Is this partnership model the key to franchise growth?
Tim Sinclair has been in his job for six weeks. It’s the first time the HR experienced manager has been involved in the franchising sector but as the new general manager of Laser Clinics Australia he's loving it - and the franchise model.
Sinclair brings to the role experience as vice president of human resources Asia Pacific for the Campbell Soup Company, HR director for Asia at Campbell Arnotts, and various roles at PriceWaterhouse.
Sinclair replaces Ian Houlton, who talked to Franchising last year about the involvement of the Archer Capital Growth Funds in Laser Clinics Australia.
“From my perspective the first thing Archer brings is money. It means our growth path can continue. Secondly it brings a level of discipline," says Sinclair.
“When Archer came in there was a natural level of nervousness among franchisees. Private equity has a mixed reputation in the community, but the franchisees can see more support and focus from the business.”
The credibility of a private equity firm investing in the LCA business helps attract good franchisees to the brand, he says.
“There is a level of discipline about how to measure success and the impact on marketing.”
The franchise system itself is built on a 50/50 franchisee/franchisor partnership, with LCA investing in each of the franchise units.
“We need to have capital to call on,” says Sinclair. “Our ambition is to double the number of clinics in our network in two to three years.”
Right now the business has 45 clinics across Australia but there is plenty of potential, Sinclair believes.
“I think this is the most powerful franchise model for growth for two reasons. Firstly we are tied at the hip to our franchisees. Financial and business success is completely aligned. Our success comes from their success.
“It’s definitely a partnership. We help with marketing strategy and partner in local marketing, key support elements and business advice.
The best of franchising
“I’ve been GM for six weeks and I’ve spent a quarter of my time with franchisees.
"I like working in the franchise environment. There are the same challenges as in corporate, there are department heads and leaders. But with this, the leaders are the owners and passionate drivers of their business. There are different incentives.”
The fast growing business needs to focus on driving customer engagement, he says.
“It’s sexy and exciting to talk about the growth of new franchises. But there is an opportunity to grow existing franchises, and that’s equally, if not, more important.
“Our best sales people are our existing franchisees. If we can help take them from a $1m business to $1.5m, $2m even $3m, in reality, that’s most important. That is our job.”
Key to this is providing innovative strategies and training for therapists and franchisees. “The most important skill of the franchisee is to be a good leader, to recruit and coach and manage performance. In most franchise networks people management is the lion’s share of the time.”
Good signs in a franchise system
- When most franchisees want more franchise units.
- It’s a financially good option for franchisees
“The power of franchising is when franchisees are active participants in the business. We don’t want people who want to invest and then employ a manager.
“Multi-units can work in some environments, and when geographically it makes sense. We have two clinics in Parramatta, for instance, with one franchisee and shared staff. We do it within reason.”
What to consider
- Am I going into a sector where the consumer spend is growing?
- Are there significant changes and new offers in the market that make it easier and more affordable for the consumer, but financially beneficial for the franchisee?
“If you look at the data, there are a lot of sectors contracting, this has continued to grow. People continue to spend more money in the beauty, health, clinic environment.
Yet the space is not cluttered, he says.
“In this sector there are more models offering convenience and price benefits for consumers. It’s a fantastic set of ingredients for a franchisee.”