When asked what they look for in a good franchisee, franchisors are likely to emphasise the ability to follow a system in addition to previous management experience. After all, it’s common knowledge that the foundation of any franchise’s success is a tried, tested, and perfected system that is then replicated time and time again. Because of the turn-key processes, technology platforms, and other “done-for-you” systems in place, those interested in becoming business owners frequently purchase into a franchise system. As a result, accelerating change within a franchise organisation can sometimes be challenging.
One may believe that franchise innovation does not exist, but you would be mistaken. Is there room for innovation in such a well-oiled machine? And, when there is some leeway, does it benefit the entire system? Finally, can the role of franchisee be fulfilling for people who like to innovate and have a little more control? The truth is that the world’s most successful franchises were built on innovative business models and, as in any business, have had to constantly adapt to changing market conditions to stay on top.
To dispel the myth of the lack of innovation in franchises we spoke to Catherine Monson, Chief Executive Officer and President of Propelled Brands on what strategies franchises can adopt in order to enjoy the fruits of innovation.
PerceptivX (P): Thank you for being with us today Catherine. Let’s begin with simply dismantling the myth that franchising is not innovative. Why do you think this statement doesn’t hold water?
Catherine (C): Standardization and uniformity are, of course, foundational in business format franchising as customers need to receive consistent quality and service from location to location. This consistency of customer experience both define and propel its growth. While we may take this practical reality for granted today, it is important to remember that the development of franchising over a half-century ago was a massive innovative development.
Franchising arose out of necessity and innovation as a solution to the challenges that those attempting to develop disciplined distribution systems faced, and its ongoing development is one of continuous innovation. The ability of franchising to constantly adapt to changing circumstances and market conditions is a major factor in its growing global influence.
To address specific distribution challenges, new forms of franchising have evolved from the original model – master/sub franchising, area development franchising, co-branding/combination franchising, multi-unit franchising, multi-concept franchising, multi-brand franchising, community franchising, social franchising, and freedom franchising are obvious examples. The ability of franchising to adapt and innovate is what drives its relentless growth.
Innovation in franchising is not limited to the franchising strategy; it is a required component of all franchise systems. Without franchising – a strategy that allows small businesses to compete effectively against a limited number of larger and entrenched competitors – the marketplace would be much blander, more concentrated with fewer competitors, and offer much less diversity.
The development of new franchising systems to compete with older, established, and entrenched systems demonstrates the power of innovation.
(P): How has Propelled Brands used innovation to stay ahead of the competition? Can you share with us a specific example of how you innovated?
(C): On this subject, I will concentrate on our FASTSIGNS brand. The technology available in the signage and visual graphics industry today is absolutely astounding. From interactive digital signage displays to comprehensive projects incorporating innovative applications such as interior décor, acoustic panels, holograms, and more, the signage industry is evolving to keep up with current trends. The signage industry is truly impactful in today’s rapidly changing marketplace by offering a wide range of solutions to customers.
FASTSIGNS has focused on providing our franchisees with the training, tools, support, supply chain, and business model they need to successfully sell these expanded products and services to customers and prospects, while also transitioning all locations to a completely paperless workflow to improve the customer experience.
As the next step in our innovation journey, we are combining several best-in-class software solutions to create cutting-edge business intelligence powered by data science for the benefit of our franchisees and their brands. This business intelligence will assist our franchisees in acquiring new customers, increasing sales to existing customers, and increasing customer lifetime value. It will also assist us in selling and expanding the number of locations for each brand.
(P): How has this kind of continuous innovation affected your businesses bottom line?
(C): Embracing innovation within a franchise environment is critical for positive evolution and long-term success, from corporate support teams to franchise owners. The well-run franchise brand utilizes the insight and “brain power” of everyone in the brand: not only at the franchisor level, but more importantly, from the franchise network. The egg mcmuffin was the idea of a McDonalds’ franchisee. The franchising community and operating under a larger brand encourages innovation across franchise locations. Having a large network of franchisees with a common vision and goal inspires innovation because the franchise brand’s success is driven by the success of each franchisee.
In 2009 we established four key strategic objectives for FASTSIGNS: to increase franchisee profitability by 50%, increase average location sales volumes to $1,000,000, increase the value of the FASTSIGNS brand, and further increase franchisee satisfaction. The accomplishment I am most proud of is that we exceeded our goal of increasing franchisee profitability by 50% in 2017 and are now focusing on further increasing franchisee profitability by another 25%. These same best practices are now being implemented by our NerdsToGo, Salon Plaza, and MY SALON Suite franchisees.
(P): If there was one quality you would say is essential for a franchise brand to succeed what would it be? Can you give us some examples from history as well as history which support it?
(C): I would say that would be resilience. Resilience, like success, starts with making optimism your default response to adversity. I believe that resilience can be developed, similar to how a diamond has many facets. It includes traits like grit, endurance, perseverance, courage, calmness, fortitude, and commitment. Courage in the face of fear, perseverance when the days are extremely difficult, a relentless resolve and grit to never give up, an internal fortitude cultivated by daily habits, and a commitment to endure no matter what comes are all examples of how people who develop resilience manifest it. We have a long hallway in our office with over 150 quotes about positive mindset, courage, resilience, goal-directed behaviour, and self-motivation. Bohdi Sanders’ quote from Inspiration Hall is one of my favourites: “During times of persistent hardship is when the warrior learns the most about his fortitude.”
Characteristics such as gratitude, kindness, flexibility, and learning to see the humour in the darkness all contribute to the ability to become resilient and bounce back. As a mantra throughout the pandemic, our team was inspired by the following Zig Ziglar quote: “Expect the best. Prepare for the worst. Capitalize on what comes.” Developing resilience, courage, grit, and perseverance is similar to building muscle; the more you use them, the stronger they become.
When we look at historical figures, Abraham Lincoln is a great example of such qualities. Abraham Lincoln, who suffered from depression as a child after the death of his mother, rose to become one of the most well-known US presidents. His success in navigating a political struggle and civil war, as well as bringing an end to slavery and bringing hope for both social and civil freedom for African-Americans, contributed to his enduring legacy. Abraham Lincoln could have given up many times in his life because he had so many disappointments and failures. He chose not to give up. He chose to keep going, to not give up, to be resilient. Clearly, this was his choice.
A recent example could be from my own life. In 1998, I was appointed president of PIP Printing. In 2001 and 2002, 85 percent of franchise agreements were set to expire. Because the company had a 15% renewal rate, the majority of franchisees in the network and the majority of the corporate team believed the company would go out of business in 2001 or 2002. When I became President, I focused the team on improving support and service. We concentrated on increasing franchisee profitability. I spent a lot of time in the field visiting franchisees and learning what they needed, and I made sure we provided it. As a result of these concentrated efforts, 95% of franchisees renewed their franchise contracts. Many people said it couldn’t be done. But the power of perseverance and resilience allowed me to do that.
(P): Let’s dig deeper, Catherine. What made you choose franchising as your chosen field for a career. Did your personal life affect your choice in any way?
(C): My childhood was not without flaws. I grew up with an abusive alcoholic mother and had to deal with the consequences. In my early twenties, I realised I had a choice to make: I could be a victim or a victor. I could wallow in self-pity for not having had a wonderful childhood. Or I could choose to be a victor and take personal responsibility for my life, my choices, and my happiness. I chose to be victorious.
Through my reading, study, and mentoring, I believe that there are five common characteristics shared by all highly successful people. The good news is that all of these characteristics can be learned. A positive mental attitude, goal-directed behaviour, self-motivation, a sense of urgency, and never stopping learning are the five common characteristics. I resolved to live by these principles, striving to improve in at least one of them every day.
My parents ran three preschools when I was growing up.. My father would take me to the schools on weekends beginning when I was 8 years old to mow the lawns, clean the kitchen and bathrooms, and so on. We would cook organ meat (we were the only two in the family who liked liver, kidneys, and so on) in the kitchen of whichever school we finished the day at in the evening. We would discuss business over dinner and on the way to and from school. This instilled in me a passion for small businesses. I knew from a young age that I wanted to lead a business.
While I stumbled into franchising by accident, I fell in love with it. I get to make a difference in other people’s lives by assisting them in achieving their goals of business ownership, job creation, economic output, and generational wealth. The franchise business model is highly effective.
Being in franchising allows me to assist people in starting their own businesses, but not on their own. As a result, I have assisted in the creation of hundreds of millionaires.
(P): Going forward what will drive the growth of Propelled Brands?
(C): The best way to keep growing is to keep persevering, keep striving. It’s your attitude that determines your altitude as Zig Ziglar would say. We will acquire additional high-quality franchise brands and implement franchising best practices across all of our brands. We will thrive as a multi-brand franchisor by focusing on the success of our franchisees. We will continue to hire quality team members, provide them with the tools, training, and resources they need to succeed in their roles, and provide them with opportunities to advance within the company.