Small Town Franchises Bring Big Time Results
Printed in USA Today
by Nancy Rathbun Scott
Some franchised stores demand lots of foot traffic to succeed. Take Frozen Fusion Fruit Smoothies, for example. Vice president of franchise expansion Mike Kiick expects the new franchise to take off like nothing he's seen in his 23 years of franchising. "With Americans dramatically shifting toward healthier food choices, Smoothies fill their desire for a delicious, healthy snack or even a meal substitute."
But Kiick acknowledges that it will take lots of thirsty bodies to make Frozen Fusion grow. "We need one to two million people on foot to come by the door in a year." Expect to find this franchise in international airports and heavily traveled downtown areas, but not a town of 50,000, he says.
Small can work, too
On the other hand, not all franchises need major foot traffic or a large metropolitan area to succeed. In fact, some franchised businesses thrive in smaller communities. "That's where our growth has all come from," says Linda Haneborg, vice president of marketing and public relations at Express Personnel Services, based in Oklahoma City. "When we started franchising, we elected to go to smaller towns and suburbs where there weren't a lot of employment services convenient to those looking for work."
Small communities have fans
Some franchise owners, like Shelley and Ed Hobson, simply prefer the lifestyle offered by a small community. The quality of life they experienced during their annual summer vacations on the North Carolina coast convinced them to settle in the small coastal city of Wilmington, North Carolina, before they even knew they would be setting up a Learning Express franchise store there.
The Hobsons aren't the only ones making these choices. "We're finding more and more laid-off sales and advertising executives, particularly from the broadcasting business, seeking to open franchises in smaller towns," says Joe Bourdow, president of Val-Pak Direct Marketing Systems, a direct mail advertising franchise. "Some prospective franchisees already have their hearts set on moving back to a smaller community."
Their numbers are bolstered by baby boomers who have done their 20-25 years and want to cash out of corporate America, says Debby Robinson, corporate communications manager for TruServ Corporation, the cooperative parent of TrueValue, ServiStar, and Coast to Coast hardware stores.
"Faced with the idea of retiring in the next ten years, these baby boomers are often looking to improve their quality of life by moving to a smaller town. Or in some cases, they are just coming back home," says Haneborg, who is witnessing the same trends.
Community involvement makes it work
Franchise owners who choose to live and work in a small community have to get involved with the people they serve to make it work. Val-Pak franchisees, for instance, tend to be owner/operators, people who want to own their business and be close to it. An individual Val-Pak contains coupons for a mix of businesses-both retail and services-within a few miles of the 10,000 households to which it is sent. The franchisee putting together that package has to know the community to serve the advertisers. "He's not just selling advertising, but the results from coupon redemption. It's essential for a sales representative to understand the businesses of his clients. He helps design the coupons. The consequences are immediate once the coupon packet gets in the mail. The franchisee has to face the business owner in the community so he's got to care and be involved," says Bourdow.
"Express Personnel Services franchisees win community acceptance because they live in the community and contribute to it," agrees Haneborg. "Out of 386 franchises, one of our top franchisees is in Owatonna, Wisconsin, population 19,386, and probably everybody in town works for her. She's an absolute dynamo who has been there over 10 years."
TruServ's Robinson points out that some businesses just do better in small towns. "Of course, the community hardware store has always belonged at the heart of main street in nearly every small town across America. Members of the hardware cooperative are very local-business oriented and we help them design their stores to match the needs of their communities. Actually, we're finding a growing backlash against big stores. Selection is great and prices are low but people-especially women-like the service they can get from a community TrueValue Hardware Store."
David Wheat, vice president of franchise development for Pet Value, International, Inc., says that their franchisees in small Canadian towns tend to do very well also. "They obtain a much higher market share than stores in the larger metropolitan areas. In fact, our store concept lends itself to smaller markets from which our competitors would shy away as unprofitable, given the size of their operations."
Growth is possible
Multi-unit ownership in smaller communities is definitely possible, says Express Personnel Services' Haneborg. "Second- and third-unit acquisition works fine once the first employment service is up and running and a strong manager is brought in. Then a franchisee can open another one in a surrounding or nearby community."
Other growth opportunities are also available to Express Personnel franchise owners. "In our system, a franchisee can also become a regional developer and director, acting like a sales manager over several several other franchisees," Haneborg says.
Regional developers get an override on offices they supervise. "It's kind of unique and works out well because the franchisees they supervise know that they are experienced franchisees themselves and know exactly what their offices are experiencing."
TruServ owners can grow, too. "Members of TruServ's hardware cooperative seeking additional opportunities can open differentiated hardware stores in nearby communities: one with a bigger paint shop, for instance; perhaps another with a stronger plumbing or hardware line," says Robinson. "They can choose to open under any of three banners and still enjoy the benefits of membership in TruServ's cooperative."
Simplest of all, perhaps, the smallest Val-Pak franchise owner who mails to a universe of 50,000 households or five zones can expand his or her business just by adding nearby zones, even while continuing to work out of the home. "Val-Pak's large graphics and production facilities provide the support that makes franchise ownership and growth feasible for a small town owner-operator," says Bourdow. "We employ 100 people in graphics and production in St. Petersburg, Florida, and Las Vegas, who design coupons, print them and put them in envelopes for distribution throughout the country."
Small Town, Big Rewards
As soon as Shelley and Ed Hobson opened their Learning Express franchise in Wilmington, North Carolina, they knew they had made the right choice for themselves and for their new community.
"From the very beginning, customers who came into our store had quite an emotional reaction," says Shelley Hobson. "They were excited to find all the educational toys they wanted for their children right in their own backyard. Until we opened the Learning Express in Wilmington they faced a two-hour drive to Raleigh to get some of the things we carry."
The Learning Express franchise was so well received by Wilmington residents that in less than a year, the Hobsons doubled the size of their store. "It was unbelievable, a perfect fit for the community and for us,'' says Shelley.
Location Counts
Ed Hobson faced the choice of losing his job as an executive with a Boston bank or moving to Pittsburgh, so he decided to look for a new job in a coastal community.
The search began in Beaufort, South Carolina, and moved up the coast to North Carolina, where they settled on Wilmington. "It's a growing city on the coast with a population a little over 100,000 and it offered everything we had been looking for."
The Hobsons went to Wilmington once a month so Ed could look for work. After a year of searching, they realized what they really wanted was independence. "We needed to buy our own business," says Shelley.
Ed started looking at franchise opportunities, but none of them appealed to both of the Hobsons until they discovered that Learning Express was a franchise. "I had been shopping for my two sons there for seven or eight years and I loved it."
They decided to talk with Sharon DiMinico, the president and founder of the company based in Groton, Massachusetts. "What we had experienced as customers ourselves was reflected all the way back up to the president and founder. From then on everything just fell into place."
Shelley says she and Ed found other toys stores in Wilmington, but no other operation capable of offering the community as much as Learning Express. Their store was the nineteenth franchise to open and, today, the Hobsons love the freedom of owning their own business and being a part of their new community. "I feel that we are in partnership not only with Learning Express, but with Wilmington," says Shelley. "We give to one another."

® copyright 1999 Nancy Rathbun Scott
Do not reprint without permission