Co-Branding Partnerships a Smart Growth Strategy for Franchises

Are you contemplating franchising your business? Entering the franchise arena can be intimidating. A smart growth strategy for new franchisors is to take advantage of co-branding with a larger, more established franchise system. Co-branding means that both companies’ products or services are sold within one location.

Smoothies and popcorn: A perfect co-branding franchise match

Co-branding worked for veteran franchise Maui Wowi Hawaiian and brand-new franchise concept Doc Popcorn. Even though Maui Wowi Hawaiian has been franchising for more than a decade compared to Doc Popcorn’s track record of less than a year, the blending of smoothies and coffees with natural flavored popcorn has produced an irresistible combination.

The five co-branded locations that currently exist across the country have done so well that the results have exceeded expectations, reports Michael Haith, CEO of Maui Wowi Hawaiian. And, because of the success of the initial five, plans are in place to roll out 10 more locations in the next four to six months. Says Haith, “The partnership has given some of our franchisees a new revenue stream and a food item to complement our beverages.”

And while Doc Popcorn’s growth strategy extends beyond just the co-branded locations with Maui Wowi Hawaiian, the relationship has been invaluable in helping the new franchise get off the ground. “I spent a long time making [Doc Popcorn] fantastic,” says Rob Israel, who cofounded the company in 2003. “I’ve spent no time learning franchising. It is a very particular way to run a business model and grow a company. For us, it has been a very efficient and effective way to shrink the learning curve and at the same time get an interested and responsive customer base.”

Co-branding and franchising: Making it work

So what’s the secret ingredient to creating such a perfect match? “Co-branding works when the products, culture and business models for both brands are similar, creating synergy between the brands and allowing franchisees increased opportunities for sales,” says Haith.

And while one would assume that it’s the veteran franchisor that needs to be especially selective in whom he or she partners with, new franchisors need to be equally careful. Not only did Israel make sure that the franchises’ philosophies are similar and the products complementary, but he is continuing to be very selective about which Maui Wowi Hawaiian franchisees he chooses to team up with.

“We don’t want anyone doing this because they feel like it’s going to fix a business,” says Israel. “We want it to be [an add-on]. We have to make sure that they’re ready to understand our brand and are excited for this concept.”

New franchisors shouldn’t look at a co-branded partnership with a more experienced franchise partner as a way to compensate for weaknesses elsewhere. “It’s not the silver bullet to make up for a struggling concept that doesn’t have legs,” says Israel. “It’s like a husband and wife. You want two parties to come together that are different but equal. I think that’s what we are and what two different brands need to be to make it work.”

More articles from AllBusiness.com:

• Legal Issues to Consider When Collaborating With Other Brands
• 3 Real-World Sales Lessons From Boy Scouts Selling Popcorn
• Multi-Brand Franchising: An Empire Building Strategy
• Nine Ways to Tap into Your Client Base to Increase Your Cash Flow
• 14 Foreign Countries with Great Opportunities for Startups

Ready to find a partner?

Until your franchise concept is established enough for your product and brand to speak for themselves, you will need to come up with an effective sales pitch. “You must be able to make a compelling argument that you have the resources—not necessarily financial—so that you can perform as the 'older sibling' partner needs you to perform,” says Haith. “The partnership needs to make sense, and you must bring something to the table to justify the tremendous amount of effort and risk that a mature franchisor must take.”

You must also be open and willing to learn from the more experienced franchisor. Says Haith, “The ability to integrate systems and be open to understanding the reasons a franchisor does things the way they do is vitally important, as mature franchisors understand the 'realities' versus the 'ideologies' of operating as a franchisor.”

Grow your franchise with a co-branding partnership

Co-branding partnerships may not work for every new franchisor, but for those that can find a complementary partner, it could just validate your franchising initiative—as it did for Doc Popcorn—and clear the way for a very exciting grand entrance.

RELATED: Important Factors to Consider Before Franchising Your Business

About the Author

Sara Wilson is a freelance writer who specializes in issues related to small businesses. Contact her at wilson.sara@gmail.com.