Franchise Update Magazine Issue II, 2011 | Page 48

Grow Market Lead

It’s closing
time
BY STEVE OLSON

Winning Leadership
Success starts at the top—and so does failure

I

’ve had the pleasure of working
with some extraordinary chief executives… leaders with open minds
who re-energized their franchise
development by breaking roadblocks
and checking egos at the door. I’ve also
worked with leaders who have sidestepped
hard challenges and crippled their system growth. Too often, this reluctance
in dealing with internal forces limits an
organization’s ability to reach its potential. What makes the difference between
winning and losing leadership? Here are
a few experiences I’ve witnessed.
Build a better franchise
Money Mailer, a national direct mail
franchisor, aggressively grew to more
than 400 franchises in its first 20 years.
But as with nearly every franchise, the
company finally hit rough waters in its
life cycle. The company was reeling from
an exodus of senior staff following two
turbulent years of franchise losses fueled by disgruntled, struggling owners.
Then President Godfred Otuteye
pulled out all stops to revive the organization. The franchise operation would
be re-examined and re-engineered if
necessary. He packed his bags and met
with franchisees, diligently gaining their
input, trust, support, and participation. To
demonstrate his commitment, he hired a
seasoned new executive staff and consultants to assist in what many considered a
“Mission Impossible” campaign.
I learned in working with his “reborn
crusaders” that achieving the impossible
is possible. Within 18 months Godfred’s
leadership strategy kick-started a hemorrhaging franchise from negative growth
to a 600 percent increase in new franchise
sales. The executive team pulled off an

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Franchiseupdate Iss u e II, 2 0 1 1

amazing victory gaining buy-in from his
franchisees, employees, and customers.
He saved a sinking ship to build a much
better ship.
Avoiding pain brings no gain!
Unfortunately, common management
traps can ambush healthy franchise growth.
A high-end landscaping company with
successful branch offices throughout
the U.S. decided to franchise in smaller
markets. Owner-operators made better
business sense than branch locations.
Unfortunately, the franchising model
wasn’t succeeding as planned, so the
founder asked for consulting assistance
to help turn the situation around.
However, several meetings were suspiciously cancelled within a few weeks.
The founder finally admitted his president didn’t want the hassle of dealing
with these “franchise stepchildren.” “He
really doesn’t care for or have time or energy to deal with them.” The pain wasn’t
worth the gain, and the founder backed
off from battling with the president, who,
incidentally, was married to his daughter!
Shatter the walls of resistance
I’ll never forget trying to convince the
corporate legal counsel of a 350-unit
service franchise to add earnings claims
to their Franchise Disclosure Document.
Their franchisees’ profitability was extremely impressive and certainly would
be a key attraction to qualified candidates
considering this franchise opportunity.
“Do you enjoy fishing?” was the initial
response to my suggestion. I was taken
aback, but it became clear this attorney
wasn’t about to rock the boat since he
was retiring next year. The franchise
would have to develop earnings claims on

someone else’s watch. The CEO should
have stepped in, ripped the fishing rod
from his fantasies, and instructed him to
publish earnings claims in their documents. But he didn’t.
Do-nothing management
A multi-concept retail franchise I had
consulted ignored six months of supporting market studies and franchisee
interviews. Research revealed one of
their concepts should stop franchising.
A problematic change in the marketplace
was hammering their unit economics.
Franchisee satisfaction was tanking as
technological improvements and price
reductions no longer allowed their owners to compete in metropolitan areas.
The concept screamed for repackaging,
with desperate pleas to do so from loyal,
victimized franchisees.
Rather than take corrective action,
the executives ignored repairing the
structural problem. They continued to
waste marketing dollars and attempted
to recruit more franchisees doomed
for failure. The dying concept was sold
several years later to a new owner who
reinvented the franchise and began rebuilding the brand.
Realize dramatic increase
Radio Shack soared in the late ’90s, transforming shrinking stores to explosive unit
growth. Then President Len Roberts
repackaged their franchise program by
co-branding a new $60,000 “mini-Shack”
in smaller markets with established retail
businesses. This included a merchandise buy-back guarantee, which paved
the way to their successful turnaround.
Community home improvement centers,
hardware stores, and other retail outlets
embraced this winning opportunity to
partner with this trusted household brand.
Like Roberts, today’s leaders must
continue to grow their brands in spite of
their marketplace and internal challenges.
As one savvy founder professed, “We cannot become our own worst enemy.” n
This article is an excerpt from Grow to
Greatness: How to Build a World-Class
Franchise System Faster by Steve Olson.
For ordering information, go to www.franchiseupdate.com/gtg.