Growth in Mature Franchises

30-Jan-2015

The points of Difference

At the tapering-off of what has been a challenging economic era, three mature Australian franchises have emerged triumphant, with plans to expand their market share and grow their networks.

 
Hairhouse Warehouse, a franchise that blossomed from humble beginnings in 1992, plans to grow its 140-store network to more than 180 by the end of 2017. As the La Porchetta group celebrates its thirtieth anniversary, it shifts from a period of consolidation to one of growth, with plans to expand its restaurant network across Australia and New Zealand to 100-strong. And physiotherapy and wellness group, Back in Motion, has grown from a single practice in 1999 to its current eighty, with another twenty outlets planned for 2015.

Notably, all of these groups hail from sectors that are subject to discretionary spending – often the hardest hit segments when consumers tighten their belts. So, what has set these networks apart from their competitors and allowed them to grow during a period that has been slow for many? 

The answer lies in strategic planning, offering the consumer something unique, and unrivalled support for franchisees that engenders a sense of belonging.

Strategic Growth

Hairhouse Warehouse, Australia’s largest hair and beauty retailer and salon network, has targeted specific regional and urban areas to ensure that customer care is extended right across Australia. The group capped off 2014 with a new store opening in Gladstone, Queensland, and other stores scheduled for Tamworth and Hervey Bay. New stores are planned for the Northern Territory, including Darwin, and a new store in Mt Gambier, South Australia, will open early this year. The group has identified a number of key urban centres in Perth, as well as several regional centres in Western Australia. In NSW, further stores are planned for Sydney as well as six regional sites, such as Erina Fair, and Victorians can look forward to a new outlet in Sale.

Peter Fiasco, Franchise Development Manager for the Hairhouse Warehouse group, stresses the importance of sustainable, strategic growth over growth for growth’s sake. 

“We’d like to see a balanced representation of our brand across the country, so we look for gaps in the market,” says Peter. “Our outlets thrive in key urban and regional areas because there are few or no comparable retailers in those regions.”
Peter explains that the wide-reaching effects of the digital age and social media have heightened consumer awareness about available products, and customers are eager to buy.

“Customers in many areas are either travelling to buy these must-have products, ordering them online, or simply missing out,” says Peter. “We want everyone to have access to the power of good hair – not just city people. We’re taking the product to where the demand is.”

Similarly, La Porchetta works closely with its franchisees to collaborate, plan, and keep abreast of changing demographics. With expansion in mind, they have done a thorough analysis of all of their sites to determine where consumer demand is strongest. “We are going where our customers want to see us,” says CEO Sara Pantaleo. 

The group boasts seventy restaurants across Australia and New Zealand, concentrated in metropolitan and regional areas. Here, its appeal lies partly in its carefully crafted menu, which allows franchisees to tailor specials to local taste, as well as its signature quick, friendly service with a smile. 

“We are your ‘local Italian’,” Sara says, pointing out that La Porchetta is as popular with young families as it is with older people. 

Jason Smith, National Group Director for Back in Motion, says that although physiotherapy falls into the healthcare category, it is not primary healthcare, therefore its target market is those with enough disposable income to afford the service.
This Melbourne-born franchise does well in high street, retail locations in middle-class suburbs. “We have sold licenses in every state and territory across Australia,” Jason says. “Our industry is poorly serviced, so wherever we actively solicit interest, we grow. Our strategic focus now is on Sydney, Perth and Brisbane.”

Standing out from the competition Hairhouse Warehouse invests seriously in studying market and industry trends, so they can offer the very latest in hair care to their customers. The group leverages its buying power with suppliers, allowing them to offer their customers the best possible value while protecting the trading terms of their franchisees.  “Hairhouse Warehouse stores stock the widest range of professional hair care products on the market at the most competitive prices,” Peter Fiasco says. “We also stock brands that are exclusive to Hairhouse Warehouse.” 

More than a mere tagline, Back in Motion’s trademark “Results for Life” is the philosophy that underpins this thriving group. Their greatest competitors for market share are long-established local operators who have earned trust and respect within local communities. “Back in Motion offers holistic, tailored health solutions – not quick fixes,” says Jason Smith. “We have extended the scope of our services to encompass wellness management and education in lifestyle choices. In this sense, we think and act differently from our peers.”

In the restaurant business, customer spending is highly discretionary yet, throughout the economic downturn, La Porchetta has remained a strong performer. In terms of what they offer their customers, this group is unrivalled in the casual dining sector. 

“We only work with the freshest ingredients,” says Sara Pantaleo. “We don’t take shortcuts with our ingredients – that is a very important factor and it’s what sets us apart from everyone else. Our meals are all prepared from scratch; other businesses our size generally don’t do that.”

“Our customer feels really cared for when they visit,” Sara adds, “with full service and an extensive menu, and the fact that we are local – we’re part of the community.” She explains that, as well as having a standard menu throughout the network, each restaurant has a unique specials board that is tailored to local customers. “That is where the local aspect comes into it,” Sara says.

Unrivalled support

So, from a franchisee’s point of view, how do these groups stack up against the competition? 

According to Peter Fiasco, it’s all about culture. “Our brand has a unique culture with people at its centre, working together to build a great brand and success for all,” he says. “We seek out people with the drive and passion to succeed, and a genuine interest in people. We provide all the tools, training and support from there.”

Hairhouse Warehouse delivers on its promises, providing not only the most lucrative margins in the industry, but also setting new benchmarks on systems, training and ongoing support. New franchisees are prepared for every aspect of opening and operating their new business. Cost of entry includes site analysis and leasing negotiations, as well as the support of a set-up team.

Jason Smith says that Back in Motion franchisees often emerge from within the group – employees who perfect their skills as therapists until they feel ready to run their own practice. He says that while they are thoroughly trained in healthcare, most have little knowledge of business.

“We have built our model to provide everything they need to run a practice, except for actual patient treatment,” Jason says. “Branding, site selection, research, our technology platform – it’s a complex back end.”

Jason adds that there are only three things the group expects of its franchisees: “They must thrill the patient with exceptional service, they must lead a great culture among their staff, and they must use the resources we’ve built without trying to reinvent them.”

La Porchetta celebrates its thirtieth birthday with a new website, a monthly newsletter, and an innovative online marketing portal for franchisees.

“We’re very excited about the launch of the new marketing portal,” Sara says. “Franchisees will be able to access the portal to develop local area marketing campaigns. All tools and materials will have their restaurant’s specific details already in place.”

Like Hairhouse Warehouse, some La Porchetta franchisees are from a related industry background, although it’s not a prerequisite. “We look for people with a zest for life – people who love food and enjoy working with people,” Sara says. “We can teach them the skills they need to run a restaurant.”

“We organise as many opportunities as possible for our franchisees to get together,” Sara says. “Networking among peers is vital for the success of our franchisees and for the La Porchetta brand.”

Jason says that Back in Motion’s franchisees fall into two categories: ambitious young graduates, excited to be part of a growing brand, and experienced physiotherapists who may have run their own practice and experienced the hardships of working alone, and are looking for the support of a franchise structure. “Having the two very different groups provides great peer-to-peer mentoring opportunities,” Jason says. 

Peter Fiasco also stresses the importance of creating a sense of belonging. While all the ingredients for growth are part of the success recipe, this is perhaps the keystone. “When you buy a Hairhouse Warehouse franchise,” Peter says, “you’ll work for yourself but you won’t be alone.”


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