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Grow Your Franchise: An Unconventional Approach

grow your franchiseWhen I was challenged by my good friend Dave to prove that the questions I pose for audiences in my speeches work, I never had any idea where it would lead me, but that’s exactly the point.

We often think we’re paid for knowing the right answers. However, I believe that knowing the right questions to ask is far more important. It also taught me that sometimes “thinking outside the box” is not enough – you might have to throw it out of the window!

In my presentations, I talk about finding niches and filling unserved customer or market needs with a product or service. I challenged my friend to come up with a business and I would start with the questions: who, what , when, where, how and why? I told him to pick a business people said you’d be crazy to start, so he chose the restaurant business.

The who and what became a part of our initial journey, as we traveled across the country to the headquarters of more than half dozen concepts, but we always found they were not right for the Twin Cities market. Many of the concepts were not new and offered nothing special – burgers, chicken, pizza, subs and tacos were all prominent in the market.

One Sunday morning while enjoying a cup of coffee, I noticed an ad in the business section of the newspaper for a food show at the Minneapolis Convention Center. I immediately called Dave and told him I would pick him up at noon. He was perched in front of the TV, ready for the kick-off between the Vikings and Packers. I informed him that he was the one who made the challenge, I was on my way over, and he’d better be ready.

We wandered the convention center passing one trade show booth after the other. Finally we saw Dickey’s Barbecue Pit. We walked right passed the booth with no regard on our way out the door to check out the second half of the game when something told me to turn around. When I did, the Dickey’s rep was waving at me to come back. So we did, chatted for a while, and left with an arm full of literature. Later that evening, it hit me! There’s little or no barbecue in the Twin Cities. The only competitor with more than one unit was Famous Dave’s. I looked at the price points, the value proposition, the quality of the food, and knew I was on to something.

The next questions became where, how, and when. The very next Sunday while going through my coffee ritual, the newspaper read “Starbucks closes 37 stores in the metro area.” I thought, “It couldn’t be!” I immediately phoned a broker and started looking because I knew Starbucks only chooses the very best locations, what’s known in the business as an “A” site – usually end caps, in high traffic areas. No demographic studies would be needed. Howard Schultz, the CEO of Starbucks, had a clause in their leases that they could close any location with six months notice without penalty. When he saw the impending disaster coming in our economy, he decided to reorganize in order to keep the company healthy. The three most important things I learned early on in my real estate investing career are location, location, location!

Our first two stores were former Starbucks. They already complete with bathrooms, electrical, plumbing and related fixtures. The only thing we had to do was move walls, make cosmetic changes, and install our hood system. The real clincher was that we were able to negotiate with the landlord to give us most of the money in what’s known as “TI” or tenant improvement dollars to set the stores up. We subsequently opened up two more stores using the same process.

We set a company record by opening up four stores in an 18 month period, something no other Dickey’s franchisee has done in the 60 year history of the company!

What made the difference?

We took a totally unconventional approach.

First, we never build from the ground up because it’s too expensive and totally unnecessary. There are so many commercial properties available and landlords who are desperate to rent space. They will make concessions that would have been impossible 10 years ago when there was not enough commercial property to meet the demand. For that reason, we only do conversions.

Second, never use the average unit volume of a franchise company when considering any concept. Usually the stores that create this number have been in the system for a long time, have little debt and help inflate the number. I gave our average unit volume of $1.3 million a 60% haircut and based our P&L numbers upon that scenario. My thinking is if I can live with the worst case scenario, the best case will take care of itself.

Third, we negotiated a four month free rent period, which gave us plenty of traction and allowed us to be profitable from day one. Had I known then what I know now, I would have asked for at least six months! Why? Because it’s needed and landlords will not risk losing a tenant for a 10 year period over a few months rent. Never be afraid to ask! It is critical to your initial momentum. Also, make sure that you ask for a generous TI package and get as much as you can up front, because once you sign your lease, you’re on the clock.

What has also made us successful is adhering to the Dickey’s standard. Many franchisees fail because they try to reinvent the wheel. This will cost you dearly in wasted time, dollars, and could ultimately cost you your business. Do it the way the parent company teaches and ask for help. Many franchisees fail because they don’t communicate until the wheels are coming off the wagon. We are constantly on the phone with the various people at headquarters asking for help.

Remember to do the following:

1.) Constantly interview new potential candidates -The one unpredictable thing about human behavior, is often unpredictability. Be clear on your standards and hire to that standard. We modeled ours after Chipotle. They have 13 characteristics and interview 13 people to hire one.

2.) Hire slowly and terminate quickly – A hint is sufficient to the wise, meaning once you see that a person is not going to work out, do both of you a favor and end it quickly because chances are it won’t get any better. As Flip Wilson’s character Geraldine would say, “What you see, is what you get!”

3.) Train, train, train and don’t become tired by the process -The restaurant business is detail oriented, fast paced, and delicate. Never assume that people get it because you mention something a single time. Always act as if you are saying it for the first time and if you’ve hired good people, you’ll find yourself saying it less. We also pay a bit more than most, that way people aren’t always searching for the next thing.

4.) Coach desired performance and reward it with positive feedback – I’m constantly reminding my team that we are not in the barbecue business, we are in the experience business and barbecue is how we provide that experience. The little things matter from our greeting, “Good afternoon welcome to Dickey’s!” During the meal, “How’s your food tasting today? Would you like to join our Big Yellow Cup Club?” At the end, “Thanks for coming, please join us again!”

Fortunately I won the bet, otherwise I would have been a few thousand dollars lighter. By the way, Dave paid the bet off by becoming my operations manager and has a piece of the action to boot! Each day we answer the question: Why? It is the most important question of all. Why is the question I pose to all the groups I work with. Why is what gives you the juice to do it when it hurts. It’s been said that people can do remarkable things if they have a strong enough reasons.

At a time when some are quick to point out the desperate times we live in, I’m here to remind them that opportunity also abounds! It all depends upon the questions we ask, answer, and the appropriate action we take on a consistent basis. Action will provide feedback and results and those experiences will teach us valuable lessons and those will ultimately lead to our desired outcome.


Desi WilliamsonBusiness speaker Desi Williamson has led a diverse career as a corporate executive, real estate entrepreneur, motivational coach for the Minnesota Vikings, and restaurant franchisee. To learn more about him or find additional articles, please visit: https://www.speakersoffice.com/desi_williamson.asp

 

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