Titans of Franchising Reveal Their Secrets for Long-Term Success Paradoxically, a stable business is one that constantly reinvents itself to meet changing customer needs.
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Success leaves clues. Any business that has been around for 40 years must have secrets to divulge, lessons learned, war stories. After all, it's been said that your first 40 years of life is just practice for your next 40. So let's save ourselves years of mistakes by finding out right now, from the very best, what makes a franchise thrive for the long haul.
I've interviewed CEOs, founders of franchise companies and even what we in the industry call "franchise dignitaries" who have four or more decades in business, in order to get in their heads and understand how their companies made it. I've parlayed that information here for you. What I have found is that their combined knowledge contains a recipe to the secret sauce we're all looking for to make not only our businesses, but our lives, deliberately successful.
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I focused on franchises that I regard as world class operations. I concentrated on service businesses that, even though they may not be a household name, have had huge success and longevity. These services have become so successful, even without consumer awareness and without being flashy or sexy. I had to find out how they did it. How does a franchise sustain itself for 40 plus years through economic downturns, natural disasters or just plain market demand changes?
The first titan I had the pleasure of sitting down with was Bob Titus, CEO and founder of Minuteman Press on Long Island, N.Y., a 950-unit franchise. Titus added the first two ingredients of our secret sauce -- relationships and the ability to accept change.
Minuteman Press started as a print and copy shop. Over the past 40 years, they've had some small -- and some monumental -- challenges. Think about how Titus must have felt when a little-known company called Xerox came out with the notion of putting a copy machine in every office around the globe. Titus said he had a lump in his throat for a very long time. What he did to face the challenge was obtain better, faster copiers and start expanding the depth of service his franchisees were offering.
Now, four decades later, Minuteman franchisees design, print and promote any trademark, name or logo on anything you can think of. Titus said that the culture of the franchise is the most important piece of their multi-decade success, proven by the fact that 125 of the franchisees in the company are second-generation owners. That is something you don't see very often in a franchise. Titus takes pride in knowing as much about each franchisee's personal life as possible. "This is a family. Our owners are not numbers; they are people. We want them to be successful and happy," he said.
Over at Express Pros Staffing in Oklahoma City, Bob Funk, CEO and founder, adds our next ingredients -- values and integrity. He said that it's about values of the potential franchisee and whether they fit in with the company's culture. Funk, a theologian by schooling, feels that his business is almost a ministry in itself. There is nothing more satisfying than helping someone get a job; in knowing someone is going home to tell their family, "I got a job!"
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Funk is a member of the International Franchise Association's Hall of Fame, right along side luminaries like Ray Kroc of McDonalds, Dave Thomas of Wendy's and Fed Duluca of Subway. He said quality franchisees are the main ingredient in a successful franchise. Last year, Express Pros had 8,000 applications from people who wanted to purchase a franchise, and the company awarded only 47 licenses. That speaks volumes regarding integrity and real care for the longevity of the system.
Russell Frith, retired CEO of Lawn Doctor and the 2016 inductee into the International Franchise Association's Hall of Fame, adds our next few ingredients -- awareness coupled with the ability to adjust and trust. Frith said one of the many reasons for his success is that he always remained aware of changes in the market place and consistently adjusted his model to keep ahead of the market demands. He said that a franchise company needs to listen to their franchisees because they are in the trenches every day and know first-hand what the customers are asking for in their communities around the country. In addition, the Hall of Famer agreed that it all comes down to finding the right franchisees for the outfit. In addition, the company needs to have the ability and wherewithal to make decisions that are equitable for both the franchisee and the franchisor. When justifiable decisions are made on behalf of both business partners, trust is built.
Just like in any relationship, trust is the paramount factor that could have the ability to make or break the franchise model in tough times, said Frith. This sentiment was seconded by David Mattson, CEO of Sandler Sales Training. Mattson feels strongly about having franchisees involved in every decision that affects them. The company has set up committees to help with development of new programs and initiatives that they explore or implement. Having complete transparency with the franchisees is what makes for a great franchise. That bond of trust can withstand obstacles that will, no doubt, come against the company.
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Jeff Elgin is the founder and CEO of FranChoice, a Minneapolis-based franchise consulting company that matches individuals with franchise opportunities nationally. Elgin's company analyzes franchise concepts across all business sectors to ascertain whether they have what it takes to be a successful company. His insight and experience is summed up clearly as he added, "The secret to successful longevity as a franchisor is to understand that your success comes from having successful franchisees. Put their success first and your success will happen naturally." It seems that there is a theme occurring here.
Our recipe for success can be summed up by the following insights gleaned from these masters:
- Be selective about awarding franchises. You can't have a great business without great people. In a 40-year-old business, it comes down to the quality of franchisees, not the quantity. Great owners will sustain the whole franchise over the long term. It's important to select franchisees who have the same values and fit the culture of the franchised organization.
- The founder, CEO and the executive team must be able to cast a vision for the company, and give the staff the latitude to make decisions. Like a ship's captain, the leader of the organization needs to know the industry well, and look out for storms on the horizon that may impact the franchise. They must have courage to face the challenge and adjust the sails.
- Be sure to make decisions for the company that do not negatively impact the profits of franchisees. Franchisees must be profitable. This is paramount. If the franchisees are making money, they will be happy. If they are happy, they will expand and also allow you to recruit more franchisees. Sour franchisees will stop growth by giving a negative view of the concept when perspective franchise owners call them for validation of the franchise. Mattson said franchise CEOs have a moral obligation to go above and beyond what their franchisees expect. Don't fall short of the franchise owner's expectations. If you do, it will have possibly irreversible effects on the franchise.
Summing up the analysis of world class franchises very well is Lane Fisher, partner at FisherZucker, LLC, in Philadelphia and member of the IFA Board of Directors. "As I look at common characteristics of mature, stable franchisors, they all are constantly reinventing themselves," she said, "reemerging and evolving their respective business models in terms of product or service offerings to meet consumer demand; embracing the latest technology and having a corporate culture where all interests are aligned in making franchisees profitable and successful. Moreover, these brands often operate on the leading edge of technology, and lead market disruption rather than fall victim to it. Successful brands typically develop a long-term relationship with the consumer, often spanning generations, and reward customer loyalty with unique purchasing opportunities."
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If you're the founder of a business, there may come a time when you need to look yourself in the mirror and honestly ask, "If I'm out of the equation, will my business still work? Do I truly have a concept that is duplicable, or is it a business that is doing well because of my passion for it?" Hopefully you can ask yourself these questions before you start franchising your business because unfortunately, there are many franchises that don't have the correct answers to these questions, yet are selling franchises anyway. Those are the ones that don't get to say they've made it to 40 years.
Knowledge is the main ingredient in a recipe for success. Now you have the secret sauce for successful franchising. Go make it, for the long haul.