- Player: Ian Fuhr
- Company: Sorbet
- Est: 2005
- Turnover: R500 million
- Visit: sorbet.co.za
Sorbet receives 40 franchise applications per week. Demand is so high that new locations are the biggest challenge for the ten-year-old business.
To cope with the ever-growing interest in the brand, from both consumers and prospective franchisees, new concepts have been launched, like Candi & Co, Sorbet Man, and Sorbet Dry Bars. It’s hard to imagine that just a few short years ago, Ian Fuhr and his business partner, Rudi Rudolph were unable to sell a single franchise.
“We call them the ‘dark days’,” says Fuhr, referring to the first four years of the business, when several attempts at franchising failed. “It forced us to continue to open company stores while we built that most elusive of traits: Credibility.”
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Both Fuhr and Rudolph were seasoned businessmen, and Fuhr had a number of successful businesses under his belt, most recently in retail. He certainly wasn’t new to entrepreneurship. He was new to the beauty industry though, and to franchising in particular.
“In hindsight, our slow start was the best thing that could have happened to us. It gave us time to build the credibility we needed to make the franchise model work, and to get the franchise portion of the business right.”
Here’s how two business stalwarts who were nearing retirement age, knew nothing about the beauty industry and even less about franchising, built one of South Africa’s favourite and fastest growing brands.
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Getting the basics right
“From the beginning we knew we wanted to franchise,” says Fuhr. “People, personal wellness and hygiene are all things that require a personal touch to get right, one we knew an owner would do better than a manager, simply because they had more invested in the brand and the business.”
Fuhr was right. As soon as stores started being converted from company-owned to franchisee-run, turnover went up. But it was getting to the point where franchisees were willing to invest in the brand that was the challenge.
“We needed to build a brand that customers loved and create a real sense of brand loyalty; but, we needed a franchise model that worked for both the franchisees and us as the franchisor.” This simple ideal took four years to get right.
The ‘servant leadership’ model
In everything he’s ever done or pursued, Fuhr’s core focus has always been on people. With Sorbet, this became more important than ever before.
“The culture of our organisation has always been a focus on people and service rather than money. Once you get that right, the money comes. It seems so obvious, and yet often the focus on results persists and people get lost in the wash. The most important group of people in Sorbet are our staff. Without them, we can’t be successful. Our core value is ‘servant leadership’, which basically means always putting our customers first. But to do that, we need to put our staff first, and then they pay it forward.”
Here’s how servant leadership works. First, Fuhr personally conducts all induction training.
“My focus isn’t on what you do or how you do it, but rather why you do it. Our staff need to believe that we’re not selling treatments and products. We’re selling a feeling. People want to feel good about themselves, and that’s what we give them.”
A focus on people
“Treatments might be similar, but people are different. Each and every customer who walks through the door is an individual, and it’s our responsibility to make sure she leaves feeling good about herself.”
Fuhr is a firm believer that if you elevate an individual’s purpose and what they do beyond just making money, you add meaning to both their jobs and their lives.
“Our therapists and technicians are touching people’s lives and making a difference every day. This isn’t just a job; it’s a privilege and a calling. We can make a big difference in people’s lives on a daily basis.”
When asked how he motivates employees, Fuhr’s response is simple. “I don’t. I inspire them instead to be a part of something meaningful. Once you create a working environment where staff can motivate themselves, everyone is working towards the same goal.”
Of course, while a purpose is incredibly important, remuneration is too, and this is where Fuhr made a risky decision that has really paid off.
“We had two challenges. First, the industry average for staff turnover is high — 45% to 50% — and in our early years we were no exception. We were working to create real meaning amongst our employees, but we needed more if we wanted to bring this average down. Second, if we wanted to build the brand we envisaged, we needed great service that was bigger than an individual therapist or technician. We needed an outstanding customer experience, no matter which Sorbet you walked into or who treated you.”
This is a lot easier said than done. “The very nature of human beings means that 100% consistency in all things is impossible,” says Fuhr.
“We needed to try though, and we decided the best way to do that was to change from a basic salary model to a commission-based remuneration structure.”
The shift happened three years into the business, and it was not without its casualties. “Most of our staff were petrified by the idea. A large percentage left, although we knew these were individuals who would have left even if we’d made no changes.”
But many stayed on, nervous, but willing to see if there was an up-side. And there was.
“There was a period of adjustment, but it soon became clear that it was a win-win situation. Staff were now able to earn more, the stores earned more, and customers received better service. We saw an almost immediate lift in income and service.”
Promoting brand consistency
The idea is simple: Staff are well remunerated when they work hard. There is a minimum base, but real money lies in commissions. But here’s the real genius behind the remuneration structure: It promotes brand consistency.
“Our whole focus was to create loyalty — staff loyalty to the business, and customer loyalty to the brand. As a Sorbet employee, if you serve customers well and give excellent service, they’ll come back, and they do. There are only so many hours in a day, so what you really want is a fully-booked store. This means everyone isn’t working to build personal relationships with clients, but rather an attachment to the brand itself, so that all stores are full, at all times.”
In addition, all technicians are graded. There are five levels, and the higher the level, the higher the commission rate. This system encourages employees to train regularly, as the better they are, the more satisfied customers are.
It’s worked. People have become loyal to the brand, rather than individuals. “That was the turning point for us, and when we knew a franchise model would finally take off. We’d created a consistent experience across multiple stores. Now we had something franchisees could invest in.”
Sorbet can track this loyalty too. “Through our loyalty cards we know that thousands of our guests go to multiple stores.” Such a high level of brand consistency exists that each year Cape Town-based Sorbets are so overrun with holidaying Joburgers that they warn their own regulars to book well in advance to ensure they still manage to get a booking.
Getting franchisees on board
“I always wondered why there were no branded chains before we started,” says Fuhr, adding that this was one of the core reasons behind the Sorbet brand: He recognised a gap in a market dominated by independent practitioners.
“Once we launched Sorbet though, we quickly learnt that while we knew consistency across the chain is crucial, it’s also difficult to achieve.”
This learning curve was just one of the challenges Fuhr and Rudolph faced as they tried to create a franchise model. “You can’t have a chain without consistency. We had to get that right.”
But there were other challenges too. Attracting the right franchisees and building a revenue model that worked for both franchisees and the franchisor were top of that list.
“We wanted a high quality level of franchisee,” says Fuhr. “From the beginning we knew we’d rather teach business women the beauty industry than beauticians about business.” But how do you attract that kind of franchisee? You start with fans.
“Initially, we tried to sell franchises when we weren’t ready to do so,” admits Fuhr. “It was a complete waste of time. We had neither credibility nor a sustainable business model. We had to pull back and focus on these core foundations.”
People who care
And that’s when the magic happened. “Today, most of our franchisees start out as guests in our stores,” explains Fuhr. “They already love the brand and buy into the value, and now they want to be a part of the community.” To create that level of engaged franchisee, the brand needed to be strong first, which is why the franchising model ultimately took time to put in place.
The second big obstacle was integrity. “Franchisees need to know the franchise will make money,” says Fuhr, “and that takes time, a track record, and a culture of transparency.”
In addition, margins need to be big enough for both the franchisor and franchisee in order for the model to work. “In the early days, we struggled to generate franchisee interest. We were very concerned about sufficient margins for both parties, and so we came in a bit lower than normal.”
Sorbet didn’t (and still doesn’t) charge marketing fees. The 6,5% franchisor fee includes marketing. “To make this work, we decided that all product supplier rebates would come to Head Office, rather than each individual store and franchisee,” says Fuhr.
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“It’s how we recover what we lose on not having a marketing fund, but it’s essential that we’re completely transparent about this.”
Next level growth: Going global
After an admittedly rocky start, Sorbet has achieved exactly what Fuhr set out to do: It’s a national, consistent and trusted franchise brand that continues to grow in leaps and bounds. So what’s next? Locally, new brands have been added to meet demand, but the intrepid entrepreneur has also set his sights on the next growth frontier — an international market.
The big question was: Where to next? “Three years ago Dermalogica, one of our key product partners, held a conference in Cape Town, and I took the opportunity to catch up with the founders of the company. The first question I asked them was, ‘If you were to go somewhere else with our concept, where would you go?’ We had been thinking along the lines of Australia. Their instant answer was England. This hadn’t occurred to us, as I’d assumed it would be overly competitive. In fact, the reality is the exact opposite. Just like South Africa when we first started, the English market is highly fragmented, with no branded chains of any substance.”
Fuhr and Rudolph’s research quickly confirmed that Londoners are frustrated by the quality of the beauty treatments on offer, which tend to be cheap, often poor experiences.
“We have the formula for this. Get people used to the brand and build credibility and then roll out the franchises. It’s a long journey, but we’ve learnt this lesson — built credibility first, and in London we’re starting from scratch. The opportunity lies in standards. Increase standards, create brand consistency and credibility, and Sorbet will be a success.”
A new start-up
The venture might be a start-up, but it’s not starting from a zero base. There are 600 000 South Africans in London, most of whom are familiar with the brand.
In fact, only two stores have launched in London, and already there’s interest from prospective franchisees. In addition, Dermalogica is an international brand, and South African brand Environ is in more than 60 countries with a firm foothold in the UK, which means consumers are aware of Sorbet’s products.
In spite of this interest, Fuhr and Rudolph are taking things slow. “It’s a long, big investment from a rand base, and although we’ve started generating revenue in British Pounds, we’re expecting a long recovery,” says Fuhr, who is personally undertaking all induction training in London.
“It’s a new chapter, with new challenges, and we’re very excited about it,” he says.