How a bold restructure has boosted business

By Sarah Stowe | 29 Oct 2015 View comments

Give your franchisees just three things to focus on. That’s the new approach at Narellan Pools as a result of a major overhaul of the business and it’s given the franchisees a renewed sense of vigour.

If you keep taking the same actions you will get the same result. That’s a paraphrase of a maxim that is a great starting point for any strategic review. When Chris Meyer began to consider what the next steps would be in the family-owned 43 year old business, he knew that change was going to be central to dealing with the new challenges of today’s trading environment.

It is particularly hard to instigate change when business is continuing to bring in the dollars, and when there is family involved.

But to best support existing franchisees and bring on board new blood, Meyer understood would require a tightening up of the business structure.

The company was founded back in 1971, and has been owned by the Meyer family since 1988. Today, the company is solely owned by husband and wife, Chris and Debb Meyer.

It has survived good times and bad but the recent run of challenges had set Meyer thinking.

“There was a steady decline, drought and water restrictions, and for while putting in a pool was not socially acceptable, we had the GFC and the floods,” he explains. “It was one thing for the environment, but it was also affecting the industry.”

He decided to take time to look at how best to reshape the business, starting with the manufacturing arm of the company.

Volume of production would be needed to support the profitability and growth of the business, so that meant a pricing change to enhance the brand’s competitive edge.

“This was designed to improve our position in the market and recruit new franchisees,” he says.

While the primary focus for the company is Australia the brand is not just known across the country, it has an international reputation that Meyer is keen to develop.

Annual pool sales in Australia are about 20,000 – a not insignificant number. But, says Meyer, globally it is so much more – on average 400,000.

“In the past, we passively recruited international franchises, now it’s an active strategy. We are looking to export our manufacturing and technology. We had to look at how we could free up some of the costs.”

TRADING OVERSEAS

“The logistics of moving a fibreglass pool is expensive so we are looking at a license or wholly owned subsidiary as a more efficient and effective way to deliver the product.

“We’ve been exporting about 20 years, for 15 years in New Caledonia, New Zealand, Reunion Island, in Oman, UAE.”

There is some presence in Europe but the economies are still unstable, says Meyer, pictured below. Better opportunities lie closer to home, specifically in Asia Pacific.

"We’d done this as a manufacturer but I wanted to understand the true costs and benefits,” says Meyer about the time spent analysing the export element of the business.

“Three years ago we looked at international opportunities, 18 months later the sales manager moved on, and I decided to do this myself. Understanding the people purchasing habits means I could start to tailor the best solution for our market.”

Although manufacturing is central to the international model, some economies simply won’t support a factory, he says. The island of Malta for instance, will be a purely export and maintenance market.

But there will be opportunities to nurture some regions into the production set-up. “We will build a sales base, get a sales and installation team, get confidence in the sales, then move into manufacturing,” Meyer explains.

Other steps need to be taken to introduce Narellan Pools in other markets – and these will be dependent on the country specifics. In Canada the price of pools delivered from Australia will be heavily subsidised to build a brand.

GLOBAL OPTIONS

Narellan Pools now has a structure based around:

  1. Exporting
  2. Manufacturing
  3. Investment models: a joint venture is the preferred model for business growth but there could be a wholly owned subsidiary or a wholly owned licensed operation. The latter has the least control but sometimes is the only option, admits Meyer.

COMPANY STRUCTURE

None of this could be accomplished without clearly defined roles, and the appointment of Andrew Latta [pictured here] to handle all the Australian operations from franchise to manufacturing – which plays a key role in supply of export – has been fundamental.

“That has freed me up so my key focus now is international, product development and innovation,” says Meyer. Also on board are Glen Chiswell whose singular focus is managing manufacturing operations; former sales trainer Edwina Griffin is the national business development manager but now with a stronger focus on effective sales; and Natalie Mayhew is responsible for business operations.“

Franchisees love it,” says Meyer. But he admits it wasn’t an easy process. “It was collaborative but tense for a year. We had to consider were we providing value as a franchisor in our marketing, services and support?

“It was quite challenging emotionally. At the core was a passion for the brand, and we had to look at what we could stop doing to reduce costs.”

The benefit of being in charge of production paid off here, with a resources redistribution possible across the company. “We knew there were areas we could adjust to be competitive, that’s the unique advantage of being a manufacturer. What is most important to the franchisee is getting a quality shell on time,” explains Meyer.

The business was able to tighten the client and supplier agreement with modified shell pricing.

REVISED FRANCHISE OFFER

Some substantial changes were also made to the franchise offer. “We significantly reduced and stripped back the franchise fee, and changed the structure for marketing so it is focused on national advertising and is not a marketing fund. This is more palatable for our franchisees, our marketing is more relevant.

“We stripped out the overheads, the fee is based on territory size. We all agree on the approach and the budget and the saving go back into LAM.”

Meyer also cut back the administration and financial support, is taking on responsibility for intellectual property himself and has simplified operations to focus on the front end of the business.

Franchisees can now choose to opt-in for a higher level of support, particularly necessary for inexperienced franchisees operating greenfield sites, Meyer suggests.

And they are loving the autonomy he says,

“We’ve made it very clear franchisees have only three things to worry about:

  1. improving the conversion rate and selling more pools
  2. never compromising the brand
  3. co-operating and engaging in the Narellan Pools community.

TIPS FOR HANDLING A RESTRUCTURE

What advice does Chris Meyer have for other franchisors considering a review of the business structure? There are three actions he highlights as essential to effectively bring the company and the franchisees through the challenging process.

Franchisors need:

  1. the capacity to have a good look in the mirror
  2. to get into the field and listen to the franchise network
  3. to create a culture of collaboration.