All hired up

Renting a product or service happens for a variety of reasons, including cost and convenience. As consumers feel the pinch in their pockets rental businesses offer a viable alternative, whether it is for the latest high tech piece of equipment, a backyard birthday party or a removals service.

When the going gets tough, the tough go shopping. That's one reworking of the '80s movie song that that might be what Kevin Rudd is after with his stimulus package but perhaps doesn't ring true across the nation. A sudden splurge at retail level is unlikely to be sustained in today's climate. In fact, according to the Australian Consumer Climate Study, produced by the Australian Centre for Retail Studies almost 80 per cent of the 1010 consumers surveyed across the country have changed their shopping habits because of monetary pressures, 70 per cent are cutting out top end purchases and 65 per cent are limiting their overall spend.

Consumers are looking for alternatives to the big spend, and in the same way that takeaway food businesses benefit when restaurant visits decline because of the dollar, so too does the rental sector have opportunities to thrive when customers become thrifty.

John Newton of inflatable castles franchise, Jumping J-Jays , for instance is expecting a move away from the expensive locations to the backyard birthday party as parents budget for an inexpensive kids' treat. At Home Entertainment Express , offering a variety of rental equipment, franchisor Mark Miller agrees that when times are tight renting becomes more attractive than buying. "People still want the new computer or LCD TV right now, but they just can't justify outlaying $3000. Renting one for $20 or $30 a week gets them the product they want with an affordable weekly payment."

For the Hire A Box rental franchise, which delivers and picks up removal boxes for individuals and businesses to utilise during a move, gaining brand recognition has resulted in an increase in traffic over the last few months.

"This has been perfect timing for us to secure our place in the market as customers are more than ever in search of the most convenient and cheapest way of moving," explains customer service manager Linda Holroyd. "We have also found an increase in work from businesses and residences that are downsizing or relocating to get cheaper rents and we have also spoken to some customers lately that have lost their jobs and are having to relocate once they have secured a new position."

So what are the issues of business building in the rental market right now?

Cameron Walker, Jumping J-Jays franchisee from Burleigh Heads responds

How important is product offer over price for your customers right now?

We have deliberately structured our business model so that our franchisees carry products and services that cannot be easily duplicated within the marketplace. Our unique custom products (designed and engineered in-house and built in our factories in China) incorporating our patents mixed with the industries highest safety standards, allow Jumping J-Jays to overcome price objection with cutting edge rental equipment that is aimed at our target market and exclusive to the brand.

However, we have also rolled out a more aggressive coupon style discount package for our past customers or past test jumpers; discounting is usually on about 20 per cent of our business.

Where do you expect new business to emerge?

Our typical business model has been the hiring of inflatable amusements for kids' birthday parties in a backyard. However, over the last two years we were predicting changes in the marketplace, from the overall economy to the market competition so our business has been directing resources and marketing dollars to growing further income streams for our franchisees. These other income streams involve marketing towards midweek hires for schools, corporate fun days and open days, chasing community interactions and business to business events. We also offer high end inflatable product lines such as water slides and custom built inflatables for companies using a vendor leasing arrangement.

How do you expect your franchisees to market to the customer?

Our franchisees receive a comprehensive nine point Local Area Marketing Program (LAMP) each year and dedicate one mid week day a week rolling out these tested programs within the community. Our programs involve getting children at a preschool or through one of our five day free shopping centre campaigns to test our rental products. Our franchisees receive more than one tonne of marketing material free every year (including about 70 different printed items) to make sure it is correctly targeted and we are able to correctly record the results.

What role does personal service play in your business?

We reach our customers through the franchisee's personal web page (managed by our marketing team), through the physical delivery of the castles to each event and through to the one day a week marketing program. We promote to related children's business and we are engaging the community.

We offer a potential franchise prospect the ability to run a professional, hands-on, community focused franchise but they also need to be willing to put in three days a week. One of our core values in the business is our community involvement. Our franchise model seems to works the best in families where mum might do the marketing and dad does the deliveries.

How does the convenience factor of your franchise impact on your clients?

Our franchises run their business from home. All the inbound calls from customers are received through our centralised booking service (owned and operated at Jumping J-Jays headquarters), so the customer rings our toll free number and they will be able to speak to someone 12 hours a day, seven days a week. So the customer does all their research and booking remotely. We really do offer a hassle-free transaction.

What skills are required by a franchisee?

The franchisee is going to be working with their hands to install the equipment so they need to be physically fit and have the ability to operate this business on weekends. The one day a week LAMP really suits a franchisee that is willing and able to just talk to people and interact.

What innovations distinguish you from the competition?

The company's email marketing program is now in full swing and we are turning to social media a lot more now. Our product themes have increased within our franchised outlets to provide parents or hirers with more choice and greater depth of choice in a way that allowed franchisees to quadruple their themes for a very small investment.

We spent in excess of $30,000 on our computerised booking system and this has really allowed our franchisees to see transparency throughout the entire company and provide true up to the minute reporting and access to some amazing tools.

Phil Hague, franchisor of Rent the Roo explains his business

How important is product offer over price for your customers right now?

Pricing for customers is a priority. Quality products backed up with personal, prompt service is essential.

Where do you expect new business to emerge?

We will be developing the current home based furniture and appliance rental franchise internationally starting with New Zealand this year. We will also introduce new product and service based franchise chains beginning with cleaning services and camper trailers.

How do you expect your franchisees to market your brand to the customer?

We have developed a sub franchise development to support a direct mail marketing strategy.

What role does personal service play in your business?

Personal service is an investment that pays big dividends over the term of the franchise. We enjoy an average percentage of over 70 per cent resale to current clientele.

How does the convenience factor of your franchise impact on your clients?

Our clients can choose any product from any retail outlet with out leaving the comfort of their home.

What skills are required by a franchisee?

Personality and maturity are as essential as any previous experience. Basic skills including telephone reception, data entry and salesmanship are necessary but easily developed with our experience, training and support.

What innovations distinguish you from the competition?

The sub franchise development of our current master franchise. This has lowered the entry level capital requirement from $195,000.00 for a master franchise to $24,750.00 for a sub franchise. The master franchisee is a capital based franchise providing administration while the sub franchisee is responsible for field work.

Mark Miller, franchisor of Home Entertainment Express and Belmont WA franchisee, lain Fisher share their thoughts

How important is product offer over price for your customers right now?

Franchisor: There are two facets to the Home Entertainment Express rental franchise. We rent DVDs and games (mobile video shop) as well as a wide range of household goods including furniture, whitegoods, brown goods and computers. In both sections of our business it is important to offer product that is desirable and/or necessary for our customers, as without the right product customers won't spend no matter what the price. With the right product lines we are then able to focus on adding value for the customer through convenience and superior personal service while maintaining our prices. We see discounting as a great way to work harder for less money and as such, we generally avoid it at all costs.

Franchisee: Product is the major focus for customers; being able to lease goods at an affordable weekly payment with no big payout is extremely attractive to customers. Price is always flexible and tailored to suit individual customers. Customers enjoy the fact that they can rent to own the latest products without forking out thousands of dollars upfront.

Where do you expect new business to emerge?

Franchisor: The increased demand that we are currently experiencing is coming from middle to low income earners in both metro and regional areas and our research leads us to believe that will continue through this economic downturn.

Franchisee: Within the territory there is already massive room for expansion without any real need to leave its boundaries. However, customers in non franchised areas can be serviced easily, providing additional income to the franchisee. The beauty of our service is that it enables customers to be seen practically anywhere, both in person as well as being serviced by phone/mail for leasing goods.

How do you expect your franchisees to market to the customer?

Franchisor: We expect our franchisees to not just market our brand through catalogues and local promotions but to effectively become a part of our brand. We market ourselves as 'not just a name and a logo but a real person', someone that customers in the franchise territory can identify with. People would still rather do business with a real person that they know and trust.

Franchisee: Exposure by our catalogues, vehicles and customer referrals, a website used nationally to promote our services and also regular promotions. For example, the current referral/frequent hiring promotion has brought additional customers. There is always a healthy demand for the leasing of goods and with our HEE Design-A-Plan software we are able to reward customers with the product they want, as well as a weekly movie and game rental bonus, all neatly packaged to suit the customer's individual needs.

What role does personal service play in your business?

Franchisor: I can't stress just how important personal service is to our business. In a nutshell, providing great service and knowing and looking after our customers' needs means we keep our customers long term. Our customers appreciate the personal service we provide and in return help us to grow our business through referrals (for which we reward them). We just did an internal survey to find out what makes our customer retention so strong and the results indicated that our personal service rates very highly.

Franchisee: The superior personal service provided keeps our existing customers continuing the use of our service as well as happily and actively promoting it to family and friends. Customers enjoy the consistency of seeing an always happy and smiling face each week.

How does the convenience factor of your franchise impact on your clients?

Franchisor: The world is a very busy place right now and increasingly convenience has become a valuable commodity. Our business started in 1991 as a home delivery video shop to cater to the growing desire for convenience. Back then we delivered movies and games to customers in their own homes which effectively gave them back more of their leisure time. We have continued that focus on convenience throughout the years as our business has evolved. Now you can get almost any type of household good from us without getting up from the lounge.

Franchisee: Enormously. Convenience is twofold: firstly, new release movies/games delivered and picked up for a whole week and secondly the benefit of leasing goods at affordable, flexible repayments with no big payout at the end of the contract.

What skills are required by a franchisee?

Franchisor: Franchisees need to be self motivated, willing to learn and follow our proven systems and be comfortable dealing with people. Bring those three things with you into our franchise system and the sky is the limit!

Franchisee: Getting on with people is a major focus as well as an ability to follow the HEE System (which has been proven to be successful) and a desire to work hard will make your business successful. Listening to your customers' feedback and interacting with more experienced franchisees is always beneficial.

What innovations distinguish you from the competition?

Franchisor: Our packaging of DVD and game rental entitlements with a rental product (for instance four new release movie rentals combined with a fridge rental for $30 per week) is something that only we do. Also, our customer rewards program is highly effective: every time a customer introduces a new client to our business, they earn $10 to spend in one of our franchises.

Franchisee: Renting goods to own, not for life; providing contemporary products such as TIVO and PS3.

Linda Holroyd, Customer Service Manager for HIRE A BOX explains the system

How important is product offer over price for your customers right now?

In the current climate, people are looking more than ever for ways to save time and money while still looking for a quality product. Hire A Box offers them delivery and collection of their moving boxes at around half the cost of getting them from a storage centre or a removalist. We combine a top quality product with a top quality service at an unbeatable price.

Where do you expect new business to emerge?

We have expanded very rapidly over the last 15 months growing from one to 23 franchisees.

We only have a few areas left to sell across the eastern seaboard so our main focus will now be on Western Australia as we have our first franchise up and running there.

How do you expect your franchisees to market to the customer?

Franchisees are encouraged to approach any residencies or businesses they see for sale or rent. Anyone moving will need boxes. Bulk purchased flyers and brochure holders, distributed from head office, make this quite an inexpensive exercise. We also show franchisees how to source the information on which houses are for sale or rent for them to target. Franchisees also approach many businesses like removalists, real estate agents and truck rental companies to offer our services.

Hire A Box takes care of all the national marketing like TV and radio so franchisees are left to concentrate on their local area only.

What role does personal service play in your business?

This is the core of our business. We believe in good old fashioned customer service and all of our franchisees understand our values and will go the extra mile for the customer. We receive many referrals and repeat customers and they all say our service is unbeatable. Our customer service will always be our point of difference.

How does the convenience factor of your franchise impact on your clients?

We find in our business people usually want a delivery straight away. As our franchisees are mobile and always carry extra stock onboard, or are near their storage centre, this is never a problem. Customers love the fact we can usually do an on-the-day delivery and the simplicity of our business ensures this is easily achieved by our franchisees.

What skills are required by a franchisee?

Although a customer focused background is helpful, it is not essential. We look for individuals with initiative, integrity and persistence. A Hire A Box franchisee needs a pleasing personality and an easy to get along with nature. They must enjoy meeting and speaking with people, enjoy driving and being out and about and hold a current C class driving licence. A familiarity with their metropolitan area is also essential as is the ability to organise themselves and the day-to-day running of their business.

What innovations distinguish you from the competition?

We have just launched a new website which makes it very simple for customers to understand our service, view our products and follow our order procedure. This has made a significant difference to our business.

We are starting a commission paid referral scheme with removalists and real estate agents to thank them for the business they pass to us. This, again, will have a huge impact on the business as this scheme will mean we are getting regular work passed on to us by our partners.

Our TV commercial launched in April and we are confident this will also boost the business dramatically.

This article appears in the Franchising Articles listing courtesy of Franchising Magazine