Multi-Unit Franchisee Magazine Issue II, 2014 | Page 58

IN-HOUSE
BY EDDY GOLDBERG

OR OUT?
Focus on your best and outsource the rest

F

ranchising is all about outsourcing. Someone comes up with a
great concept and essentially
outsources its growth to franchisees so corporate can focus on its core
task of system development. Why not
take that idea and apply it to your own
multi-unit organization? After all, if the
prevailing wisdom at larger companies
is to focus on their core competencies
and outsource the rest, why should it be
any different for you?
“The important thing
to remember is to take
on the responsibility for
the things you do best.
Outsource the things that
are time-consuming or a
challenge for you, so that
you can focus on strategy
and growth,” says Sean
Falk, a multi-unit franchisee with 12 units in
Sean Falk
the food sector.
Key questions in making a decision
to outsource include: What are your
core competencies? Can you afford it
at this stage of development, or are you
still feeling you have to keep doing it
yourself? What should you outsource,
when, and for how long? And perhaps
most important: Can you let go?
Smaller and younger companies often
don’t have the $150,000 to $175,000 to
hire an in-house CFO, or an in-house
sales person at $60,000 to $80,000 a year
plus 5 percent of sales. “They don’t have
the deep pockets,” says Dick Rennick,
founder and CEO of Team Rennick.

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MULTI-UNIT FRANCHISEE IS S UE II, 2014

“Infrastructure is usually just overhead with no significant income associated with it,” says Falk. “When you add
the overhead, you better have additional
plans to grow from your current level.
Otherwise, you cannot overcome the
expense you just added to your business model.”
Once operators feel they have enough
units to support additional overhead,
Falk suggests they start by considering
the following positions for hiring: operations manager, regional
manager, administrative
assistant, marketing specialist, bookkeeper, and
perhaps accounts receivable/payable.
“All of these choices
depend on your situation,
the needs that you have,
and the things you excel
at,” says Falk, who offers
another piece of hard-won
advice: “Stay ahead of the growth. Don’t
hire an operations manager because you
have grown so much that now operations
are out of control. Hire them
early so you can continue
with your growth plan in
an orderly way.”
Executive as a service

“Each situation is different,”
says Andrea McKenna, who
has worked in a marketing
role with brands including Dunkin’ Donuts (EVP,
chief marketing officer) and

Friendly’s (director of advertising and
sales promotion). She currently is working with a non-food franchise, which
has chosen to outsource its marketing.
“They had a few people internally
doing some good things, but realized
they were at a place in their business
growth where they couldn’t afford to
bring in a full-time person,” she says.
McKenna is working three days a week
as a “fractional” CMO.
McKenna works with Chief Outsiders, a company that supplies chief marketing officers to companies that need
them now, but only for a limited time, for
example, to help them with projects such
as reversing substantial traffic declines
(Friendly’s) or repositioning the brand
with new product categories (Friendly’s).
Once she begins working with a
company, says McKenna, the scope may
become larger than initially anticipated.
If the client thinks more work is needed,
or would like the rent-a-CMO to stay
on longer to see the project through
to completion, they have the option of
renewing on a 30-day basis.
“Many of the companies we deal with can
get a much higher-level
person if they don’t have
to pay them full-time,”
says Art Saxby, founding principal of Chief
Outsiders. “Instead of
full-time temporary, go
fractional. It’s better to
be part of a company for
Andrea McKenna
6 or 12 months, sitting