Part two of a two-part special, Michael O’Driscoll chairs an in-depth and honest discussion with two print brand franchisors who are not only leading organizations during a global pandemic, but have been operating in a sector battling decade-long disruption.
WHO’S WHO?
Interviewee: Rob Dallimore, MD of Worldwide
Interviewee: Richard Thame, CEO of Snap Print & Design
Interviewer: Michael O’Driscoll, CFE
Pandemic disruption
How did the pandemic hit the print sector?
Richard Thame summed it up in one word: “hard!” Richard says it was almost instantaneous as there was so much uncertainty about who could open and not open. “We’re a business-to-business franchise, so all the businesses we have as customers suddenly were not trading or were trading with significantly reduced revenue. This had a huge impact on our Snap CBD franchisees in particular with some seeing revenue drops of 70 to 90 per cent.”
Rob Dallimore agreed and was genuinely concerned about how he was, as a franchisor, going to have sufficient resources to financially support the franchisees. “The governments of Australia hadn’t yet worked out what economic support would be provided,” he explains. “I have never been more stressed in my 25 years at Worldwide as I was trying to forecast what kind of financial resources we needed to get through. We didn’t even know what ‘through’ looked like.” Rob said they had to learn to be prepared to expect each day to dish up uncertainty. Conversely, Rob was pleased to see that online orders went up during the peak of the pandemic shutdowns, particularly for those franchisees who had embraced the new digital tools they had introduced to the business in the prior years.
“We took the opportunity to help franchisees clean up databases and using the new marketing automation software, begin running targeted campaigns,” says Rob. “Once we started doing this, we felt more in control of our destiny again and could relax a little about how the future could be managed.” Rob said having the right monitoring systems in a place to identify vulnerable franchisees quickly and assisting them was essential. Snap also tackled the problem in a similar way. “The first three months was hectic for our support team and franchisees as we tried to come to grips with what was going on. Once we were deemed an essential service, we could move forward with our planning. We also discovered that when things settled into the ‘new normal’ we seem to be working on less tasks, but more important tasks that could make a real difference to our business. It’s still hard, but we can see the way through now and must keep franchisees focussed on the upside of continuing to embrace the change we are trying to facilitate.”
I asked both Rob and Richard if they had to permanently close units during the pandemic. Rob says he was fortunate that they only had to consolidate one unit into a geographically close unit. Richard says: “We closed less units in 2020 than we did in 2019. We will consolidate the network still, but that is different to permanent closure.” Both men admit that without the various government support packages available in Australia, they would have been forced to close more units. They believe that the longevity of their franchisees meant they were probably better financially resourced than many other franchisees outside of the print sector to ride out a severe economic downturn.
The rest of 2021 will see wholesale government support cease and more targeted programs come into place. They expect top-line growth to still be very challenged as they have exposure to industry sectors such as tourism, hospitality and education which they expect to remain severely affected for sometime. They believe as those sectors come back online there will be lift in demand for printing as businesses refresh their marketing materials.
Richard and Rob believe many independent print operators that were marginal businesses prior to the pandemic will fold as government support ceases at the end of March 2021. They believe this will affect the whole print supply chain which will continue the print industry’s disruption. They want to see poor, entrenched practices thrown out and a refreshed way of managing the print sector embraced by the sector. “The pace of change is a real challenge right now for franchisors,” states Richard “We need to make sure we keep a focus on forecasting and keeping our franchisees informed.”
Personal leadership lessons
I asked both franchisors what has been the hardest issue or challenge they have had to manage pre -and post the economic downturn as a franchise leader. Rob was quick to respond: “I am far less patient and tolerant, driven by frustration and the fact we genuinely care for our franchisees and their businesses, that they won’t change and adapt to the new digital era so they can have a sustainable business. I have been transparent with franchisees about the need to be innovative. I worry that some of our franchisees aren’t keeping up and what the consequences of that will be to them and to the franchisor.
Complacency amongst franchisees is our greatest enemy. We need to find new ways of leading the business through this complacency.”
Richard believes his greatest challenges as a leader have been managing uncertainty across three countries of operation and trying to hit the right notes to help keep motivation levels up. “This has been a very
“Once we were deemed an essential service, we could move forward with our planning”
formulaic business model,” he explains. “You know, follow these rules and procedures and you’ll be fine. Don’t deviate. That doesn’t work now. I am trying to influence our support team and franchisees to be nimble and accept change more readily as the norm. Innovation is our friend.”
I asked if they have had to change their leadership style during this triple disruption marathon. Richard didn’t believe there is a templated version of franchisor leadership.
“It is more nuanced than that in franchisor leadership. “You need to learn to adapt, for sure, but it’s not all the same for every CEO or founder in every franchise system.” Rob believes he has had to adapt but it hasn’t necessarily changed the business as much as he hoped for. “I am worried that the franchisees aren’t taking enough considered risks to make the business more sustainable. If we don’t take some risk and change the way we do things, we simply won’t be a competitive business model over the next five years.”
The future view and personal advice
Change management will remain a core challenge; both men believe they and their teams need to get better at leading lasting change.
As Richard said: “We need to be more informed and keep our franchisees informed and be more convincing in our ability to influence franchisees and our teams. We also have to accept some people won’t be able or willing to move with us. This will need to be managed carefully.”
What is their advice for young founders or CEOs on managing disruption? Richard stated it was “important to be clear about the fundamentals of your business that you can’t or won’t change and be clear about what you can and would be willing to change. Know the DNA of your franchise system very well and communicate it clearly to your core stakeholders”. Rob believes: “Be open-minded and be willing to constantly adapt. Your IP is the core of the business, but you must be willing to keep investing in it. Don’t be afraid to take up all ideas. Assess them all and take calculated risks. I try to give my team the freedom to try new things. I’d rather they kept coming up with new ways of doing business and looking at all opportunities to continue to diversify our offering to have a sustainable business model than just accepting the status quo. Be the disruptor, not the disrupted.”
Both men believe it is important to seek advice. Both formal, informal and at a personal level. Talk to your peers and those with more experience. Also, find ways to invest in appropriate professional advice when you get stuck. Both Richard and Rob have consulted extensively during the last 12 months and find this incredibly valuable to helping maintain their leadership focus and impact. As Rob says: “Don’t be too proud to seek help. It’s curious to me that the people who need the most help are the ones that don’t seek it.”
Both believe that the franchise sector in 10 years will look vastly different to what it is today and to what they ‘grew up’ with. There will clearly be more technology involved. More regulation for franchisors to contend with and possibly less new franchise systems entering the market as the cost of capital is cheap right now and will be for some time. Richard believes: “Sources of capital have diversified, too. Some businesses simply won’t need to franchise their business to scale. Simple methods of distributing goods and services, like licensing, may continue to grow if young entrepreneurs do not wish to use the more structured model of franchising.”
There will be more knowledge about how to set-up and build a successful franchise system. Rob speculated: “We may very well see less crises and failures in franchising as people become more knowledgeable about the suitability of a business to be franchised and self-assess this. They will also acquire the management skill of being able to influence people to do something they don’t want to do as the franchise model matures. A good franchisor of the future will have change management as their core skill set in my opinion.”
Richard observed: “Through all this chaos of the last 12 months, the three operating countries of Snap have been brought closer together. This can only be a good thing and will hopefully make us a stronger franchise business in the future.” Let’s hope this is the case for both of these mature models and they can be an example for others about how to get through long periods of disruption and come out the other end a better business with a sustainable future.
THE AUTHOR
Michael O’Driscoll, CFE has been in the franchising sector for 30 years. He has been a CEO, COO and board director of several franchise systems. He is the former director of the Franchise Council of Australia and holds an MBA in International Franchise Strategy
Disclosure: The author is an advisor to one of these franchise-related businesses.
