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Great explanation and thank you for taking the time.
And you make an interesting point, the franchisee is already paying for all that advertising. I get JL coupons in the mail just about every month and they have Pennzoil splashed all over the insert, which is fine by me if I were so inclined to use them - you can easily do worse than Pennzoil but I don't understand why you wouldn't leverage SOPUS for your lubricant's. I guess if you got a smokin deal from a local distributor it might make sense..but still, to think about the ad dollars you're throwing away. Yikes. I don't imagine JLI allows a franchisee to opt-out of it's ad programs.
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Thanks, I'm glad to weigh in when I can contribute. Sorry to take so long to reply. I thought I'd get a notification when you replied to me, but I didn't. I'll have to see if I missed that in the setup.
Jiffy Lube franchisees can be a funny bunch. But, when you're talking about annual oil costs in excess of a million dollars for owners of multiple stores, cutting that cost can realize significant contributions to the bottom line, even if national advertising features an oil brand different from the one used. And the price of the oil is only part of the equation. Large oil buyers will often get cash payments from the oil company. They are just like a business loan from a bank, but can be paid back by buying nearly exclusively from one oil company for a period of time. The repayment of the loan is built in the price of the oil, based on estimated purchases for the term of the agreement. Hopefully, both seller and buyer calculate correctly on the projected purchases, and everyone is happy. So, the brand of oil you see may depend almost exclusively on what deal makes the franchisee the most happy. Without these cash payments repaid this way, the price of the oil is much lower. This type of lube agreement is common from a two bay garage who may have lube equipment gifted to him, all the way up to large car dealers, where five figure payments are common. And, no, last I knew, franchisees couldn't opt out of advertising. It's included in the royalties they pay.
It's very likely the coupons you receive are local advertising done by the franchisee. I remember the fellow I worked with hated to do couponing, because he believed it lowered the perception of the value of the service in the eyes of customers, and they'd be reluctant to pay full price. The coupons you receive with the Pennzoil branding are likely at least partly reimbursed by Pennzoil through a co-op advertising program. Based on purchases, a Pennzoil buyer builds credits which can be spent on approved types of advertising. To get approval, branding needs to be very prominent. A minimum size for logos and emblems is determined by the size of the ad in square inches. While a Jiffy Lube franchisee buying, say Mobil, would lose this program from Pennzoil, but most, if not all the majors have a type of co-op advertising available to their customers.
