January 2016 Archives

Wellington, Florida based LED Source is considered one of the top innovators in franchising. (See Entrepreneur Magazine October 2015 issue) Not only is the company a franchisor itself, but many of its customers are also franchise chains looking for awesome lighting designs and for a vendor that will outfit all new stores with the lighting of the future; LED lighting. In less than a decade it will be a "must have".

Many systems and large box store chains are already hiring LED Source to retrofit all of their old locations and to install all the lighting in their new locations.

ledsource-logo-211.pngFASTSIGNS and Massage Envy are just a couple of examples.

But CEO Marcel Fairbairn realized he needed to streamline the process between his franchisees and his vendors.

He generously shares his knowledge with you here in a Q&A.

  • Describe how your franchisees originally got all their materials when you first began the franchise program.

Our system was one where our zees were "forced" to buy ALL products through the "head office". In fact, we had a two-stage royalty where it would cost them twice as much if they were buying product from an approved vendor other than our office.

Our internal team would help the zee determine what to buy, process the order, place an order with our vendor, bring the shipment into our office, re-package the shipment to complete for the zee, send to the zee, carry the A/R, then process any returns that might happen as well. It was a crazy amount of administration and we eventually realized we were losing money on our franchise business due to this.

  • When did it occur to you that this was not the way to go?

Very early on we could see it was problematic but we felt there was no other way to do it. Our vendors are very big old lighting brands who are also finding themselves in this new, disruptive business called LED. They had enough on their plates with that to then delve into a whole other world.

The world of franchisees or small business owners as it was. It took my team more than a year to convince all of our suppliers to do business directly with our franchisees and to help design an expedient method for doing so.

  • What was your first real issue that opened your eyes?

The short answer is the impact it had on our financial performance. Since we were not making a margin sufficient to cover all of the support needs of our franchises, we were mounting losses each month.

Additionally, we were carrying inventory for our suppliers who never seemed to have what we needed when we needed it.

So we'd cover their deficiencies as best we could which never really seemed to be enough.

In the end, we were hurting our zees, ourselves AND our suppliers and I really took a hard look within to come up with a very obvious answer.

  • What was the very obvious answer?

If it's broke, fix it. First we pushed very hard on our vendors to create a model they had never used before. Again, we are talking multi-billion dollar businesses with 50 or 100 years history.

Change does not come easily and there is a tremendous amount of time and work involved so this was an enormous task. The fact is we never really had to admit anything because it was going to be such a positive change for our vendors and our zees. There was very little, if any pushback.

  • What exactly IS Vendor Direct and does it have steps that you put in your manual now so franchisees can follow easily leaving you all out of the fray?

Vendor Direct is quite simple. When a franchisee signs on, we provide them with a list of vendors, contacts, links to training videos and materials, etc. We basically introduce the franchisee to their suppliers.

The franchisee goes through the process of signing up as a dealer, applying for credit, etc. It has been a huge update in our manuals and processes, but well worth it in the end!

  • What was the reaction from the franchisees as you transitioned to this plan?

Initially there was some hesitation. Having us supply them gave them a certain comfort factor. They didn't have to deal with many other individuals.

The real issue was one we helped with to make sure that the franchisees receive credit from these large suppliers who often had very strict standards.

The truth is we were acting like a bank even to some who were not very solid credit risks.

But we worked through that and the affected few did very well in the end and now have solid credit and a solid business to go with it. Since then we've received nothing but praise.

We've got a stack of testimonials from happy zees who are discussing everything from the choices now available to the speed of shipping, wider availability, etc. Some of our zees have created very good relationships with their new suppliers and many of these relationships have already been quite productive.

  • How's it working for you and them now?

Even on my side, my finance team was at first skeptical towards the idea. Because we were, in reality, lowering our revenue, how could this possibly be a good thing?

The facts are the facts.

While yes, our gross sales have been impacted; our bottom line has already increased and will continue to. In addition, we've been able to re-purpose people who had been glorified order placers or trackers to now support franchisees in other, more productive ways.

We've allowed the manufacturers to discuss process and support THEIR products, and we support our zees on application, training, marketing and general business management.

As our business continues to scale, we do not have to borrow money or tie up resources toward massive inventories or administrative costs. Plus, our franchises have proven very quickly that the program works by rewarding themselves and us with growing revenues!!

  • You are clearly happy with the decision. In one sentence sum up what you learned from it.

It's hard to put such a laundry list of lessons and bumps on the head into one sentence, but for sure the one thing that comes to mind is that you should always play to your strengths. In this case, we were a challenged, even deficient supplier to our zees, and it showed in their numbers and our own.

So I looked at what we were doing and said to myself, "we are very good at what we do but this is not it. So let's get out of this role!" And that's precisely what we did.

About LED Source

Founded in 2005, LED Source® is North America's first franchisor of LED lighting. The company supplies high quality LED lighting products to a variety of spaces, and specializes in design, support, development, project management and financing through its Retrofit, Architectural, Entertainment and National Accounts divisions. In 2012, LED Source launched LouMan Money®, a private-labeled finance program that affords companies an LED lighting upgrade without tying up capital or using existing lines of credit. For more information and/or about franchising opportunities, please visit www.LEDsource.com/franchising.

Beyond excellent franchisee growth in 2015, Cincinnati-based Window Genie was also lauded by a number of business journals throughout the year.

Inc. Magazine recognized Window Genie as one of the fastest-growing businesses in the Cincinnati metropolitan area, in addition to placing it on the upper half of its annual Inc. 5000 listing of fastest-growing companies in the United States for the second year in a row.

Entrepreneur Magazine ranked Window Genie 170th on its annual Franchise 500 list for 2015, moving up 15 spots from 2014, cementing its place as one of the fastest-growing and top home-based franchises. Window Genie also placed 51st on Entrepreneur's top home based/ mobile franchises.

Franchise Business Review, a national franchisee satisfaction market research firm also placed Window Genie on its annual Top Franchises for Veteran's list. It is the only list of top franchises for veterans based on data from those who know best - the veterans who own them.

Window Genie's Founder and CEO Rik Nonelle said,

"This ranking is very important to us personally as we have a unique ability to give back to those who serve. We offer veterans additional territory at no cost when purchasing a franchise."

Nonelle continues, "These rankings are great but I most like achieving them for our franchisees, who are the most important part of our whole business structure."

Nonelle has made it HIS business to market to his franchisees, or, in other words, build internal programs that help them achieve great results. An example of one such program is an agreement made in April 2015 with 3M Company to provide a residential window film solution as part of the company's lauded Envision™ line of films.

window genie.jpgThe partnership provides Window Genie franchisees with the opportunity to service over 125,000 residential customers with window film that reduces fading, heat and glare, lowering utility bills. Window Genie's partnership with 3M is the result of two years of discussions between the companies.

In 2016, says Window Genie founder and CEO Richard Nonelle, the company has big plans for more programs that benefit franchisees and customers alike. "We will continue to focus on improving the experience between franchisee and customer," says Nonelle.

"This year we expanded our Your Holiday Lights program from three franchisees to 15 (this program is optional for those franchisees who wish to fill their winter months with an outdoor holiday lighting business) and continue to offer an incentive program for current owners who refer a new franchisee."

Window Genie's mobile search strategy, adds Nonelle, will be in full effect in 2016, which will entail an improved online presence and SEO enhancements to benefit owners.

"We have also been using the Franchise Navigator," said Nonelle. "I've learned the best thing I can give my existing franchisees are additional excellent franchisees coming aboard. We look for the same profile as my top performing franchisees. They deserve to have the brand continued to be bolstered by hard workers like themselves."

"The strength of your franchise system comes from the people who deliver your products or services. You could have the best business model and the best product or service, but if you sell your franchise or business opportunity to the wrong type of person you, they and the consumer will not receive what they expect from your brand," ​says Craig Slavin, Founder and President of Navigator System Solutions, owner of the Franchise Navigator.

Franchisors must focus on the human component part of growing their business. That means talent, skills, values and behavior! Create and "model" your high performing franchise owners. All inbound candidates should then be compared to this profile to determine if they are a good "fit" and can execute the franchise company's business model.

"A franchise sold to the wrong person is worse than not selling one at all," Nonelle agreed.

Window Genie aims to continue its growth in 2016, and Nonelle points to years of consistent annual expansion as proof that his plan is a sustainable one. This past year 15 new franchisees have joined the Window Genie system.

Window Genie franchisees can be found all throughout the United States, with target markets for growth for 2016 in Florida, Arizona, New York and California.

Plenty of expert franchise people will disagree with this article.

Between you and me - they will be spectacularly wrong too.

If you take exception you can dispute my thoughts on this in the comment section and we'll talk about it, but only if you want to.

Here are the Top 3 Lies -

Lie #1 - 57% of the franchise buyer's decision process is complete before their first engagement with a franchise salesperson.

You'll find a variety of versions of this factoid on franchising websites. And hear them regaled at franchise conference & expo roundtables & panel discussions.

Problem is this 57% statistic (stated as high as 75%) is unsubstantiated. It is a convenient meme dubious suppliers and vendors promote to franchisors.

Lie #2 - Franchise buyers are smarter, more sophisticated and technologically advanced than ever before.

Purportedly franchise buyers want all the information in advance from franchisors.

So if your franchise recruitment website and automated franchise discovery process doesn't answer every imaginable franchise question & potential objection you'll miss out on those franchise buyers.

Lie #3 - The way people buy franchises has changed dramatically.

And Franchise Buyers are building detailed composite profiles of franchises from online search & social media and are franchise savvy.

There's just no evidence to support that this is true.

Here's what I know -

  • We have great technologies with more ways to send and receive information today. And the internet has an inexhaustible and overwhelming amount of info on franchises.
  • If franchise buyers were really doing better pre-purchase research and due diligence they would be pursuing your FDD - Franchise Disclosure Document for the most accurate stuff at the outset.
  • If we believe the meme that franchise buyers are 57% to 75% through their franchise discovery process before they talk with you then why haven't franchise sales cycles become significantly shorter? Wouldn't it be reasonable to expect a 57% to 70% sales cycle timeline improvement?
  • What hasn't changed is the series of mental operations that franchise buyers must go through before they buy your franchise.

Here's what you can do -

Follow this 118 year old selling dictum originated by Elias St. Elmo Lewis of NCR fame and design your sales processes to -

"Attract attention, maintain interest & create desire." E.K. Strong, The Psychology of Selling & Advertising, 1925

P.S. If you want to market and sell your franchise on LinkedIn I can show you how Franchise-Info's paid social franchise marketing works.

It requires a 15 minute investment from you.

And I guarantee you won't look at LinkedIn franchise recruitment the same way again.

For more information, call Joe at 1-443-502-2636 or email Joe at [email protected]

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This page is an archive of entries from January 2016 listed from newest to oldest.

December 2015 is the previous archive.

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