Franchising is a me-too kind of business. When one brand hits big, competitors follow. Look at how Massage Envy’s success spawned an industry of massage franchises, or how Five Guys Burgers set off a stampede of “better burger” concepts. But the scrum doesn’t last: Some brands flame out, and others rise to the top. So what makes one better than the next? There’s no single answer -- but by examining five of the brands that sit atop their categories in our Franchise 500, you can see what it takes to truly stand out.
America was hit by a tidal wave of frozen yogurt. Hundreds of independent stores and dozens of chains offer the same basic service: Fill a cup from your pick of fro-yo flavors. How can one brand stand out? Oklahoma City-based Orange Leaf, which has 300 locations and 150 franchisees in 38 states, has done it by continually rethinking its product.
There is, of course, the yogurt: “We worked with partners to find just the right balance of taste and creaminess,” says president Geoff Goodman. “They are these intangible properties that consumers can’t identify, exactly, but fall in love with.” He’s now exploring ways to make the product even creamier and will be adding a line of smoothies, energy bars, a bakery case and other snacks. “If we focus on getting better, customers will demand we get bigger,” says Goodman. “And if the quality of our yogurt and our new products connect with guests as well, we have the opportunity to insulate ourselves from the problems other brands may face.”
But Orange Leaf is also rethinking its business model. Today’s self-serve-yogurt world is measured by the ounce: Customers fill a paper cup, then discover how much it costs when a cashier weighs it. Orange Leaf is challenging that model with a fixed-price cup, the first by any large yogurt chain. “What happens today is that kids put a cup on the scale, and it’s a big number,” says Goodman. “That’s not good. Parents don’t like that. We don’t want kids to lose their empowerment. We want parents to give them a cup and say, ‘Go to town.’ So we’re flipping the value equation -- instead of customers saying, ‘Wow, Orange Leaf got one over on me,’ they’ll say, ‘Look at all this yogurt! I got one over on them!’”
Putting Franchisees First
Painting With a Twist
Cathy Deano and Renee Maloney didn’t create the “paint and sip” trend -- art classes with alcohol on hand -- but they’re by far the biggest paintbrush in the can. The two moms met in their kids’ kindergarten class in 2003; they now have 275 studios across the country and have served five million aspiring artists. “So many people have modeled their business after ours,” says Mike Powers, managing director of the brand. “While it may seem like a race for market domination, we’ve maintained a healthy pace and are the largest ‘paint and sip’ franchise by more than 100 studios.” Competition just raises awareness of their classes, he says.
Many things set this franchise apart from its followers, but they all stem from one basic philosophy: Make life as easy as possible for its franchisees. Other companies struggle to acquire the rights to paintings or develop new works of art that their students can learn, but Painting With a Twist has a catalog of more than 7,000 paintings for franchisees to choose from. The franchise also has a focus on charitable giving, which appeals to repeat customers. And it is extremely responsive. “If there’s a problem, we have one or two people on a plane to go help our franchisee,” says Deano. Since 2007, when the brand launched, only four units have closed.
In fact, the company has added so many support-staff members in the past year -- it now has 27 -- that it had to buy a second building in its hometown of Mandeville, Louisiana. “And we’re debt-free,” says Powers. He expects the brand to add 100 more units -- and more staff -- by the end of this year. “When our franchisees and candidates come to our headquarters and see the kind of people and the assets that will support them, they’re impressed.”
Calibrating to the Customer
Unishippers does logistics: It helps clients find the best rates on shipping, then makes sure everything reaches its destination. And it has nearly 300 locations and affiliate outlets across the country. But in a crowded logistics market, Unishippers has differentiated itself by focusing on niche customers. Rather than chasing contracts with large and national companies, it concentrates on small and midsize clients. “Smaller customers want to save money,” says Kevin Lathrop, the company’s president. “It means we have to drive a lot more value into those relationships than we extract. We have to be very customer focused and offer individual solutions. These customers can’t be just account numbers.”
This gives the company a purpose and a defined niche to pursue. And because of Unishippers’ relationships with various shipping companies, the logistics firm can handle almost anything a customer asks.
Unishippers also knows the importance of keeping up with technology, which has radically altered how packages are routed and priced. Over the past decade, the company has continually updated its system -- and in the fourth quarter of 2015, it made its largest tech investments ever by improving its website, express and freight-management systems. “Unlike other companies, we’ve tailored our technology solutions to help manage our sweet spot -- small and midsize businesses,” Lathrop says. “We don’t need the same technology as a company that manages the logistics of Fortune 500 companies.”
Fit into the Community
Plato’s Closet is a teen-used-clothing franchise with 450 units, and president Steve Murphy can tick off many reasons he believes it stands out in the consignment and resale world: a narrow focus on the teen market, software that helps franchisees know which brands and styles are hot and the fact that franchisees pay cash on the spot to their customers.
But there’s one thing that, above all, Murphy thinks makes the difference: Plato’s Closet selects franchisees that will actively and enthusiastically connect with their local community. “Because we are so large right now,” he says, “we don’t have that many territories left to sell. So we are very highly selective about who we pick. We really train them up and start them on the right foot.”
That’s particularly important in the clothing-resale business, because “the consumer is also our supplier,” Murphy says. A Plato’s store needs a teenager to check back in often -- to sell their old clothing and to buy new wares. That’s why, Murphy says, community engagement is a must. Many franchisees partner with local organizations for in-store fund-raisers. “We really stress that,” Murphy says. “We’re not just another retailer.”
A System That Works for Everyone
Budget Blinds has 1,040 units in the U.S. and takes great pride in a system—that is, the guide to running a franchise -- that it has refined over 20 years. “We’ve looked at the demographics and sliced and diced them to find the profile of the best franchisee,” says CEO Shirin Behzadi. “The good news is, there’s not one profile. Anyone from executives to accountants to engineers to veterans to people doing handiwork can succeed with Budget Blinds. It comes down to whether you’re willing to follow the system and apply yourself.”
That highly refined and detailed system is designed to help people with little or no management experience run the business; it includes guidance on everything from how to have a successful design consultation with a client, measuring and installing blinds and shades and even how to handle employees and payroll. And the franchise’s low overhead costs are also very attractive -- and manageable -- for new entrepreneurs. Budget Blinds is a mobile concept, making it easy to set up and go. “They’re kind of like little speedboats compared with other brick-and-mortar competitors,” says Behzadi. “We’re able to put our franchisees in contact with vendors quickly and produce individual orders. That reduces the demand for inventory and all related complications.”
Above all the other factors, that word -- complications -- may be the most important for this group of standout franchises. They’ve separated themselves by removing complications, for both their customers and their franchisees. That way, everyone involved can just get the job (or painting or soft-serve cup for their kid) done.