Some listen harder than others. Taco John's International, a fast-food franchisor based in Cheyenne, Wyo., went so far as to rip up its basic franchise agreement and start over, working with its franchisees to design a document that management hoped would appeal to the new sophisticated crowd of potential franchisees. (See "The Collectively Bargained Franchise Agreement," [Article link].) Taco John's and franchisors like it understand that in a saturated and competitive marketplace, their best weapon consists of franchisees who understand technology, marketing, and people management, and can beat out their rivals -- be they other franchisees or independent businesses -- by executing everything better.
"The franchisees are the ones facing the customers every day, and they've got to come up with the ideas," says George Naddaff, former chairman of Boston Chicken Inc., the now 770-unit restaurant chain. "As a franchisor, you can't have everybody changing the decor or adding something of their own to the menu, but you also can't ignore something that increases sales. When that happens, you should go out and investigate it. That's the smart thing to do." (For more of Naddaff's vision of what makes for a successful modern franchise operation, see "The Next Big Thing," [Article link].)
Following are some of the sharpest ideas to come from the new breed of franchisees who are committed to injecting fresh ideas into as many aspects of their businesses as they can.
They're not necessarily the biggest franchisees or the richest. Yet. But no matter what you think of their logo-covered wardrobes, their creativity will surprise you -- and force you to think hard about the ingenuity you could be bringing to your own business, whether it's a franchise or not.
* * *
Sales and Marketing
One weekend a month Forrest ("Woody") English gets up on a flatbed truck and shouts at total strangers. A rabble-rousing preacher? Close. English sells used cars.
Last year he hit upon a novel way to market his autos not just on his own lot near Indianapolis but to buyers up to 70 miles away. Once a month, usually on a Thursday night, he hauls 50 to 60 cars to an outlying town and parks them in a retail setting, often in Wal-Mart parking lots. Over the next two days the cars are showcased in a kind of used-car bazaar. Banners fly, a country band jams on a flatbed truck decked out like a stage, and a local deejay does a "live remote" from the site. While English works the crowd like a carnival barker, his sales crew and "bankers" operate from a trailer. "On Saturday night we just fold our tent and go home," he says. "We're like a circus."
It's an unlikely role for an electrical engineer who was once General Electric's top international salesman, dealing in heavy power equipment. In 1990, in an odd career switch, English bought a franchise of J.D. Byrider Systems and opened up in Avon, Ind.
Byrider specializes in cars three to six years old. Such vehicles account for 70% of all cars on the road, but on a used-car lot they are mechanically suspect and tough to finance. Byrider is "basically a financing operation," English explains. "We recondition the cars and back them with a warranty, and then we offer affordable terms through our own finance company, the Car Now Acceptance Co. Every Byrider dealer owns a finance company, and the availability of credit is a powerful sales weapon."
Establishing a Byrider franchise costs upwards of $1.5 million, which covers the dealership and real estate, the start-up auto inventory, and seed funding for the finance company. That kind of investment demands a good return, and although English's road shows lack a certain dignity, they pay off handsomely. Each one costs him about $5,000 but typically yields 20 to 30 sales in two days. Since the road shows started, a year ago, average monthly car sales have jumped from 28 to 48, and English's accounts receivable, $1.2 million in 1994, are up $600,000. Business is so robust, in fact, that he's opening two more locations.
Ryan DeVoe, director of development at Byrider's headquarters in Indianapolis, applauds English's ingenuity. "These small towns can't support a multimillion-dollar used-car operation," he says. "The volume isn't there. But there's definitely enough business to justify a regular visit, and a lot of our people are now copying Woody's strategy."
Karen and Bernie Marshall didn't need a circus act to draw attention to their business, but they did need flashy marketing materials. When they started their Takeout Taxi franchise, in 1992, the menu suggested by the franchisor was a flimsy trifold. "We thought it looked like trash," says Karen, who decided they needed an attractive menu booklet for the affluent working couples in their market area -- Arlington, Va., and nearby Washington, D.C.
"Bernie and I were the first ones to publish something with a nice design and quality paper," she says. "It has since become a 56-page book, with a color cover, which we update as we add restaurants."
Takeout Taxi's slogan -- "We bring the restaurants to you" -- captures the company's concept. On a typical day orders flow in by phone and fax to a half dozen customer reps at the Marshalls' command post, in Arlington. Dispatchers in turn fax the orders to the restaurants, and uniformed drivers are then dispatched by radio to pick up the meals and deliver them to homes, hotels, businesses, and government agencies. The restaurants give discounts of 30% to 35% to Takeout Taxi, whose customers pay the regular prices plus a $3.50 delivery charge.
Last year the Marshalls -- both of whom previously worked at big companies -- posted sales of $1.8 million, and they're on track for $2.5 million in 1995, putting them in the top 5 of Takeout Taxi's 100-plus franchisees. The menu booklets, Karen says, are big growth drivers. For Arlington, their most established market, they print 50,000 menu books twice a year. The current edition features a four-color cover with food photos -- burgers, salads, steaks, even a sushi dish. A two-page review provides thumbnail sketches of the 45 restaurants for Arlington customers, followed by their menus.
