag’ or a ‘donut’ with space to put local phone numbers etc. One of the great things about HB is definitely in local control of advertising spending. Corporate is providing a professional image with a new logo and related materials for flyers, cards, etc. Producing radio and tv spots would just add to our warchest! But, just as we have a choice to buy flyers or cards, etc…. we should be able to choose to utilize electronic media. Royalties of any kind are a negative for this business in my opinion as stated before! Thanks for all the great input on this topic – I think this is how we grow into a focused company!

dsmall is exactly on the money in my opinion. My sentiments exactly. Many of you are, I assume, who have been in the business 10+ years, I suppose grossing in the order of $200-$800k/ year and at that level, kicking a number of $$$ in TV commercials makes some sense. maybe.

Our thought from day one was to grow slowly and steadily building a solid base of repeat and referral customers. Not to grow fast.

We are right now going to go after the commercial customer to flesh out the early evening work in order to capitalize on our one USP.