"Adventures in Franchising"
January 19, 2005
Editor's Note: George Snider, who roomed in Pierson College, now lives in Hudson, Ohio, with his wife Nora and their pets, Miss Kitty and Buster. In 2002, Recruiter Magazine Online named him one of the 100 "most influential people in recruiting."
My father owned a small business. During my high-school years, I worked several summers in his store. Heading off to Yale, I knew only one thing for sure: I never wanted to go to work for my father full-time. So after graduation, I became a Corporate American instead.
Thirty years later, though, his entrepreneurial genes got the better of me, and I stopped making money for others in order to start I hoped making money for me.
After flirting with starting a business from scratch, I concluded my particular tolerance for risk pointed me instead to the statistically "safer" choice of business acquisition. Many months and false starts later, I bought a franchise system. My company helps business men and women start executive-search practices under the 46-year-old name of Sanford Rose Associates (or "SRA" for short). Today we have over 60 franchised offices in the Americas, Asia and Europe. Our motto is "Finding People Who Make a Difference."®
SRA offices and their employees typically specialize in serving a particular industry (such as pharmaceuticals, banking, consumer products, etc.) or functional discipline (such as information technology and law). Accordingly, they are niche players in worldwide markets, as opposed to local recruiting generalists. While offices operate independently, they have access to common databases, can share search assignments (where one office has the client and another the successful candidate) and can partner with each other in winning a search assignment. Our Singapore office, for instance, represents a Singapore-headquartered multinational that last year required a technology director in the U.S. Our Atlanta office recruited the perfect candidate for this San Francisco-based position.
Franchises, according to the industry's major trade association, contribute over a trillion dollars to the U.S. economy each and every year. They sell virtually every kind of product and service known to mankind, range in size from huge resort hotels to tiny kiosks in shopping malls, and are owned by everyone from mom and pop to groups of sophisticated, high-net-worth investors.
To paraphrase a well-known law-firm saying, managing franchisees is like herding cats. Being independent business owners, franchisees have their own point of view about everything and, even though attracted by a common brand identity and business format, are essentially non-conformists at heart. One of my earliest lessons was that, not being employees, our franchise owners resist being told what to do. Therefore, an effective franchising executive must learn to lead by example and persuasion.
Today, for example, the entire SRA search process is managed and tracked online. Twelve short years ago, however, the concept of a "paperless" office almost sparked a rebellion in our system; recruiters, it turned out, were as wedded to their piles of résumés as babies to their mothers' breasts. (As one outraged owner protested, "If you eliminate résumés, what will I take to the bathroom?") After some deliberation, we accomplished the changeover by identifying those owners who were early adopters, involving them in the selection of technology and then letting them convince their peers.
In terms of franchisee-franchisor relations, franchise systems range from the good to the bad to the ugly. One of my principal goals upon acquiring the SRA system in late 1992 in addition to entering the computer age was to change the environment from a confrontational culture to a collegial one. The staff and I worked very hard to convince an initially skeptical audience that we were all in this together and that sharing information in both directions was preferable to hoarding information. Today, the SRA Family (as we call system members) consists of individuals who have common values and who know, respect and trust one another.
Many people hate to sell and, consequently, view franchises at least some franchises as a way to own a business without having to sell. (The franchisor, they assume, will do all the marketing for them.) In our type of professional-services franchise, by contrast, owners must focus on the continuous necessity of attracting and keeping client companies, with which they may do business anywhere in the world. While the revenues of most retail franchises are population constrained (only so many people within a geographic territory are going to buy hamburgers, for example), the revenues of an SRA type of franchise are relatively open-ended dependent mainly on each owner's effort and vision.
In Franchise Land, the Bell curve is alive and well. There are the pace-setters busily creating wealth, there are the laggards whose businesses (despite the coaching of the franchisor) just don't take off, and there are all the people in between who are pleased to own a business that provides a comfortable living and lifestyle. Over the years, I have talked to a number of franchising executives across the country, and virtually every franchise company sees the same array of franchisees. At Sanford Rose Associates, we probably spend more time assisting the occasional struggling franchisee than hard-headed business sense would justify.
With a little study, it's easy to comprehend franchising intellectually. One has to be in the business, however, to appreciate it emotionally. Back in the spring of 1993, the understandable anxiety of holding my first annual conference was exacerbated by threats from a disgruntled (and possibly unstable) franchisee, who threatened to bring his machine gun to the meeting. (He never showed and has since disappeared from our radar screen.) That contrasts with the ego-builder, while opening a franchise in Dublin, of having a half-page interview (with color photo) in Ireland's largest daily newspaper, The Independent. In between, there has been an incredible variety of experiences ranging from the truly annoying to the immensely rewarding including travel to such far-away locations as Singapore, Hong Kong and Seoul.
Two challenges await me.
The first is to help our offices emerge stronger than ever from the 2001-2003 recession, when business hiring almost ground to a halt. Employment picked up during much of 2004, and we are now in what some call the "Goldilocks recovery" not too hot and not too cold. The pace of recovery may be "just right," but many corporate managers remain cautious about investments of any type in plants, equipment or people. Fortunately, as all the Baby Boomers begin to retire, there will be an increasing shortage of men and women entering prime management age (45-60), and employers will need to act more decisively to attract and keep top talent.
The second challenge is how to extricate myself from the business. Unlike my father, not to mention many classmates, I approach my 64th birthday with no clear plans for retirement. Succession planning outwits CEOs as mighty as Michael Eisner, and to the smaller business owner it is an issue of astounding perplexity. ("Don't worry," says my lawyer. "Someday the right buyer will come along.") Meanwhile, thank God, there's a franchise system to run.
George's email address is email@example.com.