Neck and Neck
2 Is Better Than 1 . . .
It seems being No. 2 isn't so bad-there's the goal of
reaching No. 1 and having greater liberty to be more aggressive
with aspects like advertising than larger, established chains that
have more to lose. So is it better to be an aggressive No. 2? "I think
it's better to be No. 1," Spinelli says. "No. 2 is on
the precipice, and small mistakes can be big failures. In
franchising, the name of the game is growth and size." But, he
adds, "Ray Kroc [founder of McDonald's] said, 'Green
and growing, or ripe and rotting.' It fits for most franchise
companies-fighting to be No. 1 is important." From a franchisee's perspective, being part of an aggressive
chain can be exciting. Andy McCook, franchisee of three
Quizno's in Las Vegas, was displeased with the lack of support
from the franchise he had previously owned and decided to look into
Quizno's. He opened his first location in July 2000. The
aggressive No. 2 mind-set has been advantageous to McCook, who says
the support has been tremendous. "We [frequently] get new
sandwiches, they remodeled the stores and paid for it, and the
advertising is great." McCook was so thrilled with the
franchise that he opened his second location six months after the
first and opened his third in December 2003. He now plans to open
several more. Content Continues Below
Can being part of an aggressive franchise have any
disadvantages? McCook hasn't seen any, but Spinelli does.
"Sometimes a franchise will get ahead of itself," he
says. "And franchisors or franchisees or both will invest a
fortune in rapid development, but the marketing impressions
don't catch up, and the understanding of the menu doesn't
catch up with the product offering. And there's a ramp up in
the sales that can be painful." Though he cites Subway as
successful in strategically managing increased sales with
aggressive store development, he warns other franchises from trying
to replicate its formula. "So many variables can create a
problem. It's easy to outgrow your capacity to service
franchisees, or for market demand to absorb those new stores. These
pockets of failure can bring down the whole plan," Spinelli
says. "My hat's off to Subway for pulling it off, but I
don't think they're going to be the norm" Instead,
Spinelli feels the better bet is on Quizno's approach of
aggressively targeting regional growth.
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