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Franchise Marketing: Cause and Effect

By COLLEEN DEBAISE
Staff Reporter of The Wall Street Journal.

From The Wall Street Journal Online

Many franchisers are adding a new ingredient to the formula they give independent operators: a charitable cause.

The tactic, known as "cause marketing," isn't new to large companies such as American Express Co., General Mills Inc. and Home Depot Inc., which for years have linked themselves to special charities or social causes and raised funds through promotions or merchandise sales. One of the more visible recent examples was Nike Inc.'s pairing with the Lance Armstrong Foundation to sell yellow "LiveStrong" wristbands, which raised money for cancer research and created a brief, yet memorable, international fashion statement.

Now, many franchisers are picking a cause at the national level -- think breast cancer or needy children or world hunger -- in an effort to unite franchisees in various markets, convey a consistent image, and boost their profiles and bottom lines. The technique is being used to help franchisees make a splash in the communities where they are based, sometimes even before they open.

"It's increasingly popular among franchise organizations who are trying to penetrate local markets, who are trying to bond with their franchisees and who are trying to help franchisees to attract and retain employees," says David Hessekiel, president of Cause Marketing Forum Inc., a Rye, N.Y., firm that connects businesses and nonprofits.

Connecting With Customers

Companies in general have begun spending more on cause-marketing campaigns and sponsorships of nonprofits, according to IEG LLC, a Chicago firm that promotes the marketing technique. Spending on such efforts rose to $1.34 billion in 2006 from $120 million in 1990, the firm says. "It makes a lot of sense for companies, including franchises, to use a sponsorship," says William Chipps, senior editor at IEG. "It gives them a marketing platform and opportunity to connect with issues their customers connect with."

In August, Contours Express, a women's fitness company based in Nicholasville, Ky., announced a partnership with the Breast Cancer Research Foundation to host fund-raising events, usually at the chain's gyms. "It was a logical fit because our clientele is women, and this charity certainly resonates with women," says Eddie Leonard, director of marketing at Contours.

Under the partnership, Contours encourages its 400 franchisees around the U.S. to host fund-raisers based on the same theme, or held on the same day. A majority of the gyms, which are located primarily on the East Coast, took part in a "Bunco for Breast Cancer" fund-raiser in September and a "10-5 To Save Lives" fund-raiser on Oct. 5, in which gym members gathered pledges based on their participation in a 29-minute workout and donated the proceeds to the cause.

"We didn't know what to expect," Mr. Leonard says. "We thought we'd raise $10,000." Instead, the various gyms and their members raised more than $46,000, which Contours' corporate office matched dollar-for-dollar. While Contours initially thought of the partnership as simply philanthropic, "it certainly does have the potential to not only do good but trickle down to all our franchisees and give them a community feel to their marketing," he says.

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About Contours Express
Contours Express, an all-women circuit training gym based in Nicholasville, Kentucky second only to Curves, is enjoying phenomenal success with more than 360 fitness centers operating nationwide. Additional locations include Canada, Mexico, Puerto Rico, Brazil, Europe, Asia, the United Kingdom, Ireland, Guam, and Australia.  By 2009, company executives project at least 1,000 Contours Express clubs will be operating around the world.  For more information, visit www.ContoursExpress.com

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