The Smartest Franchisees in America

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Kathy Miller put in 17 years with NCR and AT&T, ending up as an East Coast sales director. Tired of traveling, she bailed out in May 1994 to run a Primrose School educational child-care center.

The $1 million required to build the school didn't faze her. "When you come from corporate America, you're not intimidated by a million-dollar investment when you're used to a budget of $25 million," Miller says. "I was convinced the numbers would work, and they have." In business only a year, her school in Cary, N.C., is filled to capacity, and she has broken ground on a second school.

Miller, Shultz, and others like them are revolutionizing the franchising scene, and not just on a unit-by-unit basis. To lure and keep such demanding desirables, some franchisors are rethinking, for instance, the support services they offer and how they share the wealth. (Mini profiles of three savvy franchisors appear below.) "There's a relationship change under way," observes Leonard Swartz, director of franchise services for Arthur Andersen & Co., the giant accounting firm. "In the 1960s and 1970s, the franchisor was the king. Now you have advisory councils of franchisees and more teamwork. Good franchisors know that the best ideas come from the folks at the cash registers, and they listen to them."

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.

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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.

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