Date: Sun, 20 Feb 2000
Subject: AMS-Forum Franchise/Value of Brand Name
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A franchiser makes money 3 ways: 1) selling the concept; 2) collecting royalties (% of sales); and sometimes 3) selling supplies. There is a curve which the sales cycle follows (things are great if the concept stimulates purchases) until either franchisee failures catch up and ruin potential sales or others jump into the market and competition eventually saturates the business.

However, every franchise needs a concept - a commodity if you will - to sell in the first place. If consumers already can't, won't or don't distinguish between van line names, why buy one when you can invent your own? What value is there in having the name when the current acquisition mania is blurring brand names left and right in the consumers eyes? Maybe in COD sales the sale will hinge on the number of zeroes on the balance sheet between the van line and the company, but consumers have time and again shown a penchant for the underdog, especially when faced with competing behemoths who are out of touch with what they really want - good service, good price. Maybe that's why, despite the reduction in "big name" van lines, there are more independents running on FHA and ICC numbers than ever before. We might complain about the number of independents running ads in our local yellow pages, but when that trend keeps growing year on year (as it has over the last 5 years) maybe that should tell us something about the consumer's mindset: Is there no difference between the brand names? Can I research and make up my own mind about what's best for me? There are so many choices, should I go with whom I feel most comfortable with? Can you blame them for thinking a low price (which they may get several of if the seek multiple quotes) is maybe not such a bad deal?

Bob @ LGC

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