In my 45-plus years working in the franchising universe, I’ve seen and worked with many brands of all sizes that are vying for customer loyalty, franchisee buy-in, and a niche they can dominate or call their own. We are all coming through a very challenging time having learned a few things about our brand’s resilience and are ready to charge forward with a new and improved playbook for recovery and growth.
When the FranConnect team compiled our annual Franchise Sales Index Report this year, all signs pointed to an economic burst. We analyzed data from over 600 of our customers and found that while franchise sales took a big hit in 2020 because of the pandemic, brands across all industries continued their recruitment efforts and reported strong results. The time is now to capitalize on pent-up demand, both from potential franchisees and consumers.
Cutting through the noise
All brands need to find a way to cut through the noise. When I speak at a franchisor’s conference or at their executive-level events, there’s an exercise I typically like to walk the audience through. We compare four of their direct competitors’ brand websites side by side, including their own.
We take away all of the brand imagery, color, and the ways they are typically identified, such as the golden arches of McDonald’s, and then ask them to identify their own brand out of those four options. Invariably, brand executives can’t clearly identify themselves from the lineup. The guesses are usually evenly split four ways.
So if the people working for the brand can’t easily recognize their own messaging, how is a consumer or a franchisee supposed to know what you’re about? Everyone is out there talking the same game about being the best, having the greatest service or pricing, having the best equipment, or whatever other accolades they’re selling.
That said, how can a brand stand out in a crowded category?
The benefits of burgeoning brands
First and foremost, differentiation. Smaller, emerging brands really have an opportunity here and some advantages over larger brands, which often move slowly. Yes, large brands typically have deeper pockets and higher levels of brand awareness to work with, but they also are often laden with bureaucracy. Emerging brands can effectively compete through differentiation because they are not mired in years and years of tradition and expectation. Sometimes tradition is not such a good thing when it limits your freedom to innovate.
Look at the restaurant segment, for example. Menu innovation is definitely an area of opportunity for differentiation. Franchisor Rusty Taco is highly recognized for culinary innovation. In addition, the brand permits its franchisees the option to build a local product variant into their menu. Rusty Taco can do something in its market that is unique from all other markets, and that autonomy drives the brand’s culture of creativity and community integration.
Conversely, Firehouse Subs, a leader in the sandwich category, is differentiating itself by “giving to a higher cause.” Firehouse Subs created the Firehouse Subs Public Safety Foundation that has provided lifesaving equipment and needed resources to first responders and public safety organizations, helping the brand to be better prepared to save lives in the communities it serves.
Charitable giving resonates with “reimagined consumers” – a majority of buyers in these challenging times that have identified that the pandemic made them totally revise their personal purpose and what is important for them in life. According to a study from Accenture, this represents 50 per cent of consumers, followed by another 33 cent who say they are unsure, which is creating new white space opportunities. Differentiation is key when competing in the franchise marketplace. Younger audiences today are not interested in brands just because they are beloved or their parents grew up on them. Now people are more interested in finding brands that are offering something unique and putting their own twist on established concepts.
“A lot of people give lip service to culture, but the bottom line is if your environment is enjoyable and fosters connection and collaboration, you’re going to create a sense of belonging that key talent will want to be a part of”
Another example that comes to mind is a new brand in the pet space called Fetch Park. It’s a dog park with a membership system, “bark” rangers, and a safe, comfortable environment for dogs. It also boasts a very social BARk environment for humans with a full airstream bar, coffee, and funky murals. Fetch Park is a growing concept with a lot of appeal.
There are so many different variations on a theme. Once upon a time, how would you compete against a behemoth like Gold’s Gym? Now there are boot camps, barre training, and so many different ways to be able to enter that marketing space. You have to take a really close look at your branding and what your message is to prospective audiences. Orangetheory is a great example in the fitness arena. It has grown to over 1,385 locations in just 10 years – and did it by standing out with a combination of science, coaching, and technology.
Technology and communication
Speaking of technology, franchise management software is now available at more price points and can be incredibly effective in helping emerging brands compete in a David vs. Goliath capacity using many of the same capabilities that used to be the domain of the larger, deep-pocketed brands. Smaller franchise brands now have the opportunity to effectively compete on the same playing field by using affordable platforms to aid their expansion, unit-level profitability, and efficiency.
Particularly in the early stages of a brand’s growth, franchisee profitability and satisfaction are of paramount importance. You need their validation for investing in your business, so you must invest in their good experience. It’s incumbent upon franchise field operations teams to be focused on making sure your early adopters are doing well. This is an area where technology can assist, providing a system of business intelligence to track performance metrics, and to generate “actionable playbooks” on how to address performance shortfalls.
Communication is another area where brands can stand out. Franchisors that can offer a “hub” – a central space online for franchisees to share, learn, and grow together – report the highest franchisee satisfaction. Expecting franchises to keep track of PDFs, spreadsheets, videos, Google Drive documents, and digital operations manuals spread across multiple shared drive folders and intranets is a recipe for frustration. I always recommend brands offer a single home for their most engaging content.
Culture and integrity are key
At the end of the day, it’s all about execution. To be successful, brands must focus on who they are and what they stand for. And culture plays a role in that opportunity.
For example, if you are a QSR brand, you might think you are competing based on your food, but your food is an ante. It’s the other things you do besides the quality of the food – the speed of service, the cleanliness, the interaction with the customer, and your involvement in the community – that is so critical.
Brands that don’t have anywhere near the brand recognition of larger competitors can really endear themselves to the community by supporting the right types of events, sponsoring local baseball teams, and being part of the activities that are meaningful to the people in those communities. Peter Drucker said, “The purpose of business is the making and keeping of customers.” Franchisees can’t be stuck behind the counter; they must be willing to go out into the community.
And finally, to become a sustainable and winning team, you need to have the ability to attract and retain the best employees and executives. A number of franchisors are finding themselves at a disadvantage as more aggressive competitors are luring away talent – and for more than just higher wages.
Culture is a key to differentiation. More and more franchisees these days are attracted to brands where they can feel they are really making a difference. You need to share your company’s “why” at every opportunity. If you’re a startup, allow executives to participate in “sweat equity.” Make sure salaries are competitive. Focus on establishing and maintaining diversity because a diverse, innovative, inspiring workplace attracts and retains talent. Focus on your company’s culture.
“A lot of people give lip service to culture, but the bottom line is if your environment is enjoyable and fosters connection and collaboration, you’re going to create a sense of belonging that key talent will want to be a part of”
A lot of people give lip service to culture, but the bottom line is if your environment is enjoyable and fosters connection and collaboration, you’re going to create a sense of belonging that key talent will want to be a part of.
In the United States, we’re seeing about 350 franchise brands come into existence every year, yet the net number of franchises that exist doesn’t seem to be expanding. Businesses come and go for a variety of reasons. Some companies don’t operationalize; we see big companies set up the ability to franchise but don’t act on it.
Mark my words: there is plenty of room for emerging brands to enter franchising and thrive provided they are differentiated in meaningful ways and can deliver a superior customer experience.
The author
Keith Gerson, CFE, is president of franchise operations at FranConnect. Keith has over 47 years of executive-level expertise creating and building leading franchise systems
