Franchise Failure – What Would You Do?

The following is an excerpt from a recent article on CNBC.com about business failure. The article, Five Businesses That Did Not Survive 2011 included one business that was a franchise… actually, a franchisor, Just Mouldings. The excerpt about Just Mouldings demise was subtitled, “We Did Everything Right”.

In my ongoing dedication to franchise success at all levels, I always attempt to analyze why a franchise business succeeds, and why one would fail. As we work our way out of economic uncertainty I’m sure we’ll have more and more opportunity for analysis, and as the excerpt details, we’ll see more identified as business failure due to the economy… which was listed as the reason for Just Mouldings’ failure.

In this case, the principals stated, “We did everything right” and I’m sure they truly believed they did. I’m also sure they did all they felt they could do. Especially as they faced an uphill battle of selling a non-essential product in an economy that saw many consumers limit their spending to necessities.

So, let’s put on our thinking caps and dig into our extensive experience in franchising and business management and attempt to define how this franchise could have succeeded. Let’s look at this as a workshop of sorts. After reading the excerpt below, please share your thoughts as to what you might have done differently if you were in the position of leading this franchise.

Certainly, this is not an attempt at diminishing the efforts of the Just Mouldings’ principals. Instead, let’s look at this as an exercise where we can assist other franchisors (and franchisees) that may be facing similar challenges. If, through our collective efforts, we can assist franchise businesses from failing, even if it’s just one, then we’ve accomplished a great deal. And, it may just help someone from losing their life savings, or help franchisees within a failing franchise system cope and survive despite franchisor failure.

‘We Did Everything Right’

Just Moulding, based in Gaithersburg, Md., sold and installed decorative molding. It opened in 2004 and closed last April.

AT ITS PEAK Mark Rubin and Kevin Wales started with a single workshop that handled small jobs larger installers did not want. In 2007 things were going so well they decided to sell franchises in the business and raised $700,000 from 21 investors. After Mr. Wales left the company in 2010, Mr. Rubin’s father-in-law, Richard Hayman, took over as president. Soon after, sales increased by 20 percent and the company became profitable.

WHAT WENT WRONG The recession. The company, Mr. Hayman said, sold a product that people wanted but did not need: “It was crown molding, not a furnace or a roof.” And while the business had the high legal and accounting costs associated with selling franchises, it had sold only three by the end of 2009. Potential franchisees had trouble raising the $100,000 to $250,000 needed to get started.

LOOKING BACK “We did everything right,” said Mr. Hayman, who sank $470,000 into the company. “We hired the best people and had a great product. We could not overcome the bad economy.” He and Mr. Rubin declined to discuss what they are doing now.

Unique Franchise Model Raises Questions…

As most everyone in franchising knows, the Chick-fil-A franchise opportunity is quite unique, especially as compared to thousands of other franchise opportunites across all industry segments.

It appears Chick-fil-A has been quite successful with this unique business model, so why haven’t more franchisors followed suit? And, for the ones that have, why haven’t they succeeded?

With respect to a recent article’s reference to average franchisee profits, are there potential issues with Financial Performance Representations in the franchisor’s Franchise Disclosure Document?

Here’s a thought as I compare Chick-fil-A to other franchises… Should Chick-fil-A really be considered a franchise?

Hey, don’t get me wrong… I admire a company that affords individuals the opportunity to earn significant income, provides a great product and customer experience, and stands by its convictions (Closed on Sundays for religious reasons). My questions are entirely focused on the franchising aspect. Is it really a franchise?

Is the Chick-fil-A model more successful from the perspective of failed locations than other franchise chains?

From a business standpoint it appears there is much to be learned from Chick-fil-A. So, why aren’t more franchisors developing similar business practices, even beyond the franchise practices.

Looking to keep this positive… and really looking forward to all thoughts, insight and perspective!

Social Media Marketing Predictions for 2012

Well, it’s that time of year when it seems like everyone is making some type of prediction or another for the upcoming year… and in the world of social media not only is it no different, it’s actually over the top as we preview list after list. The following was posted today on Social Media B2B, an excellent resource for social media information. Upon reviewing the predictions please feel free to share some of your own.

12 B2B Marketing Predictions for 2012 from B2B Digital Marketing blog

Top 3 Predictions for B2B Marketing in 2012 from Marketri blog

10 Predictions for B2B Marketing in 2012 Part 1 and Part 2 from Bliss PR

2012  B2B Marketing Predictions – Will Marketers Leave Sales Behind? from B2B Marketing Insider Blog

8 Tricky B2B Marketing Predictions for 2012 from B2B Appointment Setting Blog

Social Business Predictions for 2012 from the Dachis Group

No Predictions, Just Action from B2B Voices

Top 5 Inbound Marketing Trends for 2012 from Kuno Creative

12 Marketing Predictions for 2012 from MarketingProfs

18 Insightful 2012 Marketing Predictions From the Experts  from Hubspot

Five key marketing trends for 2012: Are you being served?  from eConsultancy

2012 Social Marketing & New Media Predictions from Brian Solis

Read more: http://socialmediab2b.com/2011/12/b2b-marketing-predictions-2012/#ixzz1hvsaGUt9

 

One-size-fits-all Social Media Solutions… A false prophecy!

As could be expected, many within franchising entered the year determined to make things happen. As also could be expected, many turned to social media, believing it could be the answer to improving sales at the unit level, increasing interest in their franchise opportunity, and considered social media a low or no-cost alternative to what they’ve done in years past.

Unfortunately, many have failed in their social media efforts. The reasons? Well, many did not understand the ins and outs of social media marketing. Some didn’t even understand the basics of the most fundamental social media; Facebook, LinkedIn and Twitter. And others failed because they were just not 100% committed to the effort. But, are these the real reasons they failed?

Well, as you may have guessed, the answer is, “No!” Ultimately, failure in social media is a direct result of failing to plan. Referring to the old adage, “Failing to plan, is planning to fail” causes me to shake my head in bewilderment at the statements posted in many of the online discussion groups recommending what clearly points to one-size-fits-all social media solutions. How much planning goes into a one-size-fits-all solution? How much commitment actually goes into a one-size-fits-all solution from both the consultant making the recommendation and the client that signs on? How much does a one-size-fits-all solution address outside the realm of the basic social media platforms? I don’t believe it’s ironic or a coincidence that the same questions I pose here are similar to the reasons many fail in their attempt to utilize social media.

Success in social media takes hard work. It takes a well-defined strategy based upon a clear, concise understanding of objectives and desired results. It takes a firm commitment of dedicated resources in both time and money. It takes knowing who the target audience is, where they congregate and communicate online, what messages need to be delivered to create interest, and seperately, to create a call for action. It takes full comprehension of a contingency plan based upon what if…? In essence, it takes planning!

Brian Solis, author the best-selling book on social media, Engage!, and Fast Company expert blogger, recently wrote an article on this very subject, In Social Media, Failing to Plan, is Planning to Fail. He wrote, “I’ve received a series of inbound requests for comments based on a report from Gartner, an IT analyst firm, that estimates as many as 70-percent of social media campaigns will fail in 2011. There are a series of discussions hitting the blogosphere and the Twitterverse exploring this very topic, some elementary and others on the right path. I contacted Gartner earlier this week and the problem is, that this data isn’t new at all. In fact, these discussions are fueled by information originally published in 2008 and in early 2010. Yet another example of the importance of fact-checking in the era of real-time reporting, yes, but, when I paused for a moment, I appreciated the timelessness of this discussion.

Are many of the social media programs in play yielding tangible results?

No …

Are they designed to impact the bottom line or are they tied to meaningful business outcomes?

No …

The truth is that you can’t fail in anything if success is never defined.”

To franchisors, I suggest, before choosing what appears to be a one-size-fits-all social media solution, take the time and expend the effort to develop a social media strategy that not only reflects your current status, but one that can evolve as your system grows. And, be sure to involve your franchisees as it is essential that local objectives to drive sales are integrated in the overall plan that may also include franchise development objectives. Keep in mind, many plans will include multiple objectives that may require that different social media be utilized for optimum results. And don’t forget to integrate your social media plan with your overall marketing and development plans!

Solis concludes his article, “Success is not a prescription. There isn’t one way to excel. That’s the point. Success requires definition based on intentions, goals, and mutual value … across the organization from the top down, bottom up, inside out and outside in. Success is defined departmentally and also at the brand level. There’s much to do …”

Read the complete article HERE.

* This post was originally published on this site July 2011

“Social Media is not applicable to us!” – How would you respond?

Earlier this year, Brett Newman, from the Franchise Opportunities Network, responded to a Linkedin discussion with a question relating to social media acceptance that I hear all too often.

“After attending a few social media presentations and roundtables, I heard an important contact dismiss social media as “not applicable to us”. I understand this to mean that he didn’t think that social media could make an impact on franchise development or franchise lead generation.

While I don’t agree, I wasn’t in a good position to challenge this view from this contact.

If you heard this from someone, how would you respond?”

My response…

“Very interesting, but not all uncommon. I probably would have quoted Socialnomics author, Erik Qualman, who also happens to be the person behind the Social Media Revolution videos – “Social Media ROI is that you’ll still be in business five years from now!”

Once I stated that, I would probably state that utilizing social media is not a one-size-fits-all strategy, nor is it easy to use effectively. I would also indicate that social media, in order to be effective takes serious planning, and should be integrated with other aspects of the business for optimum results. Last, I would reiterate that social media is a communications tool, and as with any tool, it takes practice and hard work to utilize it correctly, and effectively.

If that still doesn’t at least get the person to pause and consider the options, then I would believe the person is afraid of social media just as many are afraid of the unknown. Or, I would tend to believe the individual isn’t willing to put in the effort which lends towards complacency or laziness.

I believe this is really no different than people continuing to use ledgers instead of an accounting software. Or, the many that were phobic about using computers and word processing programs and continued utilizing IBM Selectric typewriters. How many times did we see someone walk away from the large Xerox copier because they didn’t know how to load the paper? In all these cases, as with social media, is it fear, complacency or laziness… or really a combination of all three to varying degrees?”

Please share YOUR thoughts!

*This post was originally published on this site February 2011