6 reasons for success: Laser Clinics Australia
Laser Clinics Australia's general manager Tim Sinclair believes the brand's distinct franchise model has significant advantages.
1. Shared risk
The Laser Clinics Australia model is a 50/50 investment from franchisee and franchisor.
"It’s important the shared risk model is consistent and stakeholders understand the power of the model. We invest together and share the risks. We will always butt heads but the franchisees know why the decisions are made. If they don’t make money, we don’t make money and shareholders won’t get the returns they want."
Partnership defines the business, Sinclair says.
Sinclair believes consistency in the model is easier for the franchisee and the customer.
Franchise systems that adopt more than one business structure are at a disadvantage, he says, whether that’s embracing master franchisees, a 50/50 investment split, or company-owned outlets.
3. Choice of franchisee
“There’s always a risk with the location, but the single biggest value creator is the quality of the franchisee. A good franchisee in an average location will do well; a poor franchisee in a good location won’t do well.”
And that’s partly because good franchisees attract good staff, Sinclair says.
“We do a lot for franchisees but if they can’t manage and engage staff, customers will have a bad experience and won’t come back.”
So what’s the process for evaluating their success in such areas?
“We look at their track record in people leadership. It might be in another area, another clinical environment, public service, a bank. We look for people who have experience and have progressed in their roles.
“We conduct behavioural-based interviews and do reference checking. It’s not just what referees say but who the referees are.”
4. Support structure
There are no BDMs or area managers within Laser Clinics Australia. Instead franchisees have direct contact with Sinclair, and with head office, and category teams are focused on building better businesses.
Franchisees are responsible for the results of their share of the business, the category leaders take care of the vertical profit and loss, Sinclair explains.
“It’s better to create centres of excellence," he says.
He believes a BDM system works well where franchises share geographic similarities but clinics are best supported like-for-like according to their level of maturity rather than location.
5. Knowledge sharing
Training for both franchisees and therapists is critical to the business. Sinclair believes it’s an advantage of the owner-operator model that the franchisee is working full time in the business so can spot and handle any staffing issues early on.
And experienced franchisees are actively encouraged to share their knowledge with others.
At a recent quarterly meeting franchisees were talking about managing and motivational tools, KPIs and staff turnover, and one of the most experienced franchisees was able to share his best practice.
That helps him to quantify what he does, but as a franchisee speaking to peers his views are seen to be much more credible than if the franchisor shares the same information, says Sinclair.
“They don’t have to share but they care enough about their fellow franchisees and care about the brand. I’ll always be indebted to these people,” he says.
6. Sensible growth
“When the business started in 2008 there was very little competition. Now we have three or four very good competitors for whom I have a lot of respect. The challenge is how many can succeed?
“There is room for growth for everyone right now but if you want to run a good, profitable business, you need sensible growth.”
International growth is part of the big plan, but Laser Clinics has been taking a slow and steady approach,
“Finding the right sites and right franchisees is a significant amount of work. You run the risk of doing five things badly rather than two well,” says Sinclair.