Franchising: The Home Team Advantage

Kenny Brightman
Business

During the last 25 years, “If you build it, they will come” has remained a beautiful, utopian quote for “wantrepreneurs” to fall back on as they pursue dreams of business ownership.

Don’t fall into that trap.

Sure, you’ve done it once, and successfully I might had, but now you want to bring your beloved business to the masses. However, now is not the time to lean on your fence post and stare starry-eyed into the horizon for scaled success. If you build it (properly), market it (correctly), and give the home team an advantage (to win), then they will come.

Now is the time to pivot and put on a different pair of shoes—someone else’s, namely their cleats.

In my last post, Get Others To Invest In Marketing Your Brand, I explored the what-ifs and “is it right for you” scenarios for selling your name, image, and product via a highly structured network. Being a co-owner in a couple businesses myself, I have been approached before about franchising and licensing one of them. I decided to pass on the offers, and here’s why:

  •       I wasn’t ready to invest the time it would have taken to give the franchisees or licensors the value they should get.
  •       The environment in which the business operated was highly competitive and, in the last five years, has become saturated and driven by commodity pricing.

Thus, I didn’t want to become one of many, and staying on top would have been a king-of-the-hill battle that wouldn’t have produced profitable, long-term growth and market share for the company or franchisees.

So, why did they approach my business in the first place? They saw a high-quality product, great presentation, and sterling company image. Everything a single business needs to be successful (beyond the numbers, right?). We prided ourselves in providing just that, and those three traits are exactly what a franchisee is looking for in an investment at a glance. Beyond the product and brand is where the true value of the franchisor is made, ultimately making the franchisee successful, both fiscally and positionally. At the heart of the whole “sell” is making your team of franchisees the REAL success story.

Buyers . . . They’re a Mixed Bunch

Hands-off investment, sole career, or for a retirement job they’re all out there.

Franchising is a growing industry. Nearly as many franchise opportunities exist as there are types of franchisees. There is no one-size-fits-all. Some want a so-called “retirement job” as an owner, and others want a steady, primary income. Still others want to shift vertically in a market or industry in which they are already experienced. What they all need, however, are resources to succeed with minimal effort and to know their money is well spent in a growing market with an established or growing brand. The questions for the franchisor then become What can I best provide to my franchisees? and What will make economic sense for them?

Go Ahead, Shout at Your Customers (If That’s Alright with You)

800px-Firehouse_Engine_Company_31_2

Hey oh!

In some cases, image is everything and clearly one of the big selling points of a franchise. It’s one thing to have a great name and recognition, but product/service aside, with a great brand comes consistency that needs to be standardized from the start. This isn’t necessarily about dictating every detail of that brand. Homogenizing a logo, an exterior sign, and a few posters will not cut it. You need a recipe for spreading your brand and user experience on a large scale—think gas stations. Some brands never deliver the same experience consistently.

We work with clients every day on their public image. But moving past the logo, letterhead, and website, they can easily forget that brand is all about consistent experience. It’s a constant discussion we have with business owners, and it always helps them gain a better understanding of user experience. The brand experience is paramount to supporting a quality product or service, and it doesn’t have to be expensive or extravagant. It can be chocolate on a hotel pillow or an honest, warm greeting from a server.

If you’ve been to Firehouse Subs, you know what a simple experience it is. Truly, it’s what you would expect when walking into a firehouse filled with all your old pals. Just shy of “Hey, Kenny,” you get the full-on shout out! Someone will break for a moment from behind the “five- alarm” pace at the sandwich counter to yell a greeting when you walk through the door: “Welcome to Firehouse!” It’s the bustle of a firehouse and the warm welcome of a comrade, all in a delicious sub shop! It’s exciting and consistent at every location. It’s not expensive, either, but it’s clearly a piece of the overall brand, and it makes the experience unmistakable and unique.

Having a brand standards guide is just the start, and building this into an “experience guide” will make a statement to emphasize your offering. It’s not to say the wheels will fall off the wagon without this depth of planning to offer to franchisees. Every effort that can be made to ensure the company keeps its unique image and position will be justified if sound business planning variables are addressed. The result is a remarkable brand.

Firehouse Subs, as mentioned previously, has been ranked #7 on The Best Franchises by Forbes Magazine, named “Company of the Year” by KPMG in 2006, and is the “National Chain” winner of the National Restaurant Association’s Restaurant Neighbor Award for community service.

Remarkable, by definition, is “worth remarking about.” If shouting at your customers is a way to welcome them like an old friend, do it! It’s not your logo that provides experience.

Be remarkable and consistent in everything!

Money: The Give and Take

Here’s the nitty gritty: Though I don’t provide legal or financial consultation to franchisors (we do have people we can lean on for that level of expertise), they must be addressed because this is business, and not a paid mission trip; money is at stake.

The fees, royalties, and payments that are made to the franchisor make the system stronger and benefit each franchisee. When shopping around, a savvy potential franchisee will look at the support they will receive initially and ongoing. What they pay in overhead, commission, marketing, royalties, and so on that the franchising company requires should be used to build infrastructure. That infrastructure might consist of the following:

  • advertising payments, both to local and national advertising funds
  • grand opening or other initial business promotions
  • business or operating licenses
  • product or service supply costs
  • real estate and leasehold improvements
  • discretionary equipment, such as a computer system or a security system
  • training
  • legal fees
  • financial and accounting advice
  • insurance
  • the costs of compliance with local ordinances
  • employee salaries and benefits
  • national conventions for owners to attend as part of their fees (refunded as mandatory spend-to-attend events)

These are all necessary components for a start-up business, and, supplied independently, take a substantial amount of time to put in place. The goal should be to have this bundle of costs and items as part of the turnkey franchise start-up so the business can be up, operational, and profitable as soon as possible. Economies of scale can work well, and having pre-negotiated offerings from suppliers can cut down on the time to market. Economies of scale are also what allow a franchisor to scale rapidly (when done properly) and reap the financial benefit.

Divide and Conquer

There are so many facets to franchising, and within each respective industry, regulatory issues and regional and state nuances affect business. This is where you would pull in a trusted advisor, run the numbers, scout territories, and perform demographic studies. Why? you might ask. Because it all comes down to two questions: Will they come? and How well will this work?

In the Hands of the Experts

“If you build it, he will come.”

We all remember that line from the 1989 film Field Of Dreams and have heard it a hundred times since as a pointed quote from the ghost in the corn talking about the single player that will start the movement of many players (who are ghosts). Though most people use the quote, “If you build it, they will come.” from later in the movie where it’s an issue of losing his entire estate. In the movie, Ray Kinsella, played by Kevin Costner, is an Iowa corn farmer who begins hearing voices of ghosts in his cornfield. convincing him to create a baseball field. This leads him to nearly lose everything after building a full-size baseball diamond in the middle of nowhere. The ghosts then encourage him to build bleachers by then telling him “If you build it, they will come”, so he can save his families farm by selling tickets to fill the seats. [insert sarcasm] Brilliant!  (Spoiler alert: the ghosts eventually arrive, and so do the fans. Typical Costner film.)

This is a great quote to highlight a shortcoming in franchising. Rarely will the “if you build it . . .” mentality with bear fruit, and it’s a perfect example of why a strong marketing and advertising strategy is a must. A single location with a loyal customer base could have a cult following constructed around a particular culture and the owner’s willingness to network and be involved in community. That’s not really marketing the business, though. Networking and name recognition alone can’t be relied on to make a business grow—ever. In that case, without modification, not a candidate for scaling.

To rely on a new franchisee to solely develop marketing while getting the business rolling is more than ill advised. He or she is deemed a worthy business owner because of skill and investment, not because of amazing marketing skills. Whether they can market or not, they should be managing the franchise. I wouldn’t eat foods just because they are made by the best marketer. Find an expert partner to guide a marketing support system. This ensures it’s done and done right.

Correctly and strategically providing consistent advertising, messaging, marketing and resources to a network of locations allows the company to help each location succeed. What’s forgotten here is the added value of providing the company key insights and marketing analytics to monitor and adjust to the desires of the clients. What can be measured can be managed, and inversely, what can be managed can be measured. Whether with AdWords; industry-specific platform placement, such as OpenTable, OpenBay, and Houzz; strong corporate social media presence; or location-based websites for each outlet, the importance of good marketing and advertising can’t be understated. This saves everyone time, money, and potential headache. Consider the last time you saw a struggling business owner do his or her own marketing and what that did to the bottom line.

If you think professional services are expensive, wait until you try amateur.

Turnkey Homerun

Babe Ruth Called Shot

 

Investors are looking for the right mix of everything to get excited about. Having that perfect mix; training regiment, support, marketing, and key differentiation already in place is vital.

Be the best team owner! Track the stats, promote the team, and fill your bench with great talent that have a strong vesting interest in the team’s success.

Allow your franchisees to step to the plate with bases loaded and deliver what they are already good at — being a business owner.

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Connect with Kenny

Written by:
Kenny Brightman

A native Daytonian, an Alumni of The Ohio State University in Industrial Design, and an avid business enthusiast. Kenny is focused on creative approaches to marketing, business, and branding. He prides himself on strategic, aggressive growth for Lion+Panda, and for their clients. Outside of business, his passion for everything automotive lead him to found Dayton Cars and Coffee.

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