Why a Franchise Model Could Be the ‘Secret Sauce’ to Winning in Specialty Retail
There are many reasons some of the most successful speciality retailers have opted for a franchise model to drive consistent growth. Chief among them: the ability to maintain strong connections to a local community.
“The guys that run and operate the local stores live in the community. Their kids go to school together with their customers,” said Matt Lafone, president and general manager of Americas for The Athlete’s Foot, a speciality footwear and lifestyle chain that is almost entirely operated by franchise owners. “I would say that’s really the secret sauce: the local ties to the community and understanding the customer.”
The Athlete’s Foot operates 67 doors in the U.S. — all franchise-owned — and plans to open its first corporate owned store in September adjacent to its new headquarters in Atlanta. According to Lafone, when it comes to customizing a location’s store design, hyper-local assortment and involvement in community events, there is no one at the management level more qualified to weigh in than the people embedded in the community themselves — the franchise owners.
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“We try to get it down to the SKU level of what that consumer needs locally and support local artists and brands that are more relevant,” Lafone said. “We rely on our partners locally and our operating partners to help supply and fill in those gaps.”
That connection factor is crucial across various sub-sectors within specialty retail, be it running or foot health. That’s because this channel tends to attract people looking for product education and a curated selection to fit their needs — and relies on relationships between salespeople and the enthusiasts who patron them.
Community connection is similarly important at Fleet Feet, a major player in the specialty run retail category that also operates a robust franchise model. Of its 272 stores in the U.S., 188 are franchises and 85 are company-owned.
“Every Fleet Feet will tell you that they’re involved in the community,” said Frank DeJulius, a Fleet Feet franchise owner that operates seven Fleet Feet stores in Cincinnati, Ohio along with his wife, Stacey. “It’s part of our business model. I would argue that we are intensely immersed in the community to the point where there isn’t a race, a local fundraiser, run or walk event that we’re not a part of.”
According to DeJulius, this commitment is evident in the vast physical and experiential differences between all of his stores, each of which he describes as having their own “muse.” For example, one of his locations has a coffee shop inside it and tables for people to work and hang out. Another store is located near breweries and has its own beer cooler inside the store.
The locations also vary when it comes to assortment: one store is more heavily outfitted with products for faster runs and another is better equipped with trail running merchandise. Some also may have a broader apparel assortment than others, depending on the preferences of the community.
“I want someone who lives in Cincinnati to have a reason to go to all of our stores,” DeJulius explained. “Not just the one that’s closest to them.”
Run Clubs are another way DeJulius engages consumers who have an appetite for more running product.
“Our retail stores are not just places to buy shoes. They are where runners hang out,” DeJulius said, explaining how he sees run clubs as a no-brainer for a chain in specialty run retail. “How are you a specialty store of any kind if you’re not engaging the community that’s doing the thing? If you’re a cooking specialty store, you better be hosting cooking classes. If you’re a toy store, you better be like letting the kids play with the toys. And for us, it’s imperative to actually run and walk with our customers in the shoes that we are showing them.”
Skin in the Game
A franchise model also empowers storeowners to participate in a more hands on way than a store manager at a large corporation might. That’s largely because franchisees have more skin in the game as owners of their own locations.
“Nobody cares as much as we do,” DeJulius said. “I just don’t think you’re going to get that level of commitment from an employee.”
This commitment can also encourage franchisees to test new ideas that that might not have come up in corporate level brainstorm. For example, the McDonald’s breakfast sandwich started out as a test from a franchisee before it exploded into a staple menu item.
Foot Solutions, a shoe franchise chain that sells orthotics and specialist footwear, actively tries to harness this creative power from its franchisees to keep new ideas flowing through the business.
“When you have a franchisee who gets creative — which we encourage very much — we encourage them to share,” said Foot Solutions’ president and chief executive officer John Prothro. “And then we share it across the whole system. And folks copy it and we just learn from each other.”
He gave the recent example of a Foot solutions store in Utah that generated buzz and brand awareness by hosting an event with another business, Stretch Zone, at its store.
“The whole concept of organizational learning means that you’ve got a lot of brains in the room, so you might as well use them,” Prothro said. “Don’t try to be so top down heavy that you can’t learn from each other.”
