Becoming the new owner of a franchise network can be an unsettling experience for you and your franchisees, if it’s not handled correctly, says Dan Tarantin
Change is not always comfortable, especially for franchise brands and their franchisees when a new parent franchisor acquires the brand.
The questions and unknowns of having a new owner can be distracting, thinking about all the changes the new owner may want to put into place.
One thing to keep in mind is change does not happen overnight.
There are many responsibilities that come with playing the role of parent franchisor, which includes allowing established brands to maintain their personality and passion, especially for franchise companies that have built strong reputations.
At the same time, it’s essential to reinforce the fact that you, the new parent company, are able to bring a wealth of benefits to the franchise model and accelerate its growth.
Benefits include experience in scaling a business and resources ranging from capital to research and development, training and marketing that the brand being acquired can tap into.
Prior to joining HRI Holdings, Inc. (HRI), I experienced integrations of some of the fiercest franchisor competitors in both the hospitality and real estate sectors. During this process, franchisees were unnerved by the idea of aligning with the competition.
But as an example of the parent company’s impact, the ad funds were combined across the portfolio of brands that gave the company added media buying power and helped each brand grow by 25 percent.
The systems and processes that each franchise brand and the franchise parent bring to the table can be of tremendous benefit to one another and ultimately build the truly lasting partnership they both want.
Acquisition of a brand
The key to a smooth transition of ownership begins with the acquisition process. As the parent franchisor, you are looking to obtain new brands that enhance and expand your portfolio.
Beyond the bottom line financials and growth potential, it’s crucial that the brand being considered for an acquisition fits within the strategy and core competencies of the parent franchisor and can benefit from the experiences and other resources that the potential new parent can offer.
This will ensure that the franchisees can see the benefits and value of this new parent in the growth of their business, the expansion of their franchise network and in the long-term value of their franchise.
Once an acquisition target has been identified, the most important next step is to understand the values and culture of the potential new brand, both its corporate team and the franchise system. For our organization, finding a franchise business that shares our passion for helping franchisees to be successful is paramount.
One way to learn and understand the culture of the organization you’re looking to acquire is to note the way they communicate internally. The method, tone and style with which the brand communicates is an important piece of the franchising puzzle, since there are often offices spread across the United States and/or internationally.
Integrating the new brand
In establishing and assimilating the processes and best practices across all brands, don’t assume that your organization, the acquiring company, already has the best processes in place; there is always something to learn from the new brand.
Get the best of both worlds by assessing the differences and adopting the true best practices, wherever they come from.
Adopting some of the processes of the business being acquired demonstrates to the entire organization the value of the new business along with the company’s commitment to collaboration, objectivity and continuous improvement.
However you achieve it, it’s critical to not only integrate best practices but also usher out ineffective ones. As the parent franchisor, you don’t want to squash the profit-drivers or the brand essence that has defined the concept and helped it to be successful.
The existing franchisees developed a passion for the franchise system they invested in and you don’t want them to lose that.
Be sure to demonstrate in your communications and your actions that you can bring resources and other assets to the table that can help them enhance the worth of their franchise.
For those franchisees who invest in multiple franchises under the same parent franchisor, they need to recognize that each brand is different.
But, if you’ve been strategic in developing your “organic brands” and acquiring and integrating new ones, each brand should benefit from being a part of a larger, stronger parent franchisor.
For example, at HRI we have a history of innovation and strong research and development across a wide array of services for residential homes and local businesses.
We’ve been able to leverage this strength to develop unique elements for each franchise model in the categories in which we compete – deep-cleaning solutions and equipment for a variety of surfaces for Chem-Dry Carpet & Upholstery Cleaning, and more convenient and more affordable refinishing services for wood cabinets and floors for N-Hance Wood Refinishing.
With Delta Disaster Services – the property restoration concept that we recently purchased – we see the opportunity to develop and supply solutions to be used in some of our mitigation services.
We also have plans to build a state-of-the-art flood house just for Delta Disaster Services franchisees that can elevate our already robust training program.
Our brands are independent and unique but still benefit from some of the same core competencies of the parent franchisor.
Supporting the brand beyond the initial integration
Everything you do as the parent franchisor should aim to have a positive impact on all of the franchisees, regardless of individual brand personalities and uniqueness.
Embrace those differences between brands, but support them equally.
A huge positive to having a parent franchisor is having a stronger support system for each individual brand.
In functions including training, finance, human resources and marketing, even manufacturing and vendor/supplier relationships, having an experienced parent company with a strong infrastructure can offer significant benefits.
The parent franchisor needs to strike the balance between leveraging the synergies where there are commonalities across the brands with providing brand-specific support to help drive the growth and success of each franchise network.
In the integration process and on a longer-term basis, there is one more key to success – communication.
With multiple offices spread across the United States and beyond, using technology to make cross-brand and company-wide communication and information-sharing easy is key for all partners, franchisor and franchisees.
As the parent franchisor, you need to find the balance between communicating and implementing the organization’s strategy, reinforcing the culture and company values that drive overall company performance, and respecting and nurturing some of the differences that make each brand and franchise network unique and successful.
5 Keys to Success For Integrating A New Brand
Learn and understand the culture of the franchisor you’re acquiring
Identify and implement the best practices from all brands, pulling the best from each
Respect and support the new (and each) brand’s unique personality
Leverage the parent’s core competencies across all brands
Find or develop systems to make communication across all brands easy, to stay connected and on the same team
ABOUT THE AUTHOR
Dan Tarantin is the CEO of HRI Holdings, Inc (HRI). HRI is the owner of the Chem-Dry Carpet & Upholstery Cleaning, N-Hance Wood Refinishing and, recently acquired, Delta Disaster Services franchise businesses. HRI is a portfolio company of Baird Capital. To learn more about its services, visit http://www.hrisupport.com.