Service chain develops rare brand awareness

Will the service sector ever see brand-name superstars? It depends on whether franchisors remember that they also are a service industry. They serve their franchisees.

The Globe and Mail
July 7, 1997

Service chain develops rare brand awareness
Franchise Co. emphasizes training and commitment to keeping owners on board.
John Southerst

Nutri-LawnCollegeProPaintersSteveRogers.jpg

Franchise Co.'s president Steve Rogers says the key to running a successful service chain is to view owners as customers. 'The battle as a service franchisor is to consistently be in front of the franchisee seeking ways to add value.' Tibor Kolley,The Globe and Mail

Pity the poor consumer service chains.

Try as they might, franchises that sell tutoring services, house painting or roof repair can’t win the same brand awareness as their fast-food cousins.

Franchise Co. is no McDonald’s, but it is trying to grapple with the problems of brand development for service chains. The Toronto-based firm owns six franchised networks, including lawn care specialists, window cleaners and painters.

President Steve Rogers says the key is to keep franchisees performing at a high level with the kind of training and future prospects that will keep them in the fold.

“You have to view franchisees as customers, the same as the end customer,” he says. “The battle as a service franchisor is to consistently be in front of the franchisee seeking ways to add value.”

THE BIG PROBLEMS
The low profile of service chains has a lot to do with franchisor neglect. People who build these businesses often lose drive when they run into the following problems:

  • They have trouble maintaining a consistent product across numerous outlets. Consistency is a fundamental prerequisite for brand development, but everybody does a service job differently.
  • The franchisee often sees little reason to continue paying royalties once the business is off the ground. Service companies by definition are built on the expertise of the personnel. If the franchisor isn’t making a continuing contribution to the business, the individual franchisee may decide to fly an independent flag.
  • The franchisor has difficulty monitoring the outlets’ sales volumes. A fast-food franchisor knows how many patties, cups or pizza boxes a franchisee has bought, so it’s simple to calculate gross sales. Service providers may work “under the table” to avoid paying royalties.
  • These problems are all solvable. The answer in each case is continuing franchisee training and a serious program of business and brand development. Trouble is, the franchise industry is generally geared to selling franchises, not to training and development.

A COMPANY’S APPROACH
Franchise Co. built its philosophy of franchising on College Pro Painters, which was founded in 1971, and acquired in 1989, by Franchise’s parent, FirstService Corp. of Toronto.

The College Pro concept depended on recruiting student franchisees to supervise other students as housepainters. The organization’s expertise lay in recruiting and training, not just slapping paint on homes.

“We viewed it as a franchise organization, not a paining company,” FirstService president Jay Hennick says.

A former College Pro franchisee, Mr. Rogers was installed as president of the company and given the task of building on it. So far, he has expanded the student services concept into window cleaning and software demonstration, and he has also created full-time paining, lawn care and stained-glass franchisors.

After profit of $2-million on revenue of $22-million last year, Mr. Rogers is forecasting that Franchise will net $2.5-million this year on sales of about $25-million.

Transferring College Pro’s franchising skills was one of his first accomplishments. The original skill certification program, developed in the mid-eighties, is now Franchise’s answer to the consistency problem for all of its franchise concepts. All franchisees achieve certification levels in areas of management expertise, such as goal setting, coaching, time management and interviewing.

“Our training emphasizes not only practical knowledge to deliver the job,” Mr. Rogers says, “but also leadership skills.”

The highly systematized approach to training also addresses the second problem, franchisee erosion. Losing franchisees is “always a problem” in the service sector, Mr. Rogers says. The solution is to make the organization too valuable to walk away from.

Besides the certification program, for example, Franchise also develops marketing materials that franchisees would find difficult to do on their own. Data base marketing, TV advertising and radio spots, for instance, build brand recognition that independent operators could not achieve.

Mr. Rogers has also created another good reason for franchisees not to bolt: the opportunity to trade in for larger, more complex concepts with higher potential payback.

“After you’ve done College Pro, you can look at the other five concepts and keep rolling your equity into larger and larger situations.”

From College Pro, which has no upfront fee, franchisees can progress to a Certa ProPainters franchise for about $15,000 to $30,000 to start. The next step would be a Nutrilawn franchise, costing as much as $100,000.

Mr. Rogers says some Nutrilawn outlets do more than $1-miilion in annual sales.

The third problem – franchisee monitoring – is solved partially by default. That is, satisfied franchisees who are getting good value and look forward to a future with the organization are unlikely to cheat.

But just in case, Franchise runs centralized call centres that direct all customers to the closest franchisee.

It’s a method of guaranteeing consistent, quick telephone service, but it is also a way for the franchisor to monitor activity. Mr. Rogers also keeps close tabs on franchisees’ weekly electronic reports.

“I measure the entire business every week. Leads, estimates, jobs booked, technicians working – everything.”

Will the service sector ever see brand-name superstars? It depends on whether franchisors remember that they also are a service industry. They serve their franchisees.

John Southerst is a Toronto business writer who can be reached at oc.eriw-eht|htuosj#oc.eriw-eht|htuosj


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