Franchisors Get Creative with Multi-Brand Concepts, Non-Profits to Fuel Development Efforts
Getting creative with multi-brand concepts and social enterprise are just two ways franchise development teams can build their brands.
This year, Kahala Franchising, L.L.C., parent company of 10 franchise brands, including Blimpie, Cold Stone and Surf City Squeeze, celebrated 25 years of franchise development. In that quarter century, like all other established franchisors, Kahala has faced many difficult franchise development challenges. However, in both good and bad economic environments, the million-dollar question has always remained the same: “Where can we find qualified, well-funded prospects who have the drive to build a successful business, the discipline to follow an established model and the business savvy to represent our brand well in their local community?”
Clearly, portals, franchise consultants and good ol’ networking are still strong avenues through which to find attractive candidates. However, in recent years, a number of iconic franchise brands have brought incredibly creative ideas to development. A couple of those ideas, expanding multi-brand concepts and partnering with non-profit organizations, have become modern trends that appear poised for long-term success. Here are a few success stories.
A New Take on Multi-Brand Concepts
Recently, a Kahala area developer was working on a restaurant build-out plan with an area hospital. As opposed to simply pitching one restaurant brand, he developed a “quadri-brand” package that allowed him to fill the food court with four Kahala brands. Like many other brands, Kahala has experimented with dual-brand storefronts and has recently negotiated co-branded store partnerships with a convenient store chain. But four restaurant brands in the same location was a completely new idea. However, the area developer was convincing and created a strategy that retained each brand’s value proposition and dispelled any worrisome thoughts of a loosely managed food court.
The result has been a win for everyone. The new franchisee received a cost reduction on all four of his new restaurants, the hospital saved months of time and money by negotiating only one contract, and the hospital visitors have enjoyed more appealing and diverse options for meals. Due to the success of this concept, Kahala has launched similar multi-brand concepts at airports and is exploring other build-outs in business parks, hospitals and other high-traffic environments.
The Social Enterprise Surge
The other idea is even more creative and is part of a new and growing trend in franchising. As private donations continue to stagnate in a difficult economy (a mere 2 percent of GDP for the fourth straight decade according to the Giving Institute), non-profit organizations are increasingly turning to franchising as a viable revenue stream. Increasingly, non-profits are relying on social enterprise efforts with high-profile franchises like Blimpie, Papa Murphy’s and Great Clips to fuel their annual funding efforts.
Let’s review three examples of non-profits that are capitalizing on this trend:
1. Affordable Homes of South Texas, Inc. In 2012, AHSTI Exec. Dir. Bobby Calvillo knew his organization didn’t have the funds to build enough homes each year to meet the needs of South Texas-based low-income families. AHTSI relies mostly on federal grants to fund its house-building projects, but Calvillo knew to meet the increasing demand for new homes in South Texas, AHSTI would have to develop a long-term plan for creating new revenue streams. He got creative and convinced his board of directors to build a Blimpie franchise restaurant in Weslaco, Texas to establish a predictable and valuable revenue stream. Only three months after AHSTI purchased the location, Calvillo and his team projected the Blimpie store’s first-year revenue would add an additional 20 percent to the private contributions the organization receives annually. It’s working well because Weslaco citizens love the food and realize the community benefits in supporting AHSTI’s mission.
2. Dale Rogers Training Center (Oklahoma). In the past 60 years, the Dale Rogers Training Center has established itself as a leading Oklahoma City non-profit. In fact, the organization will train and employ more than 1,100 people with disabilities in Oklahoma City this year. However, like many other non-profits, the organization was seeking new and unique revenue generating options to compensate for dips in private funding heading into 2013. Considering that 83 percent of Dale Rogers Training Center’s annual operating revenue was already generated by social enterprise efforts, the center was clearly open to partnering with a business. Earlier this year, Dale Rogers Training Center teamed up with national take and bake pizza franchise, Papa Murphy’s, to open a new store in Oklahoma City which already proved to be a winning venture because the center receives 100 percent of the store’s annual profits while hiring people with disabilities to fill 75 percent of the store’s available positions.
3. National Christian Foundation (Tennessee). In 2011, a Great Clips franchisee setup a limited liability corporation called Sow Seeds, allowing him to donate a 99 percent ownership stake in four salons to the National Christian Foundation. The goal was to support the development of economic enterprise missions in East Africa and Uganda. Together, the franchisee and the NCF worked to develop a poultry farm and school. In addition, they were able to support TivaWater in Uganda to make the water drinkable through biosand filtration. The stores eventually attracted a buyer, allowing the franchisee and the NCF to sell them for more than $400,000 with all proceeds going to benefit their efforts in East Africa and Uganda.
These partnerships are working well because they solve fundamental issues that typically plague franchisors and non-profits. Franchisors benefit because they have launched a new location (or, preferably locations) that is owned and managed by a non-profit organization that possesses a strong and favorable community reputation and understands how to follow a proven system. The non-profits benefit because they are buying into proven concepts and corporate office teams who are invested in their success.
Getting creative with multi-brand concepts and social enterprise are just two of the many ways that franchise development teams can build their brands. In today’s technology-fueled world, every franchise development professional has more tools at his disposal than ever before. However, it’s important to ensure that those new tools don’t replace human creativity and intuition. Big ideas that lead to successful partnerships and long-term success don’t come from portals or social media tools; they come from the brightest minds in the industry thinking outside the box.
There is no single perfect answer to the question: “Where can I find the right prospects?” The key is assembling a smart and inventive franchise development team capable of creating new development strategies that fit the brand identity and capitalize on modern business and consumer trends such as consumer desire for multiple food choices at one location and the decline of government funding or private donations facing the non-profit sector.
Dana Mead is director of franchise development for Kahala, parent company of Blimpie, Cold Stone and many other franchise brands. Find her at fransocial.franchise.org via the directory.