The balance between brand identities and efficiency synergies
Small business is what the American dream was founded upon, and it continues to be an important part of our economy. With larger entities dominating some industries, it can seem impossible to start certain kinds of businesses; how would you ever compete with these corporate giants? That’s where franchising can play an increasingly important role in business ownership, even in a fluctuating economy.
ServiceMaster® Brands is a multi-brand franchise organization. Instead of attracting brands to remove them from the marketplace, we attract brands to retain and grow their position in the marketplace with thousands of entrepreneurs at the helm of each individual franchise. When multi-brand franchising is done well, it provides an entrepreneurial opportunity while having the support of a 1,000-pound gorilla at your back.
Franchise organizations with multiple brands have a unique influence, which is critical in a challenging economic situation. Leveraging marketing buying power, investing in efficient operating systems, and having the financial stability to take a longer-term view of business growth are all benefits that come with a multi-brand organization. If you’re a franchisor with less than 200 units, you can get in hot water pretty quickly, and the first thing to suffer is often franchisee support.
Financial stability leads to a steadier hand, which instills confidence in franchisees.
Protecting Brand Identity While Sharing Services
Shared services is a bit of a mythical animal when it comes to multi-brand franchises because we are maintaining brand identity as opposed to wiping it out and rebranding it as part of the conglomerate. Our goal is to choose brands that push each other to do better while remaining dedicated to the individual identity of each franchise.
For example, one of our brands – TWO MEN AND A TRUCK® – was able to benefit from our shared resources in IT and accounting, which helped streamline their back-office operations. In return, it had one of the best support models we had ever seen in managing relationships with franchisees. We were able to leverage those learnings across our other seven brands, increasing the support system for franchisees, and, in turn, creating a better customer experience.
Financial Stability During Uncertain Economies
Franchisees with access to capital will grow; those without access to capital will not grow as quickly.
The ability of current and potential franchisees to access capital is critical in business. Higher interest rates make it more expensive to borrow money, and that can make franchisees hesitant about their investment. Our brands have great relationships with lenders who know our business and who can be partners in fluctuating times. That stability helps take some of the heartburn out of loans for franchisees.
We are fortunate that ServiceMaster® Brands stands a little outside of the trend in economic turbulence. ServiceMaster Restore® is a disaster mitigation service, and disasters happen regardless of economic conditions.
Merry Maids® serves nearly 80,000 homes each year, yet holds 4% of the market share because it is highly stratified. We can still gain market share when the economy is in flux. We use this time to double down on marketing and elevate the customer experience so that when we come out on the back end of the turbulence, we have a bigger slice of the pie.
With steady financials, we can invest during uncertain times and use it to grow.
Employment: The Outlier
Historically when there’s an economic downturn, there’s also high unemployment. Today, unemployment is the lowest it has been in 50 years, so access to employees remains a challenge. This is a prevalent issue for our franchisees, so we invest in recruitment and retention techniques to support franchisees in building an effective strategy.
Culture plays a big role for all our brands, and the franchisees who are really great with creating a positive culture typically have lower attrition. Attraction to our brands has far less to do with compensation and far more to do with presenting the right cultural aspect so we spend a lot of time enabling franchisee success in those areas.
Final Thoughts
When there is uncertainty, providing a human connection is more meaningful in every aspect, as a culture, as a business, and as a community.
I have been part of franchising during several economic fluctuations, and I can tell you unequivocally the brands that doubled down on customer experience, who appreciated their relationships with customers – what they want and what they’re going through – those are the brands that win.
About the Author
Tim Arpin is the Vice President of Franchise Development for Service Master Brands. Prior to this role, he has led development efforts for Restaurant Brands International, Scooter's Coffee, and the Self Esteem Brands portfolio of brands.
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