MANAGING FOR
MONEY
Franchises
and Networks
They're changing window coverings forver. How will they effect you?
How will you compete?? Will we all be more professional?
by Steven C. Bursten
Franchising
and networks are an important trend in window coverings that tells
a lot about where our industry is moving. Be alert to its impact.
It will affect your business. This accelerating trend will make business
more competitive. But it also will result in better service to customers.
With my experience in both franchising and independent businesses,
perhaps I can share balanced perspective on this important subject.
I am proud to have started the first franchise in our industry some
35 years ago, now known as Interiors by Decorating Den. I have also
worked as a consultant in recent years with major, multi-million dollar
independent specialists.
HOW WILL FRANCHISING AFFECT YOU?
Let’s look at how this franchising trend will affect independent
business owners and the industry in general. But more importantly,
how will it affect customers who want beautiful window coverings for
their home?
Typically, in any field, whether a restaurant or maid service, a franchised
business is likely to have a well-trained owner, a clear concept and
a professional image that is comforting to customers. Of course, independent
owners can do the same, if they make the effort.
The key point: Given a choice, most customers prefer to buy from a
business with a professional image and assurance of service. The issue
is how to project that image. It does not come easily or automatically.
Whether you buy it from a franchise, or invest in your own independent
business, the more a window coverings retailer is well trained and
projects a sharp, good-looking image, the more customers benefit and
the stronger our industry becomes.
HOW ARE FRANCHISES IMPACTING OUR INDUSTRY?
Franchises have been in window coverings for over 30 years, but in
the last five years their growth has exploded and the impact is front
and center for every aware business owner. First, the fact that there
are now a lot more franchises affects every business owner, independent
or franchised. The number of new units this year probably will reach
upwards of 300 and more if you count existing businesses that join
a network. If current trends continue, this number will increase in
coming years.
In an industry of less than 10,000 outlets listed in yellow pages
headings, that is a serious number. Possibly 10 percent of all listed
window coverings businesses are now franchised or affiliated. But,
franchisee sales are higher, on average, than non-franchised business.
So their impact is greater.
Of course, there are thousands in our industry who are not in the
yellow pages and sell one or two customers a month. Still, bottom
line, the impact of franchising is growing because their sales are
outpacing the industry.
WHO ARE THESE FRANCHISES AND NETWORKS?
Just as our industry has divided into two camps, franchises are the
same. On the “soft” products side—draperies, fancy
valances and fabrics—are Decorating Den, the leader with over
500 units; Décor & You, with about 30 franchisees; and
a new up-and-comer, reportedly with more than 100 units and growing,
V2K Window Fashions.
However, the real franchise growth is in “hard” products—blinds,
shadings and shutters. Thanks to innovative market leader, Hunter
Douglas, this category is reportedly 60 percent of sales of all custom
window coverings. Leading groups in this category include Today’s
Window Fashions, approaching 50 units; and “Gotcha Covered”
Blinds, a new fast growing operation with more than 100 units (see
D&WC, April 2004, page 26). But, hands down, the leader in this
category is Budget Blinds with more than 500 units, growing at more
than 100 a year, and with increasing visibility by their new graphic
vans (see D&WC, April 2003, page 30).
NON-FRANCHISED NETWORKS
Other non-franchised networks also are growing rapidly. Blind Broker’s
Network, reportedly with over 300 units (it’s a hidden business
because there is no common trademark). And, finally, industry leading
Hunter Douglas with its Window Fashions Gallery program is now at
more than 200 units and appears to be adding some 100 a year (see
D&WC, March 2003, page 31).
With the exception of Window Fashions Gallery retailers, all other
franchises and networks are home-based and bring non-experienced men
and women into the industry.
WHAT IS SPECIAL ABOUT A FRANCHISE OR NETWORK?
Traditional retailers ask the question, “How does a franchise
name bring in business? Even though it is called a national name,
the reality is that only a tiny percentage of homeowners know any
franchise name. So, how can the name itself mean anything?” In
a sense, that is a fair question. It is not like millions of customers
have seen national television ads for the name.
But sometimes a national name is in the appearance of graphics on
business cards, letterhead, Web sites and newsletters. It is the image
the name projects that gives it a national sense, along with a network
of dozens of retailers throughout the nation.
Most franchises have a professionally designed logo and advertising
materials. In a customer’s mind, classy color brochures, sharp
career apparel and dramatic van graphics may convince her that this
is a legitimate and credible national company. For a non-store business,
credibility means everything.
But, in reality, the name may be only part of the story. The actual
strength of a franchise or network is often intangible. It may be
initial and ongoing training, marketing expertise, or possibly just
meeting and exchanging ideas with other franchisees to learn how they
find new customers and manage operations.
It is not always how many leads you can count, or customers you can
directly attribute to a national name that actually makes the difference.
It may be the credibility for a customer to buy from a business she
trusts, and not to buy from what she perceives as an amateur. It may
be the dealer’s education to sell better at higher margins, or
market research to define the target customer profile and rifle shot
advertising for more effective results.
ADVANTAGES OF BEING INDEPENDENT
Independent business owners have some advantages not equaled by a
franchise. Not paying a royalty is a big one. Royalty fees may be
a flat fee or a percentage. Either way, the savings may be $15,000
to more than $30,000 per year.
Another advantage is freedom to buy from the supplier of your choice.
Franchises may have restrictive agreements to favor approved suppliers.
Sometimes there are valid reasons for doing so. Sometimes the franchiser
may receive income on your purchases. As an independent, there is
no pressure to favor any vendor.
As an independent, you have no territory restrictions. You can open
new stores and expand into new areas without worrying about other
people’s territories. As to a logo and graphics, you may be able
to develop your own identity program for less money than paying for
a franchise. You can have a graphic artist develop a professional
logo that will give your business the image of a national name. You
can embroider your logo on shirts and jackets, especially for installers,
to set your business a notch above others. You can engage an ad agency
to develop a business brochure and advertising format . . . and probably
for thousands less than you would pay for a franchise.
Another advantage you have as an independent is the freedom to advertise
as you choose. Under a franchise, you will need to follow approved
advertising guidelines and possibly request permission to use the
franchised name in a specific way.
ARE FRANCHISES LOW PRICE COMPETITORS?
You may lose business to a franchise, but chances are it will not
be from undercutting your price. With hefty royalty fees, franchise
owners are trained to get top profit on their sales. One dealer reported
that after losing a sale to a franchise, he found the franchised sales
consultant quoted a better, more costly job that captured the imagination
of the homeowner.
Your low-price competitor will likely not be a franchise, but instead
will be the no-name independent that has nothing to sell but price.
HOW WILL FRANCHISING AFFECT OUR INDUSTRY?
Chances are, competition from franchises will challenge independent
businesses to be even sharper—better training for consultants,
professional image, Web site and advertising—everything that
makes a business more professional in the eyes of customers.
Whether independent or franchise, the more professional we all become
the better that homeowners benefit by having a better business to
help bring them a more beautiful window and a happier home.
Every business owner has three options: Join a franchise or network;
upgrade the professionalism of your existing business; or do nothing,
stay as you are. You know yourself and your customers better than
anyone. You see the trend lines on your sales graph. You are the best
person to make the right decision.
I hope this article helps crystallize your options and helps you to
have the kind of business that is right for yourself, your family
and your customers.
 This
article is based on Steven C. Bursten’s actual experience with
sales and financial information working with hundreds of window coverings
businesses. Whether you are a sole manager who aspires to higher sales
or you manage 50 window fashion decorators in a multi-million dollar
business, this series will help you manage sales better and increase
your profitability. Bursten is the retired founder of Decorating Den
Interiors and author of a how-to book on new business start up, “Bootstrap
Entrepreneur,” and is a leading expert in window coverings marketing,
sales systems and sales management through his company, custEmers.com.
Questions and comments welcome: steve@custemers.com or (888) 333-8981.
For a report, “Why your customers love shop-at-home, and so should
you,”send a request with your business name and address to sah@custEmers.com |
