June 2009 Franchising World
A new executive’s key to future success should include participation and inclusion.
By Paul Mangiamele
Much like being the new kid in class, being the new person on the job is never an easy task, especially when one is coming from the outside to take over a leadership role at an established company. While it’s clear the person was brought in to make some modifications, existing employees are often hesitant to embrace their new leader because they know their way of doing business may be in for a drastic change. If this business operates under a franchise model, however, the ante is upped significantly as the new leader must determine not only how to maintain the company’s continued success but appease the sometimes hundreds of independent franchisees as well.
According to the International Franchise Association, there are an estimated 2,000 franchise companies in existence right now and each of those systems probably has an area or two in need of improvement. While the existing corporate team may have an idea of what needs to be done, it sometimes takes a fresh perspective to turn things around. When a management changeover occurs, it’s important to inform everyone–both corporate employees and franchisees–of the company’s plans before the change occurs to gauge reactions and solicit suggestions.
Keep in mind that there will always be some who think the business is fine as it is, so at least some pushback should be expected. It is important to make the information about the change readily available in a timely manner to show that the company is willing to cooperate to reach a mutual goal. For the person assuming the leadership role, it’s essential he or she learn as much about the company as possible before stepping one foot into their new office; by having a complete, unbiased overview of the company, the new leader will be wellequipped to hit the ground running and address any queries or concerns head on.
Make it Personal
Once on the job, the first order of business for any new executive should be to put a face with the name and meet the franchisees. In-person site visits should be coordinated if possible. By interacting with franchisees at their businesses as opposed to in a corporate milieu, the executive can see them in their element while evaluating their operation against the company’s objectives.
However, if the franchise has a worldwide presence or if the company’s budget won’t allow for such extensive travel, personal-site visits can be replaced with a series of Web conferences. At this time, franchisees can see and hear what the new executive has to say and then have the opportunity to raise any questions. Accessibility is a must and the executive should be ready and willing to be available on franchisees’ time. In doing so, the franchisee will know the new executive is working with them and not against them and the executive can exhibit their genuine compassion, understanding and insight into the unique situation of each franchisee.
When I joined Salsarita’s as president and CEO in June of 2007, I found myself in a situation quite similar to the one detailed above. Although I had years of experience in the industry and had been responsible for restructuring companies in the past, I was well aware no two concepts were alike and made it my mission to find the most effective ways to streamline the concept for future growth, efficiency and success. Here are a few initiatives that have worked especially well that franchisors may consider and modify as they embark on this path.
Development of Mission
It is often an overlooked or dismissively handled issue, but a common thread that began to develop as I met and visited with franchisees was an absence of a clear purpose. We all agreed that we were there to create wealth, but the how and why varied dramatically from franchisee to franchisee. With this problem in mind, I set out to develop a unifying mission statement for our organization. Admittedly, mission statements have a way of growing tired and trite and are typically resigned to the bottom of the employee bulletin board, so it was important not only that our mission statement be simple, purposeful and meaningful, but that we dedicate our staff and leadership to keeping the mission alive in the hearts and minds of our franchise community. I have ruined many Saturday afternoons by phoning corporate staff, franchisees and their store managers and asking them to recite the mission statement. It makes ever yone a little uncomfortable, but in time of change, discomfort is to be expected and embraced. Discomfort reminds everyone that things have changed, we are all in it together, and we will work through the discomfort on our way to success.
Formation of a Franchisee Advisory Council
Though Salsarita’s had been in existence since 2000, there was never a formal Franchisee Advisory Council in place. I wanted to make sure there was a recognized and structured way that all franchisees could feel truly represented. To do this, franchisees were nominated from each region of our system and were elected by their region to ensure each franchisee had a voice. As CEO, I held in reserve one appointment to the council because I wanted to ensure that each type of franchisee–area representatives, area developers, and franchisees–had a voice and representation on the committee. Since its formation, the level of communication between corporate and its franchisees, as well as between franchisees in general, has increased. Each franchisee–even if they are not a member of the FAC–feels included in the overall strategy and has displayed a marked increase in confidence in the brand. This effort highlighted to the franchise community that participation and inclusion were values of their new executive and important to our future success.
Rightsizing and Rightpricing the Menu
Given the economic turmoil that began in late 2008 and the violent shifts in commodity prices that have become the norm, there was considerable pressure from the franchising community to publicly encourage across-the-board price hikes. At the time, many of our competitors had done so and there was compelling evidence that it made good business sense. However, my “gut” told me that a price hike alone wouldn’t address the franchisee’s needs and certainly wouldn’t make the guest happier.
Through the involvement of the entire corporate staff and numerous franchisees, we devised a series of interwoven changes to the menu, all based on hard data, that would have the effect of a massive price revenue increase from the operators perspective without the sticker shock of price increases to the guests.
Rolled into the program in a balanced manner were targeted price increases and cuts, an emphasis on combo meals, a reevaluation of portioning, a beverage cup-set upgrade, and a newly-redesigned menu board which made making dining decisions easier. We removed some slow-moving items and began offering portion sizes, small and large, to cater to each customer’s appetite and budget. We also revamped the actual menu boards to help customers easily formulate their dining decisions, a move that has increased the speed of the line, the overall satisfaction of our customers and an increase in sales for our franchisees. The net effect of these changes is franchisees receiving the maximum value for every dollar they invest in their business and customers receiving the maximum value in their restaurant visits.
It may seem like common sense but the better understanding one has of a brand, the better equipped they are to run their business. To ensure this, we implemented retraining and recertification across the board for franchisees and corporate employees alike. A brand is only as strong as its weakest franchisee and this program allowed us to evaluate the level of each franchisee and revealed the specific areas in need of improvement. On the corporate side, we found where higher levels of efficiency were needed, as well as new areas where we could carve costs without sacrificing the look and feel of the brand.
Once we evaluated our internal structure, we took a closer look at our vendors. Everything from distributors to public relations was discussed and we made the changes necessary to reach our previously established goals. For example, if we found we could get ingredients for one of our offerings at a lower cost from another supplier, we gave our existing supplier a chance to match the price or risk losing us as a client. The same held true for public relations: When our existing firm did not produce the results we desired, we brought a new firm aboard that focused on the needs of franchised companies. Both of these changes have elicited positive feedback from franchisees, as they are both keeping costs down and gaining a great deal of media exposure which brings in new customers.
In a time of economic strain, vendor partnerships need to convey to each partner a sense of service, value and true partnership. Now is not the time for gouging one client for cost recovery nor is it the time to only reward the lowest bidder. Changes we made to our vendor roster have delivered significantly higher value to our franchisees and affirmed with many franchisees the value we were receiving from many of our existing partners.
Increased Attention on the Guest
Our goal at Salsarita’s is to convert one-time customers into life-time guests, so it made sense to focus more attention on what we could do to increase their loyalty and satisfaction. The goal was to shift our franchisee’s mindset away from conducting a transaction with a guest, i.e.”Give me some money, I give you a taco,” to having a shared experience with the guests.
Experiential relationships build a community of lifetime guests around our franchisee’s businesses. Out of consultation with our franchisees, we established a guestservice specialist at each location to further address the needs of our patrons. Guestservice specialists work the front of the house during peak revenue times and handle everything from talking to guests at their tables, distributing samples of new products and even providing door-to-door umbrella service to customers on rainy days. Since this position was created, our franchisees have reported that customer satisfaction, though it was already quite high system-wide, has increased and brought about more repeat guests at each location.
Each initiative listed has brought about positive change for one reason: The franchisees were involved every step of the way. Instead of dictating a course of action and hoping for the best, the franchisees played an integral role in the decisionmaking process and, in turn, had a vested interest in the outcome. Being the one to implement these types of changes is a daunting task–one that increases tenfold if the one spearheading the initiatives is new to the company–but with an open mind and a true understanding of the concept, even the new kid on the block can bring about lasting change and gain approval from the most discerning franchisee.
Paul Mangiamele is the president, CEO and chief marketing officer of Salsarita’s Fresh Cantina. He can be reached at 704-540-9447 or email@example.com . Mangiamele serves on IFA’s Franchise Relations Committee. For more perspectives on franchise relations, visit www.franchise.org/franchiserelations.aspx .