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Co-branding refers to the practice of collaborative marketing of two or more distinct brands. It doesn’t mean owning multiple units of the same brand. Rather, its design matches brands that appeal to customers and enhance business success.
A co-branding technique is the use of marketing campaigns that benefit both brands. Adidas and Kanye West both benefit from their collaboration on Yeezy shoes. Red Bull and Go-Pro collaborate in their appeal to similar, active-lifestyle consumers. The match-ups create a synergy that enhances both companies.
In franchising, the synergy of co-branding is gaining traction, too. As consumers, we expect co-branding to make our experiences better. These days, for example, we anticipate food options when we purchase fuel or get a carwash.
Co-branded entities share physical locations in one place. For instance, a large franchisee of Dunkin' (Donuts), Togo’s Sandwiches, and Baskin-Robbins intentionally locates the stores together. No matter the time of day, hungry buyers will find what they crave.
And who could forget when Yum! Brands started putting combinations of their brands (Taco Bell, KFC, Pizza Hut, A&W and Long John Silvers) together back in the 1990s. (Note: Yum! Brands has since sold A&W and Long John Silvers.)
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There are clear and multiple benefits to owning two different franchise brands and teaming up for better results.
- Increased sales and revenue. This sounds counterintuitive, but franchises that offer slightly different options (but work together) will get more customers who value having multiple choices in one location. The franchises experience increased market share because multiple brands bring in more customers overall.
- Increased choice. Consumers appreciate having options, and a co-branded franchise location offers that. Having the opportunity to kill two birds with one stone and save time is valuable to busy customers.
- Money-saving efficiency. Food franchises that share kitchens and employees save on overhead, all of which directly contributes to profit. Shared investment risk and operational costs provide financial and operational efficiency while reducing initial investment risks.
- Combined marketing funds. Co-branded franchises share marketing expenses when they appeal to customers with similar needs. A car repair franchise can promote their co-branded coffee house, for example. Customers can sip and work while a mechanic repairs their vehicle.
- Strong competitive play. One brand’s local competition doesn’t offer the combined benefit of multiple brands. Wouldn’t you rather do your laundry where you also have a doggy play area or a salon or a gym? Customers want to make good use of their time rather than watch the dryer spin. Choosing your co-branded location is an easy decision.
Co-branding leverages complementary brands with operational efficiencies. It also enhances your customer’s experiences and your bottom line. Theoretically, any combination that appeals to customers could work together as it combines two entities in ways that make good business sense.
A note of caution: When you buy a franchise, you agree to work within the franchisor’s framework. Some franchisors preclude their franchisees from operating any kind of competitive business (like two types of food establishments in one place). Still, some natural pairings improve the customer experience while increasing your franchising opportunity for success. Many franchisors will be open to the idea of co-branding, willing to enhance their brand with a cooperative partner.
What co-branding combination sounds good for you?
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.