Multi-Unit, Multi-Brand Franchising Evolves: One Franchisee’s Story
Multi-unit and multi-brand concepts are not only possible, but potentially the future evolution of the industry itself.
The Early Years
In the early years of franchising after World War II, the entrepreneurial spirit in America fueled an explosion of new products and services. Simple concepts like “The Airdrome” food stand in Monrovia, Calif. would eventually become the first McDonald’s restaurant that opened in 1948. Within seven years, Ray Kroc founded the McDonald’s Corporation and by 1958 had already sold more than 100 million hamburgers.
Ravenous consumer demand was the hallmark of this post-war era and eager entrepreneurs rose to the challenge with an explosion of new business concepts. To survive the inevitable draw of competition and the race to establish market share, sharp entrepreneurs turned to an established business model known as franchising to fuel their ambitions.
During the 1960s, ‘70s and ‘80s the franchise industry saw a kaleidoscope of new concepts emerge offering product innovation, marketing dominance and business support as the primary weapons in the fight to capture market share. The predominant franchise model during this time was to build one brand at a time using focused market development and the rapid deployment of an army of new franchisees.
The Internet Revolution
Next, the Internet revolution brought its infinite source of information and instant communications. The race to capture market share had changed forever and the old business model of “location, location, location” gave way to search engine optimization, pay-per-click advertising and unlimited virtual territories. Client acquisition, market penetration and service areas became new challenges (once again) for delivering asset-based products and services in a new “virtual” consumer world.
As before, the entrepreneurial spirit kicked in and franchisees would evolve and learn to dominate market areas with multiple locations under single-ownership groups. The age-old principles of economies of scale, shared infrastructure, sound financing and geographic familiarity would lend themselves to multi-unit franchising success.
Then the new millennium’s “Great Recession” severely tested the inherent benefits of the multi-unit franchise model and sharp entrepreneurial franchisees had to adapt once again. In addition to the challenges of downsizing and cost controls, these multi-unit groups again resorted to time-tested fundamental principles, those being diversification and brand synergies. Everyone has heard the old expression “don’t place all your eggs in one basket” and that is exactly what these franchisees did next.
Franchisors Adapt as Well
There’s just one problem with the multi-unit franchisee now looking for multiple brands to provide his return-on-investment protection: the franchisor. “Old school” thinking would be to protect the single brand and not allow franchisees to lose focus or devotion to their original concept. But franchisors have had to adapt as well and the progressive view of multi-unit franchisees became one of key drivers for development partners and organizational leaders.
Franchisors, such as The Dwyer Group, Yum! Brands, FOCUS Brands and Annex Brands, among others, began to diversify themselves by acquiring or developing complementary brands. But in the end, it is the ambitious franchisee truly leading the evolution of the multi-brand concept. Franchisees’ demonstrated ability to develop competent staff, establish a proven track record of managing multiple locations and exhibit strong financial and operational infrastructure are key ingredients for making the multi-brand model work.
The Dwyer Group Pres. and COO Mike Bidwell, CFE, became the first multi-concept franchisee in 1987 by opening Worldwide Refinishing Systems while already operating a Rainbow International franchise. In 1992, he also opened a Mr. Rooter Plumbing franchise, all of it supported and encouraged by parent organization The Dwyer Group. The benefits of allowing multi-brand development were protection from single market downturns and fickle consumer tastes, as well as consistent, predictable cash flow.
One Franchisee’s Story
At Annex Brands, the multi-unit, multi-brand franchisee story unfolded in a very unconventional way, but clearly demonstrates the same set of mutual benefits. In 1996, Annex Brands set out on an aggressive acquisition strategy to obtain complementary brands and continue its financial growth in spite of slowing “organic” development in a maturing industry. This strategy would eventually lead to some pioneering developments.
The original PostalAnnex+ brand was well established since 1985 before it began to first acquire Express Postal Service in 1996, Sunshine Pack & Ship in 2006, the Handle With Care Packaging Store brand in 2007, Navis Pack & Ship in 2011 and the AIM Mail Center group in that same year. At one of the PostalAnnex+ locations in La Jolla, Calif., a loyal customer named Camil Saab decided to join the brand when the store became available for resale. His primary thought at the time was to preserve his long-standing mailing address that he had established to operate his small, home-based new product distribution business.
It turned out that Saab was one of those entrepreneurial franchisees with a knack for developing good people, building strong infrastructure and ultimately managing multiple locations. Within a short time, he had acquired and vastly improved gross sales at three more PostalAnnex+ locations.
Saab’s strategy was to simply stay focused on finding his customers’ needs and solving their problems. A wide-format printer in one of his stores was taking up too much retail space, so he decided to move it to a nearby space. As word got out and printing demand grew, Saab would invest in and add new machines each time a customer requested a new service. “My philosophy is when a customer says they want something, I say ‘yes’, then figure out the details later,” said Saab. “I find a way to do it myself or outsource it.”
This entrepreneurial spirit led Saab to begin developing a new copy-center brand and he soon turned to Annex Brands’ management team for help to pioneer this effort. Like the phrase Ray Kroc had coined many years before to define successful franchising, “you are in business for yourself, but not by yourself.” With this idea in mind, both franchisee and franchisor set out to model the new print center concept and begin market development.
Camil Saab is now assisting with the development of the Annex Copy Center, a new concept focused on delivering print and graphics products typically associated with the older lithographic press print shop, but now updated with all the latest electronic innovations and equipment. And as he had done before, Saab began development by recruiting a top-quality staff with the necessary experience and talent, then equipping them with the newest and most sophisticated computerized equipment available.
What’s next for Camil Saab? He has acquired an industrial warehouse facility in San Diego to both complement his large-scale printing operations and to serve as an operation center for his sixth business location. His new Navis Pack & Ship franchise is a commercial version of the custom packaging and shipping business concept and it can handle palletized freight for a variety of industries including fine art and antiques, electronics, biomedical and family heirlooms.
In the end, Saab has diversified his small business and franchise investments into three complementary brands: Postal Annex+, Navis Pack & Ship and the Annex Copy Center concept. Between them, he can handle any small-business services, custom packaging, crating and logistics or printing service challenge. The support and flexibility of the Annex Brands parent organization has provided the platform on which this ambitious entrepreneur can thrive and grow. Together, franchisee and franchisor are changing the face of the industry proving multi-unit and multi-brand concepts are not only possible, but potentially the future evolution of the industry itself.
Jack Pearce, CFE, is executive director of franchise relations at Annex Brands, Inc., a 450+ unit franchise organization of six brands within the mail and parcel, printing and graphics, custom packaging and shipping industries. Pearce serves on IFA’s Franchise Relations and Marketing and Technology committees. Find him at http://fransocial.franchise.org/Home/ via the directory.