I must admit, Donato’s franchise has great pizza. But when it comes to trusting their online ordering environment, they leave some things to be desired. Below find the email that came to my house after ordering online. We knew it was “real” because it came shortly after the order was placed. But Donato’s made two errors. Make sure you aren’t making them in your business.

• Donatos doesn’t use their own domain name for the feedback link, prompting Vista mail to flag the message with a phishing warning. In a world where trust is a critical part of branding, this is just foolish. My family is very advanced when it comes to the web, but many customers would just delete the message without reading it.
• Donatos sends our usernames and password in plain text in the message. You just don’t do this, especially with all of the other personal information in the same message. My family uses different passwords for our sensitive accounts such as online banking, but I am absolutely sure this isn’t the case for many customers. This means the Donato’s password may have been used for more lucrative purposes, such as paypal, etc. We all know that keylogger exploits can do worse damage, but at least they require an infection and many have basic protection.

As some of you know I work with Franchises quite a bit in my SEO/SEM work. These organizations offer something unique to the market. But it’s not easy thanks of some nasty dynamics. While some franchise buyers realize they’re actually buying a model and should retain consistency, many others think that they’re only buying “guidelines” they should be able to color at will.

I’m proposing a system for improving the quality, fairness, and understanding during due diligence as it relates to business model franchises. Essentially, a way for buyers to know who they’re dealing with as they do research.

Let’s take a real-world scenario involving two franchisees who are about to become the target of a due-diligence routine:

Franchisee 1 follows the business model. The operations manuals are well worn and they give the franchise model benefit of the doubt, especially in the early days of their location. But most of the time they pull through it (”the dip“) and if the model is a good one, begin to succeed as designed. They think of the franchise model as “rules” to be followed to the letter.

Franchisee 2 uses their own ideas. They try to run it the way they’d run a business started from scratch. They aimlessly try different things and frustration builds. Their operations manual is covered with dust. They start to lose money, and 90% of the time they blame the franchise. They think of the franchise model only as “guidelines.”

Potential Franchisee 3 comes along, and wants to do due diligence by way of calling or visiting other locations. They begin calling franchise locations. By Murphy’s Law, they call Franchisee 2, and get an earful of how “bad” the franchise is. This can undermine thousands of dollars in marketing effort, many hours of salesperson time, and is how many franchises bleed to death. But also it may put a stop to what would have become a very profitable venture for #3.

I have a simple idea to level the playing field and would love feedback. (more…)

A terrific brain trust of folks answered great questions that I’ve tried to aggregate into an organized list you may find very helpful. Enjoy! The Q/A was especially helpful and added a lot to the session.

Moderators:
Chris Sherman, Executive Editor, Search Engine Land
Greg Sterling, Founding Principal, Sterling Market Intelligence

TIP: See the end of this post for other coverage on the conference too.

 

(more…)

Well, getting ready to head out tommorrow for SMX Local/Mobile conference in Denver, and looking forward to seeing friends in the search marketing world again I’ve not seen since SMX Advanced in Seattle.

I’m very excited about the Local/Mobile marketplace, especially with my developing expertise in working with franchises in internet marketing, and hope to shore that up even more in 2008 with some specific offerings under the PrecisionLocal brand. This is a tough, tough marketplace for consulting as the resources for local search are still quite fragmented and difficult to understand for clients.

Flickr Sets for SMX Local/Mobile

So if you’re going, Twitter me (id: scottclark) to catch up or meet.

I looked at a franchise website’s homepage today, and found that they were all gushy about being listed on the “Franchise Times” Fast 55, so I checked that list out. It even looks like the make a plaque (see photo.)

This list, published by the Franchise Times, lists franchises based on their rate of growth and without regard for the type, size, investment or length of agreement. So, home based franchises such as in the case of Weathersby Guild, is strictly by single-person, work-from home franchisees doing highly skilled labor on site. Just to get a sense of scale for the business, I did a little bit of poking around using a few reverse phone lookups and windows live.local.com which showed me that almost all of the Weathersby folks work from home, often from apartments. There is nothing wrong with that, but consider that Mobile Attic is listed next to them in the list - naturally requiring a vastly larger capital investment (30 containers must be ordered,) a rollback truck, 1-4 acres, and a twenty year agreement. These two franchises are not even the same species. To grow Weathersby by 100%, you find some people ready to be trained in their system and equip them for the work. To do the same for Mobile Attic, you need earthmovers and a steel mill.

Entrepreneurs should try to realize that if the franchise you’re interested are not advertising in these magazines, they may actually be a lot smarter than you think - and any franchises that prominently boasts themselves in such lists could be a tad desperate for market coverage. Look for substance in the press releases. Know which magazines matter, and which are make-believe!

If you’re buying a franchise…Go visit, in person, the franchises you’re considering. I would not let the corporation call ahead - I would just GO. Talk to the owners (not the possibly underpaid staff.) Then…because some franchisees are just plain-old-grumps… go to another town, talk to those owners. And do it until you get a feeling for the company, and whether it’s compatible with your own goals (which you’ve written down, right?) Ask them if you can work for them, for free, for a couple of days.

Spend the time and you’ll not be sorry, especially with $80-100k on the line.

Postscript: While writing this I came across this little jewel of absurdity

“The first and biggest factor is finding a franchise doing something you love! If you love to cook, find a restaurant. If you like to clean up, select a carpet cleaning or maid service. Do not assume that just because you own the franchise that you won’t have to work it, you will have lots of times where an employee won’t show up and you will be doing their job. Doing something you love will make the hard work and long hours bearable!”

No… what makes a business bearable is to design yourself OUT of it. Choose a franchise where you can be profitable and expendable. You should not be required at the location much, if at all. The system should allow you the freedom to live your life the way you want it, not work “long bearable hours.”

To anyone at the show right now reading over this….. thanks for making a first-timer feel so welcome - it’s been awesome.

I’m getting a lot out of the sessions and the socializing here. I’ve met some folks who not only were very approachable but ready and enthusiastic about conversations with a first-timer. I definitely try not to be the “interruption guy” but have managed to at least chat with some who I’ve wanted to meet for a long time and had extended conversation with many who I respect in the industry.

The booths were a real mix of knowledge levels The Google booth was well staffed with people who knew the stuff really well. Yahoo’s API party was the same way. It’s not suprising though that a few of the vendors live in the frictionless, ideal world of pure numbers. Introduced to a pile of real-world nastiness, their answers became distinctly less clear.

Thus far my favorite single presentation has been Gord Hotchkiss’ take on changes in SEO in the age of personalized search. Barry liveblogged the whole thing but what I got from this was that we’ll be optimizing around buckets of behaviors and themes. Buzz sites launched by SEMs and run by “Buzz” services will provide methods for rapidly inserting yourself into the web history of large numbers of people, thus influencing the Personalized search results for the future. It’s still a massively evolving space. I think it will change everything, and much of what we’re worrying about now will be irrelevant. I originally knew about Gord because he refers a fair amount to one of my interests, eye tracking studies, which have been popularlized for web design and marketing uses.

Graywolf makes the point it’s not clear enough that one is using personalized search (cite heat maps) and that it “dumbs down” the searchers putting more control over what is shown in Google’s hands - which may not be such a healthy long-term thing.

It was refreshing to hear Google chime in at the Paid Search “Tricky Issues” session when I asked about how they could help trademark owners issue larger-scale authorizations for localized search. In my case the issue was franchises, but it applies to resellers and company-owned branches as well. Apparantly they are working on something that will make this easier than the constant trademark complaint form modifications it currently takes (one must add approved trademarks to the form manually for each location wanting to advertise on, say, Google maps.)

Barry’s got some great coverage, and Carolyn (Cshel) has posted lots of good photos (search Flickr for “cshel smx” until she posts a link on her site.). Photo above is from Cshels flickr feed - Scott and Brent Csutoras.

One more day to go - I can’t wait!

I’m not suprised to see a major correction in this business.

I’ve never used one of these stores. I don’t get it myself - I buy a few supplies at Sams club and throw the boxes in my trunk for drop off at UPS store. I keep my money. I know I’m not their customer, and this blog is always my opinion.

It goes like this. People who don’t want to deal with boxing and shipping stuff for their eBay auctions were going to drive across town (right past the UPS Store and the Post Office,) drop them off, and pay another percentage of the sale to a store to list their item.

Okay, to sell on eBay you need to be able to:

• fill out a web form that describes your item.
• use a digital camera to photograph something, and a tool like Picassa to grab it.
• pack up a box.
• stick tape and a sticker on a box (with your ship stickers on it)
• Drop off the box at the UPS Store or DHL Counter.

Some of the major complaints of these centers are:

• Unfair on shipping supplies (300-500% mark-up)
• 25-30%+ commissions (Selling an item for $75 sometimes nets you $45)
• Aggressive Upselling Tricks for worthless and confusing add-ons.
• Store-favoring tactics if the item didn’t sell.

The franchisees are loudly complaining of their pain.

• Lack of corporate support (franchisees always expect more than they get)
• Software problems.
• Franchise Start up of $70-100k (that’s a lot of knick-knacks to sell.)
• Ebay fees are going up all the time, and rules are getting stricter.
• There are no real volume advantages on ebay (except perhaps for feedback.)
• Lots of time spent fighting negative feedback, often from rival franchises.
• Franchises are faced with big problems in their models …model? hmmm.
• More regulations are surely coming as these stores become the “new pawn shop.”
• Scrutiny of each store as a potential fencing-point for stolen property.
• If you have an hour or so, you can read more here.

If you read some of the posts on these links, you’ll come away thinking the $100k for a eBay Drop-off franchise would be vastly better spent elsewhere (oh yeah, don’t forget about the monthly royalties.) I do realize that there are millions of people out there who want to sell items and don’t want to muck with eBay.

But isn’t it logical to assume there are going to be fewer of these people all the time, as broadband and computer/internet penetration grows, and as everyone has a digital camera in the drawer. This generation of folks is not going to want to plunk down $30 of every $100 on somebody with a tape gun.

There are two types of franchises. Brand franchises and Business Model Franchises.  I don’t really know anything between the two. With a brand franchise, you buy the use of the name, and that’s it. These are not very common anymore, but they used to be (Ace Hardware, Sherwin Williams Paint, etc.) Business Model Franchises are the ones that work today - started and perfected by people like Ray Krok. These are the ones where systems and operations manuals are painstakingly worked out through repetitive motion and the results are then used to build better copies of each franchise. These franchisees feed the “mother ship” and the mother ship makes better babies. The owners of these businesses concentrate on getting customers, not the systems of the business.

But what happens when business model franchises break from the pack?  Chaos and unhappy customers! The owner of the franchise wanted a brand franchise, in a certain sense, but that being unavailable they bought a business model franchise. They then decide what parts of the franchise model they want to buy into and what to ignore. The system breaks.Â

I ran into this today returning a movie to Blockbuster here in Lexington. Even though the ads for Blockbuster’s new On-Line Netflix competitor “Blockbuster Online” have been filling the airwaves (good franchise marketing at work) I found this posted on our neighborhood store. Earlier, the same franchise didn’t participate in their “keep as long as you like” program.  So essentially any brand manager wanting to take advantage of the program designed to keep these brands relevant in today’s movie-at-home and download-to-watch era are being shunted. Okay, I don’t know the whole inside story, and it may be due to a problem that the Corporation has caused rather than the franchisee, but as a consumer, I see only the words “NO!” So the competitive advantage that Blockbuster had over Netflix (return and get a new movie) has been removed.

Sorry for photo quality, my phone cam sux.

In my opinion this is one of the reasons that franchises should build into their models compliance penalties (and bonuses.) If a franchise refuses to adopt a proven system-wide program, they are charged a non-compliance fee on their royalties. This would give the corporation the ability to control the brand and customer experience.

Yeah, I know that most promotions say “at participating ____” but isn’t the whole point of franchises to, er, participate?

Franchises aren’t designed for the independent-minded. They depend on a by-the-book execution of a business plan, adherence to time-tested systems and a willingness to follow directions.

“A franchise is still a business,” Lawrence “Doc” Cohen, owner of 24 franchised locations, including five Mrs. Fields Famous Brands LLC Pretzel Time outlets, and a former chairman of the Washington, D.C.-based International Franchise Association told the Wall Street Journal “It’s not a guarantee of success. The worst thing a new franchisee can do is say to his franchiser, ‘You guys don’t know what you’re doing,’ ” says Mr. Cohen. He likens that to someone taking over a McDonald’s restaurant and deciding not to put sesame seeds on the Big Mac buns. Making sure employees are properly trained and executing according to the rules is vital. After acquiring a struggling Great American Cookie outlet, another brand of Salt Lake City-based Mrs. Fields, Mr. Cohen discovered why the store was ailing: The baker was going home at 11 a.m., leaving the store without fresh goods to sell the rest of the day. At another store, cleaning and maintenance had obviously been ignored. Following a thorough scrubbing, the location, previously in default for lack of business, now does nearly $600,000 in annual sales.”

If you’re tasked with building a portal for a franchise, where franchisees will share ideas and information through online collaboration tools, here are five tips to make your deployment smooth and effective.� It doesn’t matter which platform you’re using, or if you’re building it from scratch, a franchise portal can be one of the most useful additions to the enterprise - saving time, money, and confusion in a common branded environment, even though the owners are� separated by miles.

1. Keep in mind the widely variant level of computer literacy amongst franchise owners.� Franchisees are not always computer savvy, and often the assumptions made about user abilities will get you into trouble.� � Simplicity is critical in portal design, but not to the point that the system loses its usefulness.� Be careful not to task the portal deployment team with computer training of novice users - that’s a different task.
2. Plan on lots of questions - and provide video training using a screen recording tool.� Adobe Captivate or Camtasia are terrific tools that allow rapid screen recording with narration of commonly-requested functions.� � These recordings are published in Flash, meaning they are visible on 98% or so of all computers on the Internet.� Make sure you use a high quality microphone for narration, and that you not get stuck in “perfection-land.”� Videos like this can be reviewed many times as needed - saving endless phone calls and emails about the same question.
3. Portals are fluid - your first design will not be the last one.� The user community will tell you what’s wrong with the portal.� You will want to listen closely to their feedback and ideas for making the portal better.� This is not a marketing website, and the point of the portal is to remove friction from the enterprise.� Every idea should be considered - but the good of the many should govern the design itself.� � Give credit to users who come up with ideas that are used in designs - this encourages others to participate.
4. Build a team of enthusiasts to run the portal.� You’re going to need moderators for various interactive components such as discussion boards and blogs.� Responses to inquiries on these components needs to be rather quick, or the portal will lose its credibility.� Often the ones who stand to gain most from the portal’s existence (the ones who’s life is being made easier) are the ones best suited to operate a portion of it.� Make sure the team gets lots of credit - they’re work and savings of time is being multiplied across the entire franchise.
5. Make sure that adoption of the portal is consistent, and rewarded.� If some are using unofficial calendars or forums for their work, reel them in.� The portal’s success will be based on its adoption - and this means some compromise.� If functions are not suitable to the user community, consider improving them.�
6. Offer live content through the portal.� Often, a filtered and cleaned set of news feeds are a great way to add value.� By having this information in one place the franchisees will feel they’re saving time and staying informed.� � � Blog feeds from internal or external bloggers are also powerful.
7. Provide rapid support from the corporate franchise entity through the portal.� Make it clear that any other support mechanism is less efficent and probably slower.� Demonstrate the efficiency of the portal to deliver requests and get them solved better than days of phone tag.
8. Make it easy for the portal to be the franchisee’s desktop.� Adding a clock, a weather badge, or other desktop-like items can encourage use of the portal as the home page for the franchisee.� Links to third party vendors and other commonly used services are also important.
9. Stick to the brand identity of the corporation.� Make the entire portal consistent with the brand - and update it to reflect any brand changes.� Set an example to the franchisees on brand consistency.� A portal is an excellent place to post your brand manual and a library of marketing materials.
10. Use the portal to give a personal touch.� Put a face on the information.� Avatars and face icons are a great way to keep things personalized in what can otherwise be a rather distant relationship - especially in a larger franchise.
11. Keep the news feed completely up-to-date.� Make sure that the first place the franchisees hear about any news is on the portal.� Not the local news or via email.� The portal should be the first place any franchise news or changes in policies should be posted.� If the portal can generate RSS feeds then it’s fine for people to use those feeds in their favored feed reader.
12. Manage all franchise-wide date-driven information through the portal.� � Make sure the franchisees can see the activity happening franchise-wide. Give the franchisees an ability to post events and show the buzz of what’s going on.� It builds energy and helps motivate the organization.� No memos, faxes, or emails about events.� Let the portal send out any notifications that might be needed.

I was sad to see that EW James & Sons decided to pull out of the Lexington market. There weren’t any stores convenient to our part of town, so I wasn’t a customer, but I like to go anti-chain when I can.

In California, my favorite store was Cosentino’s on Homestead Ave in Santa Clara. We avoided safe and bought just about everything there. Michael Chu did a nice write-up about them on Cooking for Engineers. I was horrified to hear they may close, but hopefully it’s just a rumor.

But the Herald Leader reported that Ken Pink, CEO of E.W. James said that they were moving out of Lexington due to advertising costs being out of proportion with the number of stores. While I understand the issue with advertising ratios (1 ad services 3 stores much more cheaply than 1 ad services 1 store) I wonder if passive media or interruption marketing could have been bypassed.

Could they have used social marketing more? Captured the anti-chain market. Gone after a niche and spread their good words via viral campaigns? Seth Godin’s idea of an IdeaVirus may have saved the chain - while huge sums of money are needed for traditional marketing, permission-style marketing would seem a better choice.

Who would have been the “sneezers” for a grocery chain? What could they have done to become another Cosentinos (I never saw one ad for this store, and their website is a mess…but their scoop-it-yourself dry goods isle was known throughout the valley.) What ideas might have been tried?

• What about appealing to specific ethnic groups? How about bringing someone from different ethnic communities and asking them how you could tune a portion of the store for them?
• How about organic specialties with earth and environmentally friendly choices?
• What about a “sin” isle full of the absolute most delicious and wonderful deserts available on the planet?
• How about nutrition and cooking seminars aimed at the busy parent-of-two showing them how to buy items that can be easily prepped for the coming week?
• What if you created a pre-prep section, working with one of the local pre-prep franchises selling a week’s worth of food at retail, cooler exchange and all?
• What if you create a “down home isle” full of items that would never be found in an upscale market - kind of a slap-in-the-face of the snooty stores?
• How about humor? You could put punching bags in the isles that say “In a big chain store this would be a big display of diet drinks. Wail away, let ‘em know how you feel!”
• How about good music? I cringed the other day because I forgot my iPod at Kroger and had to listen to their incessant babbling ads on the intercom. How about LIVE music?
• How about 1950s uniforms? What if you let people TIP the floor staff?

PS: Perhaps they could have been the first chain to locate downtown? As the new residential developments go up all over Lexington, we need a downtown grocery store. I’ll shop there myself, even though Kroger is closer.