The CEO of FASTSIGNS International talks about her objectives and achievements and about the challenges facing the franchise business today
When did you join FASTSIGNS and what positions have you held?
I have been CEO of FASTSIGNS International, Inc. since January 2009, when Roark Capital– the private equity firm that owned the company at that time – recruited me to be CEO.
What does it mean to you to be FASTSIGNS CEO?
I love what I do. I’m passionate about franchising and passionate about FASTSIGNS. When Roark was recruiting me, I realized that I had the opportunity to take a brand that was the leader in the sign, graphics, and visual communications category to the next level.
It was an exciting opportunity. I am blessed with an outstanding, experienced FASTSIGNS International team that is committed to supporting our franchisees and helping them maximize their success. We have fantastic franchisees that are interested in doing an outstanding job for their customers. When you have great groups like that, it’s easy to take the business to the next level.
What have you achieved in this position?
We are most proud of our ability to increase franchisee profitability. When I came to FASTSIGNS in 2009, I established four key strategic objectives, with the first being to increase franchisee profitability. We set a goal that whatever the profitability was at the end of 2009, we would work to increase that by 50 percent. After the close of calendar year 2009, we benchmarked the average profitability of the network, which was at 12.9 percent; our goal – to achieve the 50% increase – is to increase average profitability to 19.4 percent.
We’re currently gathering the system’s 2017 results, but through our 2016 financial benchmark survey, we know that we are at 93 percent of our goal; 2016 average profitability increased to 18.9 percent. Once we achieve 19.4 percent average profitability, we’ll set a goal to further improve profitability from there. We’re also very proud of our franchisee satisfaction. In 2009, we had good satisfaction ratings and we’ve continued to improve upon already strong franchisee satisfaction by providing outstanding leadership, services, and support.
In general, what are the franchising issues you most care about?
I care the most about Unit Level Economics (ULE), so our franchisees can make a good living and have a good return on their investment. High franchisee engagement and satisfaction are also incredibly important. This is why I volunteer my time on the Board of Directors of the International Franchise Association and often speak at franchising events.
I want to help franchisors, particularly emerging franchisors, understand the importance of these critical best practices of franchising and how to implement them to drive success for their franchisees and their franchise brand. From a regulatory perspective, I continue to be concerned about new (since August 2015) expanded definition of Joint Employer.
What are the challenges facing the franchising industry as a whole today?
In the U.S., certainly the expanded definition of Joint Employer poses a significant challenge to the franchise business model. This has caused many franchisors, including FASTSIGNS International, to reduce some of their service and support to franchisees because they want to protect themselves from being deemed a joint employer.
This expanded definition of Joint Employer is becoming an issue in other countries as well. In certain countries outside of the U.S., reasonable access to capital remains a challenge. Whether someone already owns a small business and is looking to grow, or they’re a new franchisee working to open their first unit, access to capital is a key component of success in franchising.
What are the main considerations when building a successful brand?
Specifically, when building a successful franchise brand, you need to have a strong value proposition, strong Unit Level Economics, and a high level of franchisee engagement. You also need a leadership team that understands that customer needs and competitors are going to change, so updating and evolving the brand is key. There was a technological advancement in 1985 that caused dramatic change in the sign business: the ability to contour cut vinyl from images on a computer. Before that, signage was typically hand painted.
This innovation created the quick sign industry that didn’t exist previously. There have been many technological changes in the signage space since then and FASTSIGNS has always been the first to innovate and expand our product and service offering using these new technologies. The FASTSIGNS of today provides digital signage and digital signage content, printing on textiles, interior décor and more.
What advice would you give to those considering master franchising?
Be very selective of the franchise brands you’re considering. You want to make sure you’re joining a strong brand that has a proven track record of success in their home country, strong unit level economics, high franchisee satisfaction, and an experienced leadership team. Conduct validation not only with their direct franchisees but more importantly with their other master franchisees. Supporting and servicing a master franchisee is very different from supporting a direct franchisee.
You need to understand and validate the level of and kinds of support you will receive as a master franchisee. You also need to understand franchising. As a master franchisee, you’re essentially a sub-franchisor and need to understand all the best practices of franchising. It’s also very important that you have the financial resources that you need as well as the required infrastructure and staffing. You need someone who understands and is good at franchise sales and the team that will make sure all those sold units open successfully and continue to grow and prosper. You will need to hire in anticipation of growth. That’s why the financial resources are so important.
What would you consider to be essential considerations when planning an overseas expansion?
First, ensure your brand and your systems are effective and proven. One of the real mistakes a franchisor can make is getting excited or wooed by the idea of expanding overseas before the brand is well established with a large base of successful franchisees—with strong ULE—in its home country. You should have a good understanding of the market, the culture, and economy and be prepared to customize the brand to meet the needs and tastes of the local culture.
Remember that it’s better to delay signing a master franchise agreement in order to find the right master franchisee than to rush too quickly. We recommend that your master franchisee is from the country they will be developing as local knowledge and understanding will always be more thorough that what can be learned by someone from another country. Having the courage to say no to a market if it’s not right for you is incredibly important. You need to be absolutely convinced you’ll be successful there.
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