What’s changed and what’s still the same?

Twenty five years ago although I didn't realise it at the time, I stumbled into an industry that would change my career path in a way that I would never have imagined.

I took up a position in the franchise sector as an opportunity to take time out to decide what I wanted to do with my life. To be honest I didn’t have a clue. 

I was only 23 and this was not a deliberate career change, just an opportunity that came along that was very different to what I had done up until then.

Last year while at the Greg Nathan Franchise Relationship Institute Franchising Summit 2010 held in Sydney last year (August), I bumped into one the directors of that franchise (Rose Vis) and she introduced me to their current support team as a pioneer for their company.

You see back then they were only operating in one city, however within 18 months we started on a journey that took their brand to new areas around Australia & New Zealand.

In 1986 there was not the much choice of franchise systems available back then as there are today. Certainly not many that was within the financial reach of most people anyhow. This in itself is one of differences to today. In 1986 an average house may have been worth say $50,000. The total out lay for this franchise back then was $10,000.  Today an average house now can be worth say $500,000+ and so depending on their equity people can borrow up to say $300,000 for a business opportunity.

Of course there were the Million Dollar businesses such as McDonalds, however not the huge selection available today.

So what did you get for this franchise system back in 1986? We paid a flat weekly fee of only $30.00 and that included the following:

• Annual Yellow Pages advertising
• Local Paper advertising
• Monthly update of our customer list Stationary such as quote pads etc.
• Advertising Flyers. 
• ...and all of these things came at no extra cost.

Over recent times I have seen franchise fees in excess of $10K for the month... and costs such as stationery, Yellow Pages and other advertising are all charged over and above this.

So what else has change over the past quarter century?

As an industry sector we have created many new jobs around NZ. Last year’s franchising survey estimated the franchise industry employs in excess of 80,000 people which is double the 40,000 estimated from the 2003 survey.

The industry is now estimated to be worth $10billion annually in nationwide sales here in New Zealand.

 Bill Vis of  VIP

Home Services 

Our ability to measure performance has enabled us to increase efficiencies in marketing and other costs. For example measurement of achievement has helped refined the way we do business, for example, measurement in 1986 was something like say we printed 100,000 quote sheets for the year, and yet we only brought on 10,000 new customers.

The assumption Bill Vis of VIP Home Services had back then was that the franchisees conversion was poor; he was right of course, however there was no accurate way to measure this. I can remember we asked  franchisees at my very first owners meeting ...out of every 10 quotes how many would you convert?

Most said 7-8. Reality was closer to 2-3. These days technology takes care of this and other Key Performance Indicators.

We had no cell phones or any way of contacting owners when they were out and about. Think about it, with iPhones &  Blackberries they can now not only take calls where ever they are but now they can even email while having a coffee on the side of the road. These days you can take an Eftpos payment on the side of the road.

In my early days cash & cheques were the only forms of payment. Nowadays it’s unusual to be paid by cash or cheque. Running a set of accounting books meant exactly that. We would write up our daily sales & expenses up in our books. Today we use an accounting program such as MYOB to enter financial data.

I remember in 1996 when I was working for one of New Zealand’s leading franchise consultancies in Newmarket, the 2 directors had computers the receptionist had a computer and all remaining staff (all four of us) shared the remaining computer. No email though.

Every franchise system I have been involved with have been set up with good marketing systems that generate huge possibilities for good income for their franchisees and sales team. Sales conversion is the difference between doing extremely well for your self and just getting by.

I have mentioned how technology has improved the capabilities for both Franchisee and Franchisor, and how costs have changed throughout the years, however what has stayed the same over all these years?      

People... In-particular Franchisees.

They haven’t change at all. The expectations of Franchisees will generally be high in terms of what they get as far as "bang for their buck." 

However, success of a franchise system needs to be a two way street, and what I mean by this is that Franchisees should not expect to have an unlimited flow of sales leads to blow off as "just an enquiry."

The franchisor has an expectation that a reasonable amount of these leads will be converted into sales and not fobbed off as "another tire kicker". 

To me sales conversion is about keeping your brand stronger which should ultimately keep your competitors weaker. So, in an endeavor to achieve better results for everyone from Sales Person, Franchisee to Franchisor is the reason I have created this blog. 

I look forward to you feedback.

Greg Longstaff
Business Development Consultant
Franchise Development Expert

Phone +64 (09) 307 7860