How 2020 enabled franchisors to embrace change and support their international franchise networks in the process.
If you ask 100 franchisors to list the ways the pandemic changed their relationships with franchisees, you’ll get at least several dozen different answers. But there will be one consistent answer: Change.
“Change is good; you go first,” wrote the late Tom Felte`1nstein, who coached franchisors for many years to help them understand how to better support and advance the success of their franchise networks.
It’s human nature to resist change. Before we make changes, we want time to look at the alternatives and study the predicted outcomes. We want to know the pros and cons of change and, of course, any affiliated costs. But up against a pandemic, those who wait for someone else to change first already lost.
Franchisors like to win! Some are better than others, and the best proved in 2020 that they had to make changes without waiting to test, to speculate, or to ask too many questions. Many franchisors changed their plans in a heartbeat, or so it seemed. They changed faster than people and companies usually change. And many changed again and again.
During the first several weeks of the pandemic, I often got this question: “What’s Ray doing?” Ray as in Ray Titus, founder and CEO of United Franchise Group with 10 franchise brands operating internationally. Ray as in Ray Titus who several years ago pledged $1.5m to teach people about franchising at the Titus Center at Palm Beach Atlantic University. “What changes has Ray made?”
Even though I didn’t specifically know what Ray was doing I knew one thing for certain: Ray was selling franchises! Because that’s what seasoned franchisors do. With obligations to communities of people including franchisees, suppliers, investors and employees, franchisors sell franchises even in a pandemic. That’s how I answered everyone who asked about Ray but then I decided to host a Zoom franchise conference entitled What Franchisors Can Do Now, featuring Ray and other members of the Titus Center Advisory Board. The interest in that conference led to a dozen more conferences, most of them designed to help franchisors and franchisees succeed in spite of a pandemic.
While “change” became the byword for success in a pandemic, it was easy for franchisors to know what to change. How to make changes also fell into place, especially as franchisors spoke to their franchisees and to their advisors, including other franchisors, all of whom were also making changes.
“By the end of winter 2020, franchisors were living in a “new normal” as they continued to sell franchises, train and support franchisees, and provide essential products and services to the consuming public internationally”
Many changes almost instantly became “aha moments”. Franchisors said to themselves: “Why weren’t we doing that (or doing it that way) all along?” Almost every change strengthened the franchisor-franchisee relationship, and many changes saved money. Perhaps most importantly, changes that obviously benefitted the franchisees demonstrated the franchisor’s commitment to the franchisees and to franchising as a business strategy.
By the end of winter 2020, franchisors were living in a “new normal” as they continued to sell franchises, train and support franchisees, and provide essential products and services to the consuming public internationally. It wasn’t an overnight success.
Businesses, including franchised businesses, faltered and failed. With few exceptions, revenues fell below projections and leadership teams rejigged their goals while scrambling to meet their financial obligations. Millions of employees were furloughed. Even a year after it all began there was uncertainty about the future for many franchise companies. The “new normal” would not be normal enough for everyone, but anyone who wanted to survive had plenty of opportunities.
Change led franchisors to rethink their businesses in 2020 and in so doing they not only got ahead of the pandemic but also raised the bar in franchise management and operations. Here are seven ways that franchisors made changes to improve their relationships with franchisees.
1. Do they walk the walk?
In franchising, the “rule of sameness” almost always applies. “This is how we do it,” franchisors tell franchisees. A brand’s success is built on consistency of quality, environment, and behaviors. “All franchisees are treated the same”. Except in a pandemic. Gary De Jesus, chief brand officer of Massage Heights, pointed out that flexibility is the most important way to maintain a strong franchisor-franchisee relationship. “Many systems are rigid, which lends to them being less flexible and responsive. The ability to listen and positively react is important to building trust and maintaining a strong relationship,” he said.
Flexibility resulted in 100 per cent royalty abatements for five weeks and 50 per cent abatements for another month at Blaze Pizza, where Rick Gestring is the chief restaurant officer. “Our initial focus was on providing urgently needed financial relief to our franchisees. Our corporate team provided financial coaching to ensure that our franchisees would have the most essential resources early on.”
2. Innovation
In spite of Gestring’s willingness to be flexible, he acknowledged the importance of finding long-term solutions for a brand that enjoyed 80 per cent dine-in business. In just three weeks, his team launched systemwide a new curbside carry out process and developed a unique QR code to deliver contactless menus as well as expand third party delivery partners. “As a result,” he said, “we experienced a 155 per cent increase in digital sales and 16 percent increase in curbside.”
3. Collaboration
Jennifer Tucker, chief operating officer at Homewatch Caregivers, recognized the need to provide a robust Home Care Toolkit to address legal considerations faced by franchisees delivering care in homes. Rather than create the document internally, her team collaborated with a leading law firm to provide this resource to franchisees. Tucker also collaborated with a consultant to develop a new Virtual Care Services strategy for franchisees to implement when an in-home visit wasn’t possible.
At Blaze Pizza, Gestring appointed two franchisees to a team leading a systemwide pricing study. “We’re not only encouraging franchisees to provide feedback,” he explained. “We want franchisees to work with our outside partners to provide their expert advice on key decisions.”
4. Coaching
Scott Redler, chief operating officer of Freddy’s Frozen Custard & Steakburgers, uses business coaches to “discuss best practices and make recommendations” to each franchisee. But he pointed out that coaching must be “a two-way relationship”. A company must be willing to receive franchisee input and feedback through informal daily conversations and formal committee recommendations.
At Card My Yard, where Jessica Stanley is chief marketing officer, the company uses a Facebook business page to coach franchisees daily. Mark Dawson, chief operating officer of One Hour Heating & Air Conditioning, includes coaching in monthly Town Hall Meetings and launched a monthly call to teach best practices to his network’s top 10 franchisees. At Homewatch Caregivers, Tucker uses franchisees to provide coaching in a peer-to-peer program created and facilitated by the corporate office.
5. Staffing up
At a time when most businesses downsized, it seemed counter-intuitive to add staff, but some franchisors continued hiring during the pandemic to demonstrate their commitment to franchisees and to stay ahead of their growth. Card My Yard benefitted from consumers celebrating milestones at home and simply needed more staff.
“We want franchisees to work with our outside partners to provide their expert advice on key decisions”
6. Personalization
Every franchisor starts out providing “the personal touch”. It’s easy to do with a few or even a couple of dozen franchisees. But with growth comes standardization, for example, the rule of sameness. Stewart Vernon, chief operating officer of America’s Swimming Pool Company, insisted there’s no better way to form partnerships with franchisees than to focus on each franchisee’s growth and happiness.
At global giant Neighborly, where Dina Dwyer-Owens was chairwoman, the company offers every franchisee a unique program titled Design Your Life. In what may be the ultimate personal touch, the course teaches franchisees how to live by design not by default. During the course, franchisees “get clarity about their personal values, understand the six areas of life and how to harmonize those areas to achieve greater peace, build a dream list and leave with two dreams they’ve converted to targets with clear and actionable steps. And then it’s all about execution; progress not perfection,” said Dwyer-Owens.
De Jesus at Massage Heights said he prefers the personal touch as a way of building relationships with franchisees. He said every franchisor should set aside one day a week to speak with franchisees. A.J. Titus, president of Signarama, frequently reaches out to franchisees via text messages as well as phone calls “just to check up with them personally.” At Card My Yard they call themselves “joy bringers” and they look for opportunities to celebrate with their franchisees. Stanley said: “Bringing joy connects us even more with our franchisees”.
7. Building an online presence
After years of insisting that prospective franchisees show up in person at the home office for a day or two of discovery, franchisors discovered something themselves: It wasn’t necessary. In-person discovery days may still be preferred, but every franchisor that hoped to continue selling franchises in the pandemic quickly learned how to recruit using online tools. Of everything that’s changed as a result of the pandemic, franchise development seems to be affected most. And in a good way! Online discovery reaches more people faster and without the interruption and cost of travel.
But franchisors found many other ways to “go virtual”. They introduced weekly video updates and conducted Franchise Advisory Council meetings via Zoom. Tucker at Homewatch CareGivers explained that early in the pandemic she introduced weekly webinars but then gradually decreased the frequency. However, the company moved its annual meeting to an online format and benefitted from increased participation. “We plan to use this format again,” she said.
Matthias H. Lehner, CEO and founder of Bodystreet, explained his staff worked “day and night” to transfer their brand from physical studios that customers could no longer visit to the “web and (then into) the living rooms” of customers. In that process, the company achieved a 600 per cent sales growth by selling healthy products via their eStore. “These products are only additional sales and not our core business,” he explained, “but a 600 per cent (result) is simply incredible.”
In some instances, franchisors moved to online out of a sense of responsibility and safety. At TBC Corp., franchisor of Midas and Big O Tires, Lenny Valentino, vice president of franchise development, explained: “We have moved our traditional in-person activities to video conferencing platforms. Our franchisees have embraced this change as it allows them to remain in their stores and service the customers. We look forward to the future when we can do a mix of in-person and virtual events to get our franchise family together.”
Indeed, every franchisor is looking forward to the future with the pandemic discussed as past tense. Lehner has already planned the Bodystreet Brand Festival, an outdoor event comparable, he promises, to Woodstock (but in Munich, Germany)! Post-pandemic, he said: “we simply have to make our brand, the brand values and everything that belongs to our culture tangible and experienceable again.”
But until then, and even then, savvy franchisors will continue to make changes to build and maintain strong relationships with franchisees.
THE AUTHOR
Dr. John P. Hayes is chair of the Titus Center for Franchising at Palm Beach Atlantic University in West Palm Beach, Florida.
