Over the last decade or so, a franchising trend that has been on the receiving end of a great deal of hype is the “co-branding” concept, in which one or more independent brands unite to create a unique product or service. You see co-branding all the time and probably don’t even register it-for instance, that Subway located conveniently inside the gas station for you to grab a quick sandwich on your roadtrip? That’s the beauty and convenience of co-branding.

The concept of co-branding was once hailed by the holding company that owns and operates Taco Bell, KFC, and Pizza Hut as “potentially the biggest sales and profit driver for the restaurant industry since the advent of the drive-thru window.” When it’s done right, it can significantly reduce operational costs and increase traffic by appealing to a wider customer base. However, when it’s done wrong (Seafood and Spareribs, anyone?) it can confuse your target audience and jeopardize the reputation of a brand.

So what determines a successful co-branding situation? The key is BRAND COMPATIBILITY. The more that the brands complement one another in management style, philosophy, and manner of operation, the more likely they are to mesh well together and attract a like-minded customer base.

If co-branding your franchise is something you might consider, make sure that you are prepared to do your due diligence in researching to ensure that there is a market and demand for BOTH of the brands. You must also work to make sure that both brands are represented EQUALLY throughout the location. Finally, be thorough when addressing contractual issues to ensure that all important provisions and needs are included for each brand in order to provide clear-cut operational instructions. Among other items, these points should cover important issues like marketing, brand specifications, confidentiality issues, licensing specifications, warranties, payments/royalties, indemnification, disclaimers, terms and termination.

What are some co-branding concepts that YOU think would be successful? We’d love to hear your ideas for the next big franchise collaboration-drop us a line!

SOURCES: “Co-branding Offers Best of Both Worlds” by Kerry Pipes via Franchising.com; “New Franchises Team Up and Make Co-branding Work”, by Jason Daley via Entrepreneur.com