Innovation is essential if a franchise is to have staying power in the market. That’s why it should always be a high priority when checking out a prospective franchise
One of the core values I have for HomeXperts is “always innovating”. This is a tough value to live up to at times but we do our best. Case in point: last week we launched a new initiative for our franchisees to help them to compete with the march of the online agent. It went down a storm and will really help their profit levels when we launch in November. This product launch got me thinking about other franchisors and wondering what their approach to innovation was. I see innovation as part of our corporate responsibility to keep changing our offering to meet the needs of a shifting market. And I’m sure other responsible franchisors will feel the same.
During the recruitment process, I am rarely asked about innovation by potential franchisees. But it is one of the most important questions you can ask, especially as the past is littered with the marketing material of franchisors that failed to innovate. This has a profound effect on the franchisees that are left high and dry in the wake of their failure.
One notable failure to adapt a model to meet the needs of a changing market is Happy Feet. This was a fish pedicure offered in beauty salons across the UK. Visitors placed their feet in a tank full of Garra rufa fish, a variety of Turkish toothless carp, and the client sat back while the fish ate away their dead skin. While popular initially as a bolt on at beauty salons, in reality it was just a fad. Headlines about how the treatment could potentially spread hepatitis B, HIV and other infectious diseases were the final blow. Within 18 months the franchise had closed within the UK over failure to address health and safety issues.
Another notable failure is iSoldit, a franchise licensed from the successful USA franchise that sells items on eBay. The customer delivers their items to a store, the store then lists and sells the items on eBay and the customer receives a percentage of the sold price. Whilst the franchise is still going strong in the US, in the UK the franchisor failed to realise the differences between the American and British markets, with the most significant one being that the price of commercial premises is significantly higher in the UK. The introduction of faster broadband and smartphones also reduced the time it takes to list an item on eBay. That meant it was impossible to adapt the model for this market and meant the franchise had gone into voluntary receivership by April 2007, scarcely more than a year after it launched.
So if you are thinking of buying a franchise what do these high-profile failures tell you? Innovation is key to your chosen franchisor’s ability to continue to trade successfully in an ever-changing market. “What areas of innovations are you working on?” is an essential question to ask franchisors when you are researching their models. If you are thinking of investing in a franchise model, make sure your chosen franchisor is doing the same.