CFA Guidebook Series: Sponsored by Reshift Media

Published by the Canadian Franchise Association CFA Board of Directors

BOARD CHAIR

David Druker*, The UPS Store

PRESIDENT & CEO

Sherry McNeil*, Canadian Franchise Association

ABOUT THE CANADIAN FRANCHISE ASSOCIATION (CFA)

The Canadian Franchise Association (CFA) helps everyday Canadians realize the dream of building their own business through the power of franchising. The CFA advocates on issues that impact this dream on behalf of more than 700 corporate members and over 40,000 franchisees from many of Canada’s bestknown and emerging franchise brands. Beyond its role as the voice of the franchise industry, The CFA strengthens and develops franchising by delivering best-practice education and creating rewarding connections between Canadians and the opportunities in franchising. Canadian franchises contribute over $100 billion per year to the Canadian economy and create jobs for more than two million Canadians. Learn more at www.cfa.ca or www.FranchiseCanada.online

CANADIAN FRANCHISE ASSOCIATION

5399 Eglinton Avenue West, Suite 116 Toronto, Ontario M9C 5K6

Ph: 416-695-2896 or 800-665-4232

F: 416-695-1950 W: www.cfa.ca E: info@cfa.ca

© 2022, Canadian Franchise Association (CFA). All rights reserved. Contents of this publication may not be reproduced either wholly or in part, without the consent of the CFA.

Legal Disclaimer: The opinions or viewpoints expressed herein do not necessarily reflect those of the Canadian Franchise Association (CFA). Where materials and content were prepared by persons and/or entities other than the CFA, the said other persons and/or entities are solely responsible for their content. The information provided herein is intended only as general information that may or may not reflect the most current developments. The mention of particular companies or individuals does not represent an endorsement by the CFA. Information on legal matters should not be construed as legal advice. Although professionals may prepare these materials or be quoted in them, this information should not be used as a substitute for professional services. If legal or other professional advice is required, the services of a professional should be sought.

1ST VICE CHAIR

Ryan Picklyk, A&W Food Services of CanadaInc. TREASURER

Lyn Little, BDO Canada LLP

SECRETARY & GENERAL COUNSEL

Larry Weinberg*, Cassels Brock & Blackwell LLP PAST CHAIR

Gerry Docherty*, Good Earth Coffeehouse

CHAIR, LEGAL & LEGISLATIVE COMMITTEE

Darrell Jarvis*, Fasken

CHAIR, FRANCHISE SUPPORT SERVICES

Kirk Allen*, Reshift Media Inc.

DIRECTORS

Steve Collette, 3rd Degree Training Chuck Farrell, Pizza Pizza John Gilson, COBS Bread

Andrew Hrywnak, Print Three Franchising Corporation

Rimma S. Jaciw, CFE, WSI Digital

Joel Levesque, McDonald’s Restaurants of Canada

Ken Otto, Redberry Restaurants

Gary Prenevost, FranNet

John Prittie, TWO MEN AND A TRUCK

Stephen Schober, Metal Supermarkets

Family of Companies

Frank Stanschus, Little Kickers

Thomas Wong, Chatime

Todd Wylie, Master Mechanic

*Executive Committee member

ABOUT Reshift Media

Reshift Media is an award-winning digital marketing organization that specializes in multi-location businesses such as franchises, retailers and food services.

We provide leading edge social media, search, design, development and software services to more than 200 brands in 22 countries. Through our extensive experience with businesses around the world, we have developed proprietary processes and technology which allow multi-location businesses to achieve exceptional marketing results.

Introduction

In 2023, we at Reshift Media expect that several trends will have a significant impact on digital marketing for franchise organizations.

The prospect of a recession weighs heavily on everyone’s mind and should be considered as part of any 2023 marketing plan. The economy slowed considerably in the back half of 2022, and all indications are that economic conditions will continue to worsen through the first half of 2023. Having said that, even during a downturn, franchise systems need to continue to attract customers and sell new locations, so a strong 2023 marketing plan is a necessity.

Housing and spending slowdown will weigh on growth

% contribution to quar ter over quar ter annualized GDP growth

Source: Statistics Canada, RBC Projections

Although the purpose of this report is to outline the most impactful digital marketing trends for 2023, we are not suggesting that franchise organizations abandon fundamental marketing tactics in favor of the “newest thing.” Rather, our advice is to consider these trends in the context of your core marketing plan to determine how you might adjust your approach to capitalize on potential opportunities to improve your results during what is expected to be a difficult economic period.

Localization as a differentiator

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While online purchasing has increased dramatically in the last few years out of necessity, there has also been a substantial increase in people making an effort to “buy local” to support their communities. According to Shopify:

of North Americans are more likely to purchase from a brand due to its local presence. of consumers say they actively make an effort to buy from small businesses.

Source: Shopify

Breakdown of people who seek out local businesses

All indications suggest the “buy local” trend will continue in 2023, with the expected economic slowdown further reinforcing peoples’ desire to support businesses in their communities. This increase in people wanting to “buy local” is powerful for franchise organizations, as a franchise is essentially a collection of local businesses with local owners. To capitalize on this trend, forward-looking franchise systems have been implementing localized website, search, social media and advertising strategies to differentiate themselves and connect with consumers on a local level.

Recognizing the importance of local searches such as “near me,” franchise systems have been implementing local Google Business Profile pages (formerly called Google My Business) and local web pages for some time. However, with a sharp and sustained increase in “near me” searches in the back half of 2021, we saw an increased focus in these areas throughout 2022 as franchise systems sought to improve their local visibility and sales growth.

Volume of “near me” searches (Canada)

Source: Google Trends

Many franchise companies have created local Facebook, Instagram, TikTok and other profiles in an effort to better connect with their local communities. These local profiles allow the head office and franchisees to easily share locally relevant information such as the location of the store, local pricing, local offers, a photo of the local storefront, or video of the local team. Not only does this gracefully emphasize the “localness” of the business to capitalize on the “buy local” trend, but these types of posts have also been shown to work much more effectively.

To achieve this strategy, posting to local social media pages is typically a mix of franchisees creating relevant local information and the head office sharing company-wide content across all locations. This approach has several benefits:

- Franchisee-created posts that include local terms and information tend to get better traction on social media because they are more relevant to people. Something as simple as the local city or neighborhood being included in the page name makes a significant difference to whether a consumer engages with the post.

- Including franchisees in content creation not only makes the posts more locally relevant, but it also typically increases the overall amount and variety of content created by your company.

- Local pricing or promotions are easier to share, as they can be mentioned just on the pertinent social pages. This avoids the need for “at participating locations” or “at your nearest location” language.

Beyond organic posting, local social media properties also allow franchise systems to create local advertising campaigns which include local information and granular targeting specific to that store. In many cases, franchisees are funding their own campaigns with the support of the head office from a strategy and ad creation perspective. We saw an explosion of this type of local-specific advertising in 2022, and given the ongoing “buy local” trend and the expected economic headwinds in 2023, we expect to see local advertising continue to accelerate as franchise systems look to improve their advertising performance and out-maneuver their competitors.

Franchise systems that use a local advertising approach see 5X – 10X better results compared to non-local methods

WHAT FRANCHISE COMPANIES CAN DO NOW

The challenge many franchise systems face is that consumers often do not realize that their locations are locally owned and operated, instead believing that they are part of a “big business.” To combat this misperception and capitalize on the “buy local” opportunity, we recommend that franchise companies explore opportunities to increase visibility for local searches and communicate their “localness” within their communities.

If you have not done so already, we recommend that all your locations be set up with a Google Business Profile and a Bing Places listing. These listings are critical when consumers are conducting “near me” searches such as “restaurants near me” or “buy a sweater near me.” Be sure to take the time to fully complete the profile for every location, including phone number, operating hours, photos, and business category. Ideally each listing should be hyperlinked to a local page on your website (as opposed to the corporate homepage) to further increase the local relevance.

You should also consider implementing local social media pages for your locations to replicate your physical footprint online. Facebook’s Locations framework is very helpful in this regard. From a messaging perspective, we recommend avoiding communications and digital ads that contain generic “buy from your nearest location” or “at participating locations” terminology. Instead, incorporate local information to emphasize the fact that the store is locally owned and operated which will naturally create additional social media engagement in your communities.

Increased performance through machine learning & AI

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As marketers look to increase the efficiency and effectiveness of their advertising in 2023, we expect to see a continued increase in the use of artificial intelligence (AI) and machine learning (ML). Over the last several years, AI and ML have been integrated into all major digital marketing channels. Machine learning allows marketing professionals to analyze large data sets and generate actionable insights about their consumers’ behaviors and preferences. Powerful learning algorithms process massive amounts of data real-time to determine the search results

you receive, the social media posts you engage with, and the ads shown to you.

AI and ML allow marketers to automate and optimize campaign management, client segmentation and lead generation. These technologies can also be used to dynamically generate personalized content and ads based on a combination of user characteristics and business objectives.

Source image: Google

Google’s Performance Max functionality is a good example of how machine learning is being applied to marketing. Google combines images and copy to automatically build ads based on campaign data and audience characteristics, and then uses algorithms to determine when and where to show the ads across Google’s advertising channels, including YouTube, Display, Search, Discover, Gmail, and Maps. Google uses automation and machine learning to experiment with creative combinations and ad placements to maximize conversions based on predetermined marketing objectives such as lead generation, sales, reach or other metrics.

WHAT FRANCHISE COMPANIES CAN DO NOW

Many of the marketing channels you are already using (such as Meta and Google) already have AI and machine learning incorporated into them. These platforms include the ability to automatically optimize your media mix, dynamically create advertising, A/B test different creatives and landing

If you are already using the “standard” automation tools available in Facebook, Google and other platforms, it may be time to look at employing more powerful technology to further improve your marketing results. A few opportunities for consideration include:

AUTOMATED LOCALIZATION

As outlined in the previous section, localization is an excellent opportunity for franchise systems to capitalize on the “buy local” trend. Rather than manually creating local social media posts, ad copy and landing pages, automation can be used to programmatically insert local terms. This also allows a local strategy to be cost-effectively scaled across hundreds or thousands of locations.

CUSTOMER SEGMENTATION

There are a number of platforms which employ machine learning to mine your customer data to develop in-depth customer segments that can be used both to retain existing customers and attract new ones.

PERSONALIZED MESSAGING AND OFFERS

Use machine learning to create and disseminate content and offers tailored to identified customer segments. Email marketing is often an effective channel for this type of approach.

Explosion of short-form video

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Online video consumption continues to grow, with video accounting for 82% of all online traffic. But the real story in 2022 was the massive growth of shortform video such as TikTok, Instagram Reels and YouTube Shorts, which shows no sign of slowing down in 2023. With more than 1 billion global users and strong consumer adoption in North America, TikTok has become a mainstream marketing platform that cannot be ignored. Although the platform continues to skew younger, it has seen growth across older demographics – in fact, 50% of Millennials and 38% of Gen X-ers say that they have visited TikTok in the last three months.

TikTok Users by Age

TikTok Users by Gender

Source: Statista

Source image: TikTok Newsroom

Source: DataReportal

Video-centric platforms such as TikTok, YouTube and Instagram enjoy strong engagement, with TikTok leading the way at an average of 95 minutes per user each day. Frequency of visitation is also very high, with almost 40% of active Instagram users and 29% of active TikTok users opening the app every day.

With such high levels of engagement and growth, video content creation and advertising – particularly short-form video – is a must for all marketers. A recent survey of more than 1,200 global marketers found that 90% of marketers who use short-form video plan to maintain or increase their spending next year, and 1 in 5 marketers plan to try short-form video for the first time. In addition, 56% of marketers using TikTok report that they plan to increase their spending next year, which is the most for any social media platform.

Percentage of Active Installs that Open the App Every Day

Average Daily Minutes Spent In-App

Source: Sensor Tower

Source: Sensor Tower

Beyond the obvious social media applications, short-form video is also a benefit for your website. Videos have been found to be 53x more effective at generating first-page search rankings compared to other SEO tactics, and 84% of consumers report that they made a product purchase after watching a video.

WHAT FRANCHISE COMPANIES CAN DO NOW

3. Explosion of short-form video

If you aren’t already using video on your website and social media channels, 2023 is the time to get on the bandwagon. Long-form video should remain part of your marketing mix, as it is valuable for providing in-depth information about a product, brand or service, particularly if your goal is SEO improvement. However, the big opportunity in 2023 is in creating entertaining and/or informative shortform videos.

Depending on your franchise system, there are several potential approaches you can pursue:

GO LOCAL

For B2C brands with engaged franchisees and local audiences, consider encouraging your franchisees to create fun or informative short-form videos posted to local TikTok or Instagram accounts. This helps create local connections and traction across your network, as discussed earlier in this report. A key aspect to this approach is ensuring you provide training, resources and support for franchisees so they have the tools, creative assets and know-how to be successful.

CREATE NATIONAL VIDEOS

If creating video at the local level is a challenge, or if you want to augment your local efforts, consider creating “national” short-form videos that can be shared on your company’s social media accounts and website. Although this does not create the same “local” effect, it is an effective way to participate in the short-form trend.

USE ADVERTISING TO INCREASE DISTRIBUTION

Organic social media will only get you so far. Consider allocating some advertising budget to increase the visibility of your short-form videos. TikTok and Instagram both have strong advertising platforms which allow you to target specific audiences and measure your results. If you are looking to take it “up a notch”, consider advertising at the local level to increase your impact.

Regardless of your approach, it is critical that you create a video plan that includes key objectives, a content strategy, target audience and a measurement approach. Many companies simply start creating video because it is “the thing to do”, without a clear business objective in mind. If you are spending organizational resources on video, then it should be adding value to your company in some way – such as lead generation, website traffic, branding or general awareness. Whatever your goals are, you should be constantly assessing how you are performing relative to your plan so you can adjust and assess the return on your investment.

Increased competition for new franchisees

Interest in business ownership has been very strong throughout 2022, leading to a surge in franchise purchases. According to Google Trends, search volume for terms such as “start a franchise”, “buy a business” and “buy a franchise” are up 30% on average compared to the same month in 2021. In fact, several months saw search volume increase more than 100% over the prior year.

Year-over-year change in search volume (Canada)

Source: Google Trends, for terms including “start a franchise”, “buy a business”, “buy a franchise” and other similar terms

Average CPC for franchise developement terms on Google

Source: Reshift Media data

We have seen a significant increase in the volume of campaigns and budget levels for digital franchisee acquisition campaigns in 2022 across all platforms – including Google, Bing, Facebook, Instagram, LinkedIn, display advertising and others. However, despite the increase in spending, there was not a corresponding appreciation in the cost of advertising. In fact, we found that the cost of digital advertising for franchise development followed a very typical pattern in 2022 – a ramp-up through the first half of the year, with a lull in the summer and a decrease in December as franchise advertisers avoid the expensive holiday season.

4. Increased competition for new franchisees

Going into 2023, we expect interest in franchising to be high at the start of the year, as Q1 is typically the strongest period for franchise development. We are already seeing a significant ramp-up in franchisee acquisition spending for January as franchise organizations look to fill their lead pipeline and get a strong start to the year. Given this, we expect to see the cost of digital advertising increase in Q1 similar to previous years, with the cost per lead remaining around historical levels.

However, as the year progresses, we expect demand to subside as high interest rates and a stalling economy reduce the number of people looking to purchase a franchise location. At the same time, franchise systems will be looking to continue to grow so we do not expect to see a pullback in advertising spending. The combination of these factors will likely result in higher advertising cost, increasing cost per lead, and a lower closing rate as franchise systems are forced to compete for a smaller pool of prospective franchisees.

CFA Guidebook series: The Top 5 Franchise Digital Marketing Trends

WHAT FRANCHISE COMPANIES CAN DO NOW

All indications are that demand for franchise purchases will be strong in Q1, so this will be a key period for franchise systems to be in-market. If you do not already have a franchisee acquisition plan in place, we recommend you do so as soon as possible. Lead volume typically starts to climb in mid-January with a peak in March, so having a campaign in place before the end of January is recommended. Knowing that lead volume is higher in Q1, consider “front-loading” your advertising budget to maximize your exposure during this period, with a decrease in spending during the slower summer months.

Which platforms you employ depends on your franchise system and target franchisee. Google search is typically a high performing advertising opportunity, however, social media can also be very effective, particularly for B2C franchise brands. Experiment with different messages, creative and ad units to find what works best for your audience and brand. If you haven’t tried them previously, Facebook and LinkedIn “lead ads” tend to be quite effective at lead generation.

Competition for new franchisees will be fierce, so it will be important to have a strong communication strategy in place for every lead. Prospective franchisees will likely be communicating with several brands, so ensuring your company has a compelling value proposition, informative documentation and timely follow-up can differentiate your franchise and help complete a transaction. Consider automating your follow-up by employing a CRM, email drip and other strategies to ensure no leads slip through the cracks.

4. Increased competition for new franchisees

Creating competitive advantage with first-party data

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With third-party cookies set to be obsolete by 2024, firstparty data collection will be incredibly important in 2023 for marketers. In addition to the major privacy changes implement by Apple in 2021 on their iPhones, major browsers including Safari, Firefox and Chrome are actively working to implement restrictions on third-party tracking.

This means that companies that rely on third party platforms for targeting and data collection such as Facebook, Instagram, LinkedIn, Google, and display advertising networks will continue to see a degradation in their advertising performance. Third-party data is information that is collected by another entity that is entirely separate from your relationship with your audience. As this type of tracking is further restricted, it will reduce the ability of advertising platforms to:

Through 2022 there was a decline in performance for social media advertising that relied on audience building using third party data, such as Facebook’s “lookalike audiences”. Because Facebook and other platforms were not able to track user behaviors, particularly on iOS devices, their ability to match audiences was reduced which affected the performance of their advertising. This does not mean that social media advertising is ineffective, but it does mean that forward-looking franchise companies are actively working on modifying their data collection and targeting strategies to adjust to the changing digital marketing landscape.

The focus for marketers in 2023 will be on building first-party data both to offset the aforementioned challenges and to provide a competitive advantage. For clarity, first-party data is what you collect from your audience directly via your own channels. First-party data is typically gathered through your company-owned assets such as:

Website App Social media Surveys CRM

There is also “zero-party data”, which is data that a customer intentionally and proactively shares with a business. It can include preference center data, purchase intentions, personal contexts, and data on how an individual wants to be recognized by your brand. You can acquire zero-party data through physical interactions in your stores, quizzes/polls, website activity, customer profiles, messages with customers, and other similar sources.

First-party and zero-party data will be important for marketers in 2023 and beyond, as it will allow companies to better understand and target their customers and prospective customers. The major benefit of first-party data is that only you have it, so it can be used in a variety of ways to give you an advantage over your competitors:

Email marketing

Segment your audience, create customized messaging, and measure results by specific groups.

Landing pages

Use customer data to create landing page A/B tests to find creative and messaging that resonates with each audience segment.

Digital advertising

Create distinct personas and target them across advertising platforms.

Content & social media

Create customized content that is targeted to specific audience segments across organic and paid strategies.

Loyalty programs

Offer points that can be redeemed, access to contests, early-bird access to sales, discounts, or free content.

WHAT FRANCHISE COMPANIES CAN DO NOW

All companies should be actively reviewing their data collection and digital marketing strategies in 2023 to ensure they will be successful in a post-cookie world. The first step for any data collection approach is to have a clear plan on what data you would like to gather, how you will gather it, how you will store it securely, and how you will use it.

What strategies make sense for your franchise to gather zero-party and first-party data depends on your business model and customers. Some potential opportunities include:

User registration

One of the easiest ways gain information about your customers is to encourage them to register on your website to create a profile, earn a discount, or subscribe to a newsletter. A loyalty program is a popular way to encourage registration.

Single sign-on (SSO)

Single sign-on is a process that allows people to sign in to your website or app using their Google or Facebook account. This approach is a low-friction way to encourage sign-in, while at the same time, you gain first-party data such as name, interests, and location.

Progressive profiling

Once a person has created a profile, you can ask follow-up questions to allow you to profile users on a deeper level. As an example, on a user’s 3rd or 4th login you can ask them “when is your birthday” in order to build a more robust profile.

Lead generation forms

Whether your franchise is “lead” focused or not, you can use lead gen forms to create first-party data. The forms can be as simple as an “inquiry”, or as committed as a “book an appointment”. The forms can be included on your website, landing pages, or even embedded in your paid ads.

5. Creating competitive advantage with first-party data

Event-based tracking

Using Google Analytics or other analytics platforms, you are able to measure specific events on your website or app. By measuring highvalue events such as products/services viewed, purchases, and other activities you are able to better understand your ideal customer and their habits.

Surveys or polls

You can deploy a short survey or a poll on your website, through email or even in-store to gather first-party data about your customers.

Product registration

If you sell a physical product, asking your customers to register their product online is an effective way to collect first-party information.

Gathering first-party data is only the start – be sure you have a plan on how you intend to use it to create a competitive advantage.

Some potential opportunities include:

Creating personalized experiences, potentially using machine learning. Develop new products based on customer feedback and preferences. Improve marketing effectiveness through better targeting, insights, and measurement. Identify and adjust to changes in customer behavior.

HONORABLE MENTION Social commerce

Although it did not make our top five list, social commerce is a trend franchise marketers should be aware of. Social commerce isn’t new, but it has been steadily growing for the past several years. According to HubSpot, 71% of Gen Z-ers and 51% of Millennials prefer to discover new products on social media, which indicates that social commerce could play a greater role in the near future.

Source: Statista

Meta has created well-established “Shops” on both Facebook and Instagram which allow companies to create a social media storefront where consumers can browse, explore and purchase products directly on Facebook and Instagram.

Source: Facebook Business

What will be particularly interesting in 2023 is to see what new social commerce functionality TikTok deploys. The company is currently testing new ecommerce features and ad units, including:

(testing globally) Place hyper-relevant, shoppable videos across the “For You” page for people to browse products.

(testing in US) Promote a product catalog at scale with new placements across TikTok.

(testing in select countries) Drive engagement from the “For You” page to live moments and show products to shoppers who are more likely to buy.

At this point we do not anticipate social commerce will be a major factor for most franchise systems in 2023, however, it is something we suggest all marketers keep their eye on for 2024 and beyond.

Images and illustrations Source: TikTok for business

FUTURE TREND

Virtual & augmented reality

During the pandemic, virtual reality (VR) and augmented reality (AR) gained some degree of popularity as companies sought new opportunities to engage with customers who couldn’t or wouldn’t come into their stores. In 2021, HubSpot reported that 35% of marketers were employing AR or VR, with half of those marketers planning to increase their investment in 2022. However, the cost of VR equipment and technical development has slowed adoption, resulting in 27% of marketers deciding to stop using AR and VR in 2023.

Despite this setback, the metaverse has emerged as one of the most talked-about topics in digital marketing during 2022. Although Facebook (now rebranded Meta) has largely popularized the term, the metaverse is a general term used to describe a variety of immersive virtual

experiences taking place online. Several major brands have announced metaverse initiatives including Nike, Starbucks, Chipotle, Wendy’s and Taco Bell. While there is a lot of conversation around the metaverse, it is not expected to be a viable marketing opportunity for most businesses in the near future.

Given these factors, we do not expect many franchise systems will pursue AR, VR or metaverse opportunities in 2023 – or even in the next few years. It will undoubtedly take several years for the metaverse to mature enough for it to become an effective marketing channel. However, with Meta’s multi-billion dollar commitment to the metaverse it is important that forward-looking marketers ensure they remain informed.

series: The Top 5 Franchise Digital