Bricks or Clicks
BRICK OR CLICKS
Choosing Between Online and Offline Business Opportunities
by Mark Henricks
The Internet has brought profound change on franchising. New concepts unimaginable a few years ago today deliver value to customers almost entirely through the worldwide computer network. Other businesses exploit a combination of bricks-and- mortar locations and virtual storefronts to produce hybrid offerings. And it’s safe to say that nearly all franchises today employ mouse clicks to market to consumers, communicate with franchisees, and run their operations.
For many potential franchisees, one of the first decisions comes down to a choice between an online business or one requiring some form of office or storefront outside the home. According to Philadelphia franchise attorney Lane Fisher, a member of the International Franchise Association board of directors, this decision revolves mainly around access to capital.
“In the traditional business world there is generally high capital investment, and there’s generally delay in finding real estate and completing construction,” Fisher says. Money and time demands can be important for people who, for instance, have been laid off from corporate jobs and need to replace income quickly, he said.
Online businesses may also require more selling skills compared to bricks-and-mortar opportunities such as restaurants that rely on marketing, location, and walk-in traffic for much of their business, Fisher says. And opportunities involving physical storefronts also usually include some sort of exclusive territory, while an online franchisee could well be competing against the entire world, he adds.
When it comes to concepts that would be impossible without the Internet, Printinginabox.com comes quickly to mind. The Tampa franchiser enables entrepreneurs located almost anywhere to broker printing services that are fulfilled in Florida. Materials to be printed are delivered electronically by customers who click on the services they need at franchisee websites.
Even marketing is handled largely online, says President Brooks Palmer. Some franchisees rely on face-to-face selling, but others do mostly search engine optimization, pay-per-click ads and social networking. “It’s an easy sell’ Palmer says. “Our quality; turnaround, and pricing is second to none. And with our easy online ordering, customers can process orders without tying up too much of their valuable time.”
The company has two physical locations and approximately 400 virtual locations, and Palmer is looking to hit 1,000 in 2010. Printinginabox.com charges no upfront franchise fee, only set monthly fees, and little training is required, Palmer says. ‘Anyone can do this if they put their time into it’ he says.
A similar approach underlies Cybertary a Roseville, Calif, franchiser of virtual assistant agencies. Business can be conducted almost entirely online, with franchisees lining up clients and connecting them to virtual assistants through the Internet who perform word processing and other back office tasks. “It allows you to work from home, and you can fit your work into your life rather than the other way around,” says Founder and CEO Patricia Beckman.
Cybertary franchisees’ customers are mostly small and medium- sized businesses looking for part-time administrative assistance. Demand for virtual assistants has stayed strong despite the downturn, and franchisee demand has helped the company expand to 19 franchise locations -- 15 in just the second half of 2009, Beckman says. She anticipates adding three or four new franchise locations a month in 2010, and the company also plans to expand to Canada later this year.
While Cybertary uses the Internet to deliver its services, SearchMarketMe of Issaquah, Wash., helps other small business owners conduct Internet-based marketing campaigns. President Jenny Dibble says the company’s objective is to fill the niche between solo web designers or SEQ practitioners and traditional marketing firms that charge tens of thousands of dollars. “Businesses know enough about online marketing to know they want to do it, but they don’t know how to do it themselves,” she says. “They know the web is where consumers are. But they don’t know who to call.”
SearchMarketMe’s agency owners help design and implement online marketing efforts employing search engines, social media, e-mail, and more. The company has 56 agency owners in its network now, and anticipates adding 10 each month in 2010. “Online marketing is such an amazing field right now to go into,” says Dibble. “It really is just the perfect storm.”
The Internet represents an almost perfect lead-generation tool for many franchises, including those that seemingly are almost entirely reliant on physical locations. Candy Bouquet International, Inc. of Little Rock, Ark., offers franchises that sell candies in flowerlike arrangements. Although each franchisee has a bricks-and- mortar location for walk-ins, the parent also provides leads virtually generated from people clicking on the company’s main website, says Founder Margaret McEntire.
Personal experience, rather than online marketing, is the main reason people become interesting in Candy Bouquet franchises, McEntire says. Many franchisees started by receiving Candy Bouquets themselves, when they were blown away by the way it made them feel -- and by the idea of making a living likewise for others. “It’s something that gets into your blood,” she says.
Candy Bouquet has 577 franchised locations and in 2010 plans to add 150 to 175, including a number of international expansions. McEntire expects candy arrangements to exert considerable cross- cultural appeal. “We’re one of the fastest growing international franchises there is,” she says.
Customers don’t need to walk into a store to do business with from Online Trading Academy. President Eyal Shahar has set up the Irvine, Calif. financial education franchiser as a sort of hybrid bricks-and-clicks business. Many customers first learn of Online Trading Academy through free learning resources found on financial websites, he says. Later, they may take a free class at a bricks-and-mortar training center, then graduate to paid training center classes and online courses for continuing education.
Online Trading Academy generates its revenue from paid financial education classes, but the customer relationship usually starts for free online. “We’ve found an incredible blend between both clicks and mortar,” Shahar says. “Offering only one or the other was not effective.” The company has 33 franchises worldwide, and next year hopes to open up in India arid other U.S. and international locations.
The business of Valpak Direct Marketing Systems Inc. of Largo, Fla, all started on paper more than four decades ago and has now transitioned into a combination of online and offline worlds. Businesses still pay Valpak to print and distribute coupons to consumers in the familiar blue direct-mail envelopes. But today they also count on Valpak to make coupons available through its website and other digital media.
And it’s gone far beyond that, says Kevin Drudge, manager of new franchise development. “We have recently enabled a mobile version of the site, as well as apps for the iPhone and iPod touch, Android, and Palm Pre platforms. We want to be everywhere our customers are looking for savings -- in the mailbox, online, and on mobile
-- in ways that offer benefits for our consumers and advertisers.”
Valpak has 175 North American franchisees. “In 2010,” says Drudge, “we are focused on building on our core business with our franchisees, expanding our Canadian footprint, and developing, testing, and launching new digital products to the franchise network.”
Coupons, training, and office help maybe deliverable online, but haircuts? Not yet. Even bricks-dependent franchisers such as Regis Corporation of Minneapolis, Minn., parent of Supercuts and other concepts, do employ the Internet to communicate with franchisees and consumers. But one appeal of bricks-only opportunities is that they aren’t vulnerable to the latest innovations, points out Alan Storry, vice president of franchise development.
“The industry is rock-solid and recession-resistant:’ Storry says ”We don’t have to worry about technological obsolescence:’ Regis has over 12,900 locations worldwide, including around 4,000 franchise locations, with opportunities targeting different consumers and price points. Storry says having all these concepts lets franchisees tap new consumers without having to grow geographically.
In 2010, Storry looks for franchise unit growth from Raze, a year- old upscale men’s barbershop concept and Cool Cuts 4 Kids, which aims to hit younger consumers. “We’re looking at aggressive plans to grow all our brands:’ he says.
Within the hair industry are many niches and one of the most significant is occupied by Fantastic Sams Hair Salons. Jeff Sturgis, vice president for franchise development of the Beverly, Mass., company says their salons appeal to customers in search of a full range of hair care services, including cuts, colors and perms, at prices undercutting boutique salons.
For franchisees, Fantastic Sams offers an opportunity that requires only a flat royalty fee. “That means as your business grows you’re not paying more to us, which means your fee actually goes down as a percentage of sales,” Sturgis says.
With 1,300 current locations, Sturgis says they’ll add 50 to 70 salons in 2010. They’ll also address personal care trends. “Hair straightening, for example, has become a fairly popular service in the last year or two, so we’ve been providing a lot of technical information to make sure we can take care of customers looking for that service,” he says.
With online-only, bricks-only and various blends to choose from, where does that leave the franchises that commonly feature lower investments than physical storefronts, but not as much Internet presence as pure click concepts. Actually, in pretty good shape.
Dennis Jarrett, CEO of Stratus Building Solutions of St Louis, Mo., has grown the cleaning and building maintenance franchise to more than 4,000 locations since beginning in 2005. Green is the differentiator with Stratus. The company employs its own environmentally-preferable formulations for cleaning agents, and generally emphasizes a green approach in all it does. “That’s the reason we’ve grown in leaps and bounds on the account side:’ says Jarrett. “Everybody wants to do their bit for the environment.”
Stratus franchisees typically have a have small office. “But the Internet really drives our brand, our leads and our awareness,” Jarrett says. Master franchisees often come from senior-level corporate backgrounds and are interested in growing multiple unit franchises quickly, Jarrett says.
The same goes for the parent “We hope to be able to open another 20 master locations in the US. And double our unit franchise footprint, going from 4,000 to 8,000,” Jarrett says. “We also hope to get into another six countries”
That kind of growth would put a smile on any entrepreneur and, with the help of WhiteScience Worldwide, that smile would be brilliantly white. The Roswell, Ga., company has established almost 1,000 accounts in establishments such as Caesars Palace, Hyatt hotels, and Ulta retail stores as well as cruise ships and shopping malls. Their new Whitening on Wheels (WOW) concept already has close to 100 representatives in the first few months, says President George Nelson.
WOW representatives operating in semi-protected territories buy WhiteScience’s dental whitening product and equipment and resell product and services to spas, salons, and similar businesses, where customers will achieve an end result superior to over-the-counter products, at a fraction of the price dentists charge.
WhiteScience is growing rapidly in Israel, England, Italy, Croatia, South America and the Caribbean islands, Nelson says. “The beauty of this business is you dou’t have to invest in brick and mortar and rent:’ says Nelson. “But it’s not purely Internet. It’s a hybrid:’
The same could be said of franchising in general today, where few if any businesses operate completely off-line. For franchises trying to choose between a concept relying on a homepage or one with a physical storefront, the answer to the question “Bricks or clicks?” is increasingly, “Both:’