Franchise co-branding, the association of multiple franchise concepts or brands to stimulate simultaneously growth among the brands or concepts, can create great synergies leading to franchise success stories. Co-branding efforts in 2010 show reason for franchisors to be both optimistic and skeptical.
Coldstone Creamery and Tim Horton’s 2009 partnership of franchises is one co-branding venture that, so far, is appearing to be successful. Co-branding works when franchisors can successfully leveraging each brand’s opposite strengths. For instance, the day-time customer traffic of Tim Horton’s and evening for Coldstone Creamery compliment each other and the franchisees are able to “fill each other’s non-peak periods with new or even repeat customers“.
But co-branding also has inherent risks. These risks were evidenced in a 2010 lawsuit filed in Illinois this fall by a franchisee of Yum Brands. The franchisee operated 26 fast-food restaurants, 6 of which were the co-branded Long John Silver’s and A&W concept. The franchisee claims fraud in the lawsuit alleging that the franchisor’s co-branding attempt was a failure, that the franchisor failed to use advertising funds budgeted for the co-brand concept, and the franchisor did not disclose deals it had with the single brand A&W restraint franchises which hurt the co-branded restaurants and ultimately led to the franchisee’s declaring bankruptcy.
While Yum Brands is vigorously defending the lawsuit, the complaint alleges that Yum Brands ceased offering the co-branded stores in 2009.