- Player: Richard Mukheibir
- Position: Managing Director
- Company: Cash Converters
- Retail Turnover: R500 million+
- Visit: www.cashconverters.co.za
In 1993, a business partner showed Richard Mukheibir a promotional video for Cash Converters, a company that was then showing quick growth in its home market of Australia.
“I was in IT, so I never really pictured myself becoming a second-hand retailer,” laughs Mukheibir. “But the more I thought about it, the more it made sense. This was just before the political changes of 1994, so we felt fairly sure that there would be a big expansion of the middle class. We would see much more upward mobility, which could be great for a brand like Cash Converters.”
Before long, Mukheibir was on his way to Australia. He liked what he saw and signed a contract to receive a master licence for South Africa. Two months of training followed.
Buying into a brand
“I’m often asked why we didn’t simply replicate what Cash Converters was doing in Australia. Why spend so much money on buying into an overseas franchise?” says Mukheibir. “There were two reasons for this.
“Firstly, even though the brand wasn’t known in South Africa yet, we liked the idea of bringing in an established and respected brand. At the time, second-hand retail didn’t have a great image. It was seen as dingy and somewhat unsavoury. Cash Converters had reinvented the concept and brought it into the modern age. We wanted to be a part of that.
“Secondly, I had an IT background, so I knew very little about the retail environment. It was important to buy into a franchise that would provide the training and expertise needed to set Cash Converters up in South Africa and run it successfully. To me, that is the whole point of a franchise system — it offers a proven business model that you can replicate. If a franchise doesn’t offer that, you have to question what the value is. Thankfully, that wasn’t the case with Cash Converters.”
When money isn’t a problem
Another great advantage of franchising is the ability to expand your business without having to bankroll that expansion yourself. In South Africa, Cash Converters embraced the franchising system and has managed to grow very successfully because of it. The business currently boasts 80 stores with another 20 in the works.
“The franchise model allows you to grow relatively quickly, since franchisees help to fund your growth. So, while access to capital is usually one of the biggest barriers to growth, it isn’t really the case with franchises,” says Mukheibir.
“But it brings with it some other challenges. When money isn’t a problem, for instance, you can be tempted to grow too quickly. Just because you have the money to grow, doesn’t mean that you should grow.
Related: Cash Converters Franchise Listing
“There have been many instances where we’ve decided to slow the company’s growth, simply because we felt that the timing wasn’t right. We’re interested in long-term success, both for ourselves and our franchisees. We want multi-unit franchisees who stay in the business for decades.
“If you grow quickly through franchising, you might raise a lot of capital in the short term, but it could damage the company in the long run. It’s not just about the number of stores you have, you also need the structures in place to support your franchisees.”
Finding the right people
According to Mukheibir, the biggest barrier to growth for a franchise company like Cash Converters lies in the finding of promising new franchisees.
“Finding great franchisees is our biggest challenge,” says Mukheibir. “We are very particular about the people that we allow to join the brand. It’s not just about the money, it’s also about the skills and energy that a person will bring to Cash Converters. For instance, some level of business acumen is very important to us. We want people who know how to run a business.
“Even more importantly, though, are the values that potential franchisees have. It all starts with values. Skills can be acquired, but you can’t force your values onto someone else. So, we start off by looking for people who share our values — who will act with integrity and always treat employees and customers with respect.”
People who can make the business model work
And how does Cash Converters go about finding these people? The most obvious way is to simply sell franchises to existing franchisees. By setting up multi-unit franchisees, the company knows that it’s dealing with people who can make the business model work, and to whom they would need to provide less training and support.
When it comes to new franchisees, Mukheibir and his team treat every interaction with a potential franchisee as a sort-of ‘interview’.
“We pay close attention to how prospective franchisees conduct themselves. If someone promises to send through a document the next day, does he or she actually do it, or does the paperwork arrive a week later? We try to find out if people are as good as their word. Once again, it’s all about values.”
Treating franchisees like partners
Cash Converters spends a lot of time finding the right franchisees, because it views them as partners.
“The success of your business depends on your franchisees. If they’re not making money, your entire business can collapse. Treating your franchisees like a revenue stream is a sure way to failure,” says Mukheibir.
“So, we treat franchisees like partners in the business. We visit stores regularly, and spend at least a day in each one. We also hold conferences where we explain the strategy of the brand and ask for input from franchisees. It’s important to us that franchisees feel as if they are part of a bigger organisation. We also believe that the brand is stronger when everyone involved is moving towards a common goal.”
Stay in touch with company-owned stores
To better understand the challenges of franchisees, Cash Converters also operates company-owned stores.
“These stores are a great place to test new ideas. So, we run pilot programmes in our stores, and then roll them out across our network, says Mukheibir.
“We also need to understand what challenges our franchisees face daily. Franchises fail when franchisors lose touch with what’s actually happening on the ground, which is why we operate our own stores.”
The Secret Sauce To Great Franchise Leadership
The upside down pyramid puts the franchisee at the center of everyone’s effort. Success follows.
I am often asked to share the secrets of franchise success with my clients and audiences of franchise executives as I travel the country spreading the Franchise Bible strategies.
The most critical of the three core strategies is what I call the upside down pyramid strategy. This is more than a catch phrase or slogan. It must become a true belief in order for this strategy to affect a franchise organization for the better. Lets start with some basic facts to clarify.
What it is
The upside down pyramid is a servant leadership model that makes sure that franchise owners always come first. This must be genuine for all members of your team.
Franchising is different than any other business model in this way. A franchise organisation simply cannot thrive unless the entire corporate team is on board with this commitment. If it’s not, it would be like a medical team where some members simply did not care about healing the patient. It is a non-negotiable.
What it is not
This strategy is not a hand-holding philosophy that rewards lazy or non-compliant franchisees. One of the exciting outcomes from this system is seeing the franchise owners step up and go above and beyond the call of duty when they feel truly appreciated, valued and respected by the franchisor. I have seen amazing things happen from franchise communities that felt connected and part of the bigger picture.
Many franchise organisation executives have a lot of experience as traditional employers so they tend to try to “manage” their franchise owners as though they are employees. In most cases this is the beginning of the most common problem that I call the traditional pyramid model with the boss on top.
The key to remember at this point is the reality that the franchise owners are not employees of the company. In fact, the exact opposite is actually the case. The franchisees invested their hard earned money into the franchise company and pay an ongoing royalty as well. This means that they are the customers of the franchisor and the franchisor should value them as such.
How do you implement this strategy?
I have seen the good, the bad and the ugly in the franchise world. I can usually sense the company culture pretty quickly when I am among the franchise executive and support team. It is no surprise that the most successful franchise brands have a pretty solid grasp on this strategy. Here are some tips to get you started:
- Train: Introduce this strategy to your executive and support team and give them the opportunity to ask questions and learn. Remember that this may be a bit of a paradigm shift for some, so they may need time to get it down.
- Reinforce: Use ongoing reminders during your meetings, training sessions and conferences to keep the ball rolling. Your system must be based on things that you and your team will do consistently for a long period of time. A short burst of change followed by a return to the former status quo doesn’t work, so make sure you can commit and stick with it.
- Insist on buy-in: Everyone on your executive, training and support teams must buy in to this commitment for it to work. You have heard that one bad apple spoils the whole bunch. This is very true within a franchise organisation. You may have to replace team members if they refuse to genuinely commit.
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You have also heard the saying that the fish starts to rot at the head. The common denominator that I see in failing franchise organisations is almost always due to poor leadership. I often say that a decent business model with great leadership will usually thrive and a great business model with lousy leadership will usually fail.
Don’t feel bad if you are not the best leader for your business. I have seen business founders step aside and hire in leadership experts to run with their creation. Knowing that someone else is a better leader than you for your franchise organisation is a sign of great discernment and wisdom. If you are not sure just ask your franchise owners to give you a grade as the leader. I asked a franchise CEO recently if he would get an A from his franchisees and he said, “Probably not.” I advised him to get back to work and make sure that he can earn that A.
This article was originally posted here on Entrepreneur.com.
Get Your Franchise Running Smoothly – Even When You’re Not There
Does the thought of taking time off from your franchise outlet make you nervous? Then you have to learn to run your business instead of letting it run you.
“A sign of a successful business is one that can operate without your physical presence 24/7,” says Brad Sugars, start-up expert, author and founder of ActionCOACH. While your franchise systems and operations are designed to run smoothly and consistently, is your staff trained to be productive in your absence?
“Franchises are already by nature systematised operations, so it boils down to how you as a business owner hire and train people to get the necessary jobs done,” says Sugars.
If you know a sick day will cause havoc in your store, an assessment of how you’re running your business is needed. Are you really running a successful franchise if things fall about without your supervision? Take a step back and consider the following steps to manage your franchise without it controlling your life. Pretty soon you could book that vacation.
Determine your role in the franchise
Are you managing the franchise, taking orders, doing admin and handling every other aspect of the business? Then you’re not hiring the right people, because those roles should be filled by people who can be left to carry them out unsupervised.
“And if you don’t have the right people for the job then it might be time to start hiring, so you can free up your franchise’s most valuable resource – you,” says Pieter Scholtz, co-Master Licensee for ActionCOACH in Southern Africa.
“You need to get an idea of how you can hire people to take repetitive or administrative tasks away from you. Ask yourself: ‘Do I really need to be doing this?’” says Sugars. Your business cannot run optimally if you’re the single most-knowledgeable and capable person there.
Lead with clarity
You have long-term goals for your business, perhaps even acquiring more locations and running multiple units. While growth is good, you need to share the load and ensure everyone employed in your business is working towards the same goals, otherwise, it’ll be difficult to get there. Sugars suggests asking yourself the following:
- How will you make your vision a reality?
- What makes you different from other franchisees and business owners?
- What kind of team do you want to recruit and create?
- How does all of this deliver value to your customer?
Conveying your vision can help ensure employees know how to get to the end-goal faster and more efficiently.
Plan for long-term cash flow
Loyal customers ensure a constant flow of cash through the franchise and this requires exceptional service and the building of strong relationships. “Target your top-spending customers and establish a good relationship with them for long-term cash flow,” Sugars suggests.
Although the broader campaigns are covered by the marketing fee you’re paying to your franchisor, it’s wise to focus on your local’s tastes and suggestions when looking to deliver an experience worth returning for.
Are Your Employees On Board With Your Franchise’s Brand Promise?
You cannot run a successful franchise if your staff isn’t aligned to the brand’s values.
Are the people who work in your franchise outlet familiar with the franchise’s brand promise? As a franchisee, you’re required to deliver a uniform experience, so any customer who walks through your door feels like they’re at the same store the franchisor has across multiple locations. If your employees aren’t able to embody the franchise’s brand promise at every interaction, you have a challenge on hand.
“If your company’s brand promise is a warm and friendly atmosphere, you can’t deliver that if your employees aren’t warm and friendly,” says Robin William, Senior Practice Consultant at Gallup.
“Selecting the right employees is essential to providing the right brand service. Hiring people who can’t behave the way the brand wants them to will doom a service initiative.”
When employees know what’s expected of them, they’re able to keep the promise the franchise makes to customers – leading to higher customer and employee engagement, trust, and revenue.
More than a mission statement
Even if you’ve ensured every one of your staff members know the brand’s mission statement, how can you be sure they’re able to exemplify it in their behaviour every day? William suggests that you do the following:
- Create structures and mechanisms to consistently instil brand values in the franchise’s culture.
- Discuss brand behaviours daily.
- Demonstrate brand behaviours yourself every day.
- Praise the efforts of individuals who demonstrate brand behaviours.
- Hold employees accountable for not exhibiting brand behaviours.
Once you’ve clearly defined the right brand behaviours, it’ll be easier to have staff on board who deliver your franchisor’s brand promise.
Internalise the culture
Here’s a conundrum. Do your staff know what to do in a situation where a customer’s request might not be aligned with the brand promise, but the brand promise is always to deliver on customers’ requests? It’s a tricky situation, but if you’ve clearly articulated the promise, your staff will know how to “Behave the brand”, says William.
“Do whatever it takes to deliver on its brand promise. Whether it’s focusing quality, fast service, customer care, or low prices,” he says.
“Employees must execute brand and service behaviours consistently, and frequent reminders can help employees understand and internalise these behaviours.”
Empower your staff
Investing in your staff is the best way to encourage them to act in line with your brand’s promise. Once they understand why it’s important to act along the lines of your brand, they will feel empowered and motivated to do so.
Starbucks trains employees to memorise customers’ names and preferences in line with their promise of making everyone who visits their stores feel at home. Apple’s strategy of hiring nice, smart people who are passionate about service and the product aligns with the company’s belief that knowledge can be improved, but personality cannot.
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