Brands Bite Back
This week, we had a consulting call with a man who bought a franchise (a well-known "brand") to augment his existing, successful business. He made the purchase several years ago.
What happened? Sales went down, down, down. His old customers thought he went out of business, and the brand of the franchise he bought had a stigma that did more damage than good when it came to attracting new customers. I should note that the brand isn't thought of negatively…it's just associated in such a way that it conflicted with his existing business.
Now, he's emerging from the fog, getting rid of the franchise and returning to his roots. We were chatting about his re-launch strategy and new name.
What struck us was the fact that this high-dollar, big name brand hurt his business instead of helping it.
It just goes to show you that chasing name recognition and brand awareness isn't always the Holy Grail people think it is. That's one of the biggest benefits of buying a franchise, right? Being able to leverage the existing brand equity of the franchise? Well anyway, it wasn't much of a benefit this time.
If this guy had used the money he spent on the franchise on effective marketing, he would have acquired a heck of a lot of new customers and would have enhanced the smaller name of his pre-existing brand in the process (brandscending).
So for anyone who is thinking of investing in a franchise…put that in your pipe and smoke it.