The Three R's

Bob Dylan wrote “The times they are a changing” and the Seekers wrote “the answer is blowing in the wind” each of these phrases are relevant in business and it is the true entrepreneur that appreciates the vagaries of business and product/service cycles and deals with them with a completely open mind in an attempt to find the best solution for their business at that time.

Observations over many years trouble me. In too many cases it seems that Franchisors do not allocate sufficient resources and in some cases none at all to maintain the edge in their system. It almost appears as degree of ‘meanness’ or some type of resentment that further money needs to be spent in order to achieve the goals they set out to achieve in the first place.

The simple fact of course is that reinvestment in any business starts on day two; that’s right, the day after it is launched. This means that an allowance for reinvestment, reinvention or re-birthing must be a component part of every annual budget for a business. There is a need to accumulate a fund for the inevitable. We expect Franchisees to do it from the depreciation monies that we ask them to put aside; why then do too many franchisors think that it does not apply to them? This attitude of course is to the detriment of their business and that of their franchisees?

So, what does Re-Invent; Re-Invest and Re-Birth mean in a franchise context? It simply means that nothing is ever the same and we must be prepared to deal with change. The following encapsulates the need for that approach by Franchisors to survive and prosper and of course to provide the ‘Environment for Success that franchisee believe they are buying

In truth it is one of the obligations that Franchisors have in their duty of care for the System that they sell to franchisees, and some need to face up to it sooner rather than later.

So, here are the three R’s; three of the important elements of being a successful Franchisor with a sustainable model: -

Reinvention is one of the secrets to success in business today and it is all too often overlooked until it is too late for a business with acute change happening in their sector. Most franchisors and business people generally, have a high level of passion for their business, this is great to see but beware for there is a dark side to business related passion.

How many times in our personal lives do we find ourselves hanging on to some form of tradition or habit for the sake of it or because we like it? Rather than adopting an open mind to the need to assess whether there is a genuine reason for change sometimes. Too often is the answer!

As already stated passion is a fundamental element of business success, the secret however is to challenge that passion regularly; very regularly.

Reinvention might simply mean a change in structure because of economic variations over time?

Examples of this can be seen when you look at the Wendy’s story and the reinvention that has taken place over recent years to ensure that they maintained a clear focus on and effective marketing to their changing target audience. Another example is clearly seen in the pizza industry. Chains like Eagle Boys and Pizza Hut have more than once had to reinvent themselves to keep pace with the changing nature of consumer expectations.

One upon a time it was all about delivery and as a consequence site selection was not much of an issue? Today of course we have seen a complete reversal of this ‘model’ and now it is all about ‘Pick up’ by the consumer. This single change meant significant amendment to many aspects of the business and not the least of this was a new focus on the need for high profile sites with better access and parking. Quite a reinvention and it all required re investment as a consequence.

Pure and Natural appear to be defending their ‘healthy’ position with an increased focus on juices; thus combating the Boost juice attack? It might also mean a change of management to provide more relevant leadership in the business for the future? It is important for Franchisors to see their redundancy coming and not try to avoid it. This was dealt with in the last issue by john O’Brien MD of PoolWerx.

It might also mean changes in product or service ranges of a significant nature? A classic example of this is the current McDonalds ‘Saladsplus – A CHANGE FOR GOOD’ pitch and the revised McCafe concept being rolled out, both of which are a reinvention to try to maintain relevance with the consumer; not an easy task and one which requires constant vigilance by Franchisors. Without this focus franchisors risk becoming less relevant than they have been in the past or indeed becoming not relevant at all due to the pace of change in the market and the ever increasing competition.

Today it is critical that all businesses have a strategic business plan which is reviewed at least annually and tested to a SWOT analysis to determine its relevance going forward. Without this ‘test’ the business is really flying without instruments; a dangerous practice for even the smallest of enterprises. Just try driving your car without your eyes open? No, don’t do that.

The phrase “If you always do what you have always done – You will always get what you have always got” is in fact not always true but is however testament to the need to test, monitor and measure and if reinvention is necessary do not be afraid of it; plan it and execute accordingly; the future of your business and those of your franchisees will rely on this process.

Reinvestment is just that, spending money or applying extra resources or both in the interests of a return, not straight away but further down the track. Sadly too many franchisors fail to invest sufficient in their systems on an ongoing basis. Even on the simple things like documentation or the like. They expect a direct return on ‘their spend’ when in fact their approach needs to be long term; the short term results should be seen by franchisees perhaps, but not always. It is commonplace to put marketing activities ahead of system improvement? This can be a foolish practice without a review of priorities and sometimes it is worth getting an opinion from a third party who would have the ability to be somewhat clinical in the assessment process.

Of course there is no better investment to make than in your own business if it has the future that you believe it has. Sadly again too many franchisors invest in other ‘fringe’ opportunities or second brands long before they have the core business optimised. This always amazes me!

Of course the fundamental for a franchisor, is that they MUST install their support structure before it is needed, to ensure that their new franchisees are trained and supported appropriately. Franchisors, who fail to do this, rarely get off the ground effectively or reach their optimum market potential at all.

There are many reinvestment opportunities available to franchisors wishing to improve their scope for success and the following are just some of those:

1. EDUCATION - Investment might be by way of educating personnel by sending them to the many courses run by the Franchise Council of Australia (FCA), or The University of Southern Queensland, or to a Greg Nathan relationship workshop to improve their relationship management skills.

The recent conference in Melbourne organised and run by the FCA was as usual an opportunity for learning across a broad range of franchise specific topics. The conference was very well attended however there appeared to be a significant lack of second and third tier management from a lot of the mature systems. What better opportunity is there for field staff and other key personnel to learn from others and broaden their personal skill base?; all in the interests of a better franchise system for franchisees and of course, the franchisor?

2. TRAINING – Whilst it would be easy to confuse this with education it is a very different topic. This is about skills training. It might be that the franchisor is not a good public speaker or has a need to upgrade IT skills? Whatever it is the needs are usually readily identifiable however too few franchisors face them and recognise the fact that they are business limiting factors unless they are dealt with. Just imagine the limitation on a business where the CEO is not computer literate? There are examples of this in franchising today.

What about something as simple as up skilling a staff member in computer literacy to bring desktop publishing into the business? This might provide greater flexibility and save money going forward?

The key here is to do a ‘Skill Set Needs Analysis’ across all key positions in the business and then establish a training program with external consultants if appropriate, to bring the skill levels up to the necessary mark. This will cost money and the benefits may not be identifiable for some time; but they will come, and in spades.

Training is a must do for all key personnel!

3. SOCIAL INTERACTION – We all know of the story about the guy who could not see the wood for the trees or the franchisee who was ‘store blind’ and could not see what the customers could see! Well for franchisors it is no different. A very experienced franchisor who became a consultant confessed to me a while back that he had not realised how much he did not know about the many variations and systems in franchising until he was outside the system he had been managing for a decade. How much do you really know about what others are doing?

It has always amazed me to see how many franchisors fail to socialise with the sector generally. Even some new franchisors with a desperate need for knowledge fail to take advantage of the many opportunities to mix with other experienced franchisors. Yes this costs money, but not much; again though key staff should also be involved, the learning opportunities are significant. What it does cost is time and this is something that none of have enough of.

Simply by recognising the true value of becoming involved in the sector will change the way that you value and allocate your time; try it.

A strange phenomenon is that most of the franchise systems that win awards and achieve great heights in the sector are run by people who have taken the time to get involved in their sector and in particular have given of themselves for the benefit of others. Do you think that is strange? I don’t I think it is almost inevitable.

4. RESOURCES/TOOLS – This is obvious really but I feel the need to make it more obvious. How could we possibly expect our systems to operate at maximum efficiency unless all elements of the business have the tools and resources necessary to achieve the corporate and collective goals? If it is a matter of money and sometimes it is, then firstly we should reflect on our goals and adjust them to fit the reasonable application of the resources at hand. To stretch unnecessarily or have unrealistic goals is asking for trouble, disappointment or both; and it will come, unexpectedly and again in spades. Make sure that your resources fit your plan. Be realistic or wear the consequences.

Rebirthing is a term generally associated with the motor industry. This where people start with a Manufacturers Compliance Plate from a wrecked car and apply it to the chassis of another good car, often imported, and then they re-licence and resell it for road use. This is like remanufacturing and it involves a complete re-identification of the original vehicle. I like to call it rebirthing because the core is still there, in this case the legality and that being the Compliance Plate of the motor car.

What has this got to do with franchising you might ask?

A rebirth in franchising can be likened to this model but only in a systemic sense of course.

The Compliance plate might be the systems and procedures together with the existing franchisees of a group that has recognised the need to reinvest, reinvent and rebirth itself, and all at the same time! Let me give you a live example.

Steve Hansen Managing Director of River Rooster based in Perth Western Australia, together with partners John Wilkins and Ray Woolley were at a cross road late in 2002 in terms of assessing the future direction of their fast food chicken retailing group following the merger of major competitors Chicken Treat and Red Rooster. Clearly this merge of two great brands had the potential to cause River Rooster some grief in the future.

It would have been easy to do nothing and wait to see what happened? This was never an option for the River Rooster management team.

Steve together with his partners and management board have always had a strong view of and commitment to strategic planning and focussing on the well-being of their franchisees; not unusual in a good franchise system.

In February 2003 in consultation with consultants Franchise Alliance discussion was held on the impact of the market changes in fast food chicken retailing. The strong view of Franchise Alliance was that the River Rooster group needed a complete overhaul of their branding and market positioning, including a new name. This was thought by Steve to be rather radical and probably not entirely necessary. Nonetheless Steve accepted that some things might need attention. The product was certainly right and the systems were right but all too often that is not enough and all agreed on that as the basis to go forward with a branding review.

The recommendation from Franchise Alliance was a review of the core business values that were communicated both internally and externally from the current branding model as well as the investment value messages sent out to intending franchisees as a consequence of that brand when compared to others. Clearly with greater competition going forward it needed to be very different than in the past.

A customer survey followed through all fifteen stores both Metro and Country to gather the necessary consumer feedback. Thank fully the loyal and highly valued customers of River Rooster rallied to the cause and provided an immense amount of feedback to the Directors. Interestingly and in some ways this survey provided information which would have been helpful in the past. The lesson here relates to the point raised earlier about blind passion. If you are not certain about what your customers think of you AND your competitors find out quickly as you are bound to learn something and it doesn’t have to cost a lot to find out.

With the survey in hand Franchise Alliance recommended a Brand Consultant to join the review team and following interviews with a number of other candidates Dick Baynham from Baynham Ross joined the management review team together with the writer for an in-depth think tank on the survey results and what might need to be considered for the future.

The outcome in my view justifies the term “Rebirth”.

River Rooster is no more.

So what happened? Interestingly the think tank produced a conclusion that in truth the Directors knew in their hearts anyway, but it took this process and third party involvement to crystallise the reasoning and the strategic way forward.

The decision was taken that day to change and to change significantly. Name, Store fronts, Fit outs, Uniforms, Packaging, Marketing material and importantly Market positioning.

Of course the interests of fifteen franchisees also needed to be considered. What would they think? How would they react? Will they revolt?

These and many more questions were top of mind for Steve and his partners in assessing this future plan. What followed was a process of consultation and deliberation that included all franchisees, even one who was under contract to acquire an existing store! This is called ‘inclusive’ consultation! The view of franchisees was unanimous; they enrolled themselves in the strategy knowing that it meant reinvesting in their businesses. This is a sign a strong network led by capable & visionary leaders. Naturally some were nervous but things kept moving.

During this process the name was struck following the recommendation from ‘Baynham Ross’; “Chooks- Fresh & Tasty”. A new, exciting and vibrant brand was about to be born!

In May 2003 just three months from the beginning of this journey and there remains a lot to be done. Sure there were many issues in the detail not the least of which was funding however with focus, creativity and a positive attitude these issues can be dealt with and so the plan moved forward. Shop front designers were called in, Fit out consultants etc all to ensure that the new Brand was applied in the most beneficial way across all applications. Dick and his team had the task of coming up with the look, the ‘feel’ (or is it the vibe these days?), and of course the marketing material to support this new model. The result is world class to coin a phrase from the recent FCA conference.

In mid-September 2003 the group were assembled at a function centre adjoining the country Pinjarra River Rooster outlet for the official internal launch. Franchisees, the management team plus all key suppliers and advisors were invited to see first hand the results of the past six month’s work. All in the know had been sworn to secrecy up until now to maintain the element of surprise.

Steve presented a story to the group in a quiet and yet professional manner full of confidence reflecting on the foundation of River Rooster, its core values and where it needed to go in the future and how it was going to get there. And what a surprise it was; fantastic; unbelievable; awesome; wait until THEY see this! all of these terms and more were expressed by the crowd following an audio-visual display of the new brand advertising materials. New uniforms were on hand modelled by a couple of franchisees and at the conclusion all franchisees went back to their stores with a complete new ‘kit’ of merchandising materials etc plus a video to use in staff training. There is that word again! Many memorable photos were taken by a new start up franchisor Vic Natoli of VIVA Life Photography and the day was celebrated by all as a huge success!

So, what is this process that River Rooster has gone through?

Is it reinvestment? YES and by everyone - no exceptions;

Is it reinvention? YES and with all key parties involved in the process of assessment from customers down; totally transparent and totally inclusive,

Is it a rebirth ABSOLUTELY!! If you had been at the launch you could have been excused for thinking you were at a christening!! We had a great meal fine wine and enjoyed great company to celebrate the event. All franchisees were presented with Foundation Member plaques for the reception area of their stores.

For Steve and the team at “Chooks- Fresh and Tasty” the future looks great, all stores now look brand new as do the teams within the stores. A fantastic new passion exudes from the outlets and the customers are the winners too. Their valuable feedback was listened to and they got what they wanted after only seven months. What an effort!

In my view this is the best current example of the type of leadership, vision and flexibility that is required in franchising today and the entire team of management and franchisees at “Chooks Fresh and Tasty” are a fine example for others to follow.

John Brown

Franchise Alliance