Co-Branding - Is It For You?

Franchising.org:

The unique feature of franchising is the way that it evolves with the changing of times. What was once traditional is rapidly moving to the non-traditional. Both franchisors and franchisees are constantly seeking new avenues to maximize facilities, human resources and competitive positioning. One manner of breaking the traditional mold is through co-branding.

This concept is normally thought of as a formal or loose association of more than one brand with one or more owners of the business concepts. Co-branded operations may exist ‘under one-roof’ or cover large geographical areas. Everyone has visited the gas station convenience store which often has several franchises at one location. The co-branding possibilities are almost as varied as ones imagination.

I recently became acquainted with a franchisor which licenses its system for making homes and businesses baby safe. When the company began co-branding with other franchisors of designer baby furniture and day-care franchises, it was able to reach out to an entirely different clientele.

How often have we heard that a franchisee’s success depends upon ‘Location, Location, Location’. What better way to get that prime location that was once cost prohibitive than co-branding. Be careful though, if there is no synergy between brands and concepts the co-brand may drain your successful franchise. If the brands are too similar in nature then the second brand may dilute the first.

Franchisors must be careful and conduct the proper research before jumping into the co-brand arena. In addition, franchisors and their counsel face the challenge of ensuring that the franchisors brand and system are fully protected before embarking into co-branding.

Franchising counsel should explore implementing a master agreement between each franchisor and tailoring each franchise agreement for the co-branded operation. In existing operations rather than tailoring a new franchise agreement counsel may draft an addendum modifying the current franchise agreement in the pertinent areas to accommodate co-branding. Counsel will also need to review the Franchise Offering Circular to ensure full disclosure is made about the co-branding relationship.