Chief operating officers for franchise companies face challenges with creativity, humor
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Chief operating officers for franchise companies face challenges with creativity, humor

They may not be the most visible, or even among the highest-paid executives in the company. But in the daily trenches of running a franchise system, chief operating officers, or COOs, are the go-to people for other executives, staff, and franchisees. Most come in early and stay late, taking only brief vacations and then doing so with cell phone in hand.

It takes focus, they say--a constant attention to all those operational elements to support the franchisee, increase efficiencies, assure consistent training material, and handle purchasing. Without a committed COO, a franchise company will not run well. Miss one detail, and you could miss your financial targets. Improve one detail, and your bottom line can improve dramatically--and the COO will get the credit or the blame.Franchise Update asked five COOs what keeps them engaged and happy with their demanding work.

Continuing movement forward

Tim Hogan of Plano, Tex., came on board as vice president of operations at ColorTyme this past January. He brings to the table 20 years in virtually every aspect of franchising and business. "I'm an operator," he says. "I started on the back of a truck and I've worked all facets. I know what it takes to open and operate a business and to bring a business into profit. I've been able to do that as a single-store owner, multi-site owner, in charge of operationally half the stores in a company and going all the way into influencing new business products. With that background comes a certain credibility."

He likes the variety involved in his job. "A COO must be a decision maker. He has to understand what the company's strategy is, what the vision is, and how to employ the right tactics," he says. "Sometimes he's not the most popular person."

Hogan, who started his career in rent-to-own (RTO) with Comcoa, a Rent-A-Center franchisee, as an account manager in 1988, spent nine years as a zone manager before Comcoa was purchased by Thorn America in 1997. He then accepted an offer with Crazy George's, owned by Thorn United Kingdom, in Scotland, to assist in the development of the RTO concept abroad. He served as market manager, regional sales director in charge of 47 stores, and then, after the company was bought by Nomura Investments, as new business development director.

During the three-plus years he was in that role, he helped the business (renamed BrightHouse) grow to 144 stores--a whopping 75 percent--by introducing key programs including payday loans, check cashing, and a home payment business program that increased rentals by more than $1 million. In 2003, he established a national call center that received existing customer references and turned them into prospective leads with $4.7 million in potential sales.

He was promoted to regional sales manager and served on the BrightHouse board of directors, where he put into place a strategy change and became the distribution and service director responsible for directing all primary and secondary distribution, field service, and fleet management for the RTO company.

By then, Hogan and his wife, Christine, had two small daughters, who were getting to the age when "it was time to make sure they knew they were Americans."

He returned to the U.S. in January 2005 and accepted a division vice presidency at another RTO company. But his Rent-A-Center "roots" led him to an interview with ColorTyme president Bob Bloom, and he began work in Texas on the first of this year.

"ColorTyme, which has been franchising for 25 years and is owned by Rent-A-Center, the largest RTO in America, has pretty good history behind it. They're stable," he says, "So my biggest challenge is to continue the forward movement and to try to put my personality and my skills into the operation and to assist them in reaching their goals."

Hogan believes he's gotten off to a good start at ColorTyme. "I'm a supportive boss, I think. I'm always looking for the positive in a situation--people gravitate to that," he says.

He looks for people with "integrity and work ethic." "If you have these two traits, you've got a good piece of clay to mold," he says.

Hogan doesn't believe in dwelling on past mistakes, but he thinks it's important to talk to his team about where they're "coming from." "People look ahead to the next task and forget that they've moved forward. We need to take a look back and reflect and celebrate our successes. That way, you can 'feed' yourself and get strength from it."

Hogan has not lost sight of the competitive nature of franchising today. "In franchising you've got to be competitive to get ahead. In operations, you're always seeking to improve efficiencies, support, training material, and the execution of all those things," he says. "And there's a diverse mix of franchisees in all different life cycles with assorted needs. Some guys have been in the business for 25 years, and some came on last week. One size doesn't fit all, so when I come off a field visit or a phone call, I have to turn around and shift gears to get into the next situation. We have to stay aware of where we are and what our objective is."

Things are also changing for franchisees, he says. "In earlier years, if you wanted to do something on your own, open a business, you did it. Today, people can take advantage of all the resources that a franchisor has to offer; the entrepreneur doesn't have to go it alone. They can become a partner and contribute to the success of the brand." And, he adds, "the harder you work, the luckier you get."

Maintaining cost levels

Mark Bollman, president and COO of Creative Colors International, in Mokena, Ill., says he has come "full circle." When he was dating Jim and JoAnn Foster's daughter during high school and college, he'd work summers for their family business, J&J's Creative Colors Inc., which was well known around Chicago for its car restoration--dyeing, repairing, and restoring leather, fabric and vinyl, plastics, and fiberglass. In 1991, after 11 years in business, a franchise system was spun off the corporate store. Today more than 68 Creative Colors franchises operate in the United States, Canada, and Puerto Rico, with more than 150 mobile units in operation.

"I've been in the business full-time since April of '92," Bollman says. "My in-laws started the business, and all three of their siblings were involved. Even before I married into the family, I had been around a long time dating their daughter Kelli. I worked with them part-time in the summers, doing everything from running service tech routes to filling in if anybody was sick or out. It's a unique business."

His own father owned a Budweiser distributorship in Illinois and he'd also worked for him as a youth. "I liked both things but needed to decide which venture to join," Bollman says. "The beer business was not as fulfilling as franchising, where you can help people get set up in their own business and help them to become profitable, control their own destiny," he says. So after graduating college with a degree in marketing and management, he joined Creative Colors full-time.

Bollman was a field consultant for four years before he was promoted to operations manager, then senior vice president, part owner, and president.

"There are lots of challenges," he admits. "The higher you go, the more you're faced with. We have a staff here of 16 and we relocated into a new facility, so for the past 18 months, I've been focusing on site selection and planning to build our new building. We also have a few corporate-owned stores [in Wisconsin] that we manage from the home office, which makes it a little more difficult. It's been a lot of work, but also a lot of fun."

Near the top of Bollman's priority list has been ensuring that the cash flow is there for the business. "We've managed to secure a couple of banking partners so that, in our time of need, additional lines of credit and loans will be available. It's better to have capital secured in case we need it," he says.

His business is also dealing with significant cost increases. "Ours have gone up 20 to 30 percent over the past year, because we work a lot with resins and chemicals--and, of course, since we're a mobile business, gas costs have been a big killer," he says. "We can't pass our costs on to our customers, so we have to find creative ways to keep us at cost level. That means negotiating better deals, buying in larger volumes, and maintaining profits at the same level. It also affects salaries for staff members; we're trying to stay competitive with our salaries and benefits so that people want to stay here."

Recognizing that a franchise is "only as good as its franchisees," Bollman says Creative Colors is rolling out new programs for franchisees. "This is part of the reason that nobody wants to leave here. We put our heart and soul--sometimes too much--into making sure that they succeed."

That means being accessible to franchisees almost around the clock, according to Bollman. "Every one of our franchisees has my cell phone number and that of the senior vice president. Being accessible is part of being self-employed. If you have to stay until midnight to get something done, it has to get done."

Constantly tweaking the system

Cathy Marks, COO for Children's Orchard, which sells "gently-used" designer clothing and accessories for children, believes the key to being good at her job is taking a proactive approach to the operations of the company. "We're never done with anything--we're in a continuous state of improvement and are always tweaking the system to raise sales and profits and help stores operate more efficiently," she says.

Marks, who has been in franchising at Children's Orchard, headquartered in Ann Arbor, Mich., since 1990, is responsible for the day-to-day operations of the franchise company, including training and support of franchise owners, marketing, PR, and the company-owned store used for training. She also participates in the franchise sales process.

"Yes, I guess you could say I'm the 'decider,' but we have a pretty clear focus. It isn't that difficult for us to make sure that everything we're doing each day is helping us to accomplish our goals. We have a clearly stated mission that helps us and our franchise owners stay focused," she says.

One of their recent innovations is the Cache Card, a customer loyalty incentive program that has contributed to healthy sales and boosted interest in the franchise opportunity. When a family brings in merchandise, they can either be paid in cash or with a Cache Card, or store credit, which offers 50 percent more than cash. The program brings customers back into the store and increases customer loyalty, Marks says.

In addition, she says, Children's Orchard recently hired a new advertising agency, which has revamped the marketing materials and advertising strategy. Was it a good move? "It's hard to argue with sales increases; we've had 10 consecutive quarters of sales increases, and we're already 9 percent ahead of last year."

Change is always a challenge, she says. "Communication is key; and we spend hours every day communicating with our owners, making thousands of phone calls and sending emails. Our franchise network posts bulletins and we come together in national meetings to discuss ideas and specific issues."

The less-than-stellar economy has also affected Children's Orchard. "When the economy isn't as strong as we'd like, that's always a factor in franchising. People who are considering taking their life savings and putting it on the line to go into business for themselves think more cautiously during slow economic times. Michigan is one of states hardest hit. So we find ourselves talking to a lot of people. The process takes longer and we work with people a little bit more, because it's hard for them to make a final decision."

Marks, who travels a lot to reach out to Children's Orchard's nearly 100 franchisees in 25 states, is accustomed to juggling the different aspects of her life. "I was traveling when my oldest daughter was five weeks old, so my husband is great about picking up the slack when I'm gone. It's a way of life for us," she says. (Her older daughter now works occasionally in the company-owned store.)

Known for her upbeat disposition and easygoing manner, Marks says she doesn't find it difficult to lead--particularly in a company whose franchisees are predominantly women. "I've been lucky--not just with this company, but with others; I've always worked with men who respect women in the marketplace. I've never faced any kind of business discrimination. Most of our customers are women, and it's an honor to help our female franchisees fulfill their dreams of having a business of their own," she says.

Children's Orchard has also been a family business for Marks. She and her father started as franchisees in 1990 and became master franchisees in the Midwest region. In 1993, her father purchased Children's Orchard from the founder. When he sold Children's Orchard to current CEO Taylor Bond, he asked Marks to stay on as COO/executive vice president.

Shaping and growing the system

Terry Schulze, director of sales and operations for Interstate All Battery Centers, based in Dallas, accepted the post with excitement 18 months ago. "I was familiar with Interstate through NASCAR, which is one of its primary marketing tools. I saw it as an opportunity to get into a small upstart company with the power and equity of the Interstate brand, which is 50 years old and is a nationwide distributor of automobile batteries, behind it," says Schulze, who was an executive with FootStar and Tux-R-Us, before joining the company. "I wanted the challenge of helping shape the company and grow the system."

As is always the case with a start-up concept, challenges pop up daily. Schulze regularly puts out fires in every area of operations. "We are in the process of a very fast growth strategy but we're trying to do it in a planned, smart way, and we're not just trying to sell as fast as we can. We're being strategic in the markets we're entering and with the right kind of people. We're developing critical mass in areas that make sense. We would rather have 60 stores that are tight and work together to help us build relationships with the customers, than 200 stores that are loose and not operating with the high standards created on the automotive side. We're aware of that equity, and we're careful how we're growing," he says.

Although the process of becoming a franchisee for Interstate All Battery Centers is rather stringent, franchisees are generally pleased to find that, due to strong commercial accounts, there usually are existing accounts already in the markets in which they build or buy. "On day one when the store opens, they already have a base of accounts. You don't have to wait for the consumer to come; they come to you. This allows franchisees to start building their retail businesses incrementally and to become profitable more quickly," Schulze says.

In recent times, the catch phrase--have it, find it, build it--has become the mantra of Schulze and others at All Battery. It means that the stores are a one-stop center for people seeking all types of batteries. "We have hundreds of different kinds of batteries in our stores and warehouses. But if for some reason, we don't have it, we promise to find it through various other vendors and supply chains, on the Internet or in China. And if we can't find it, we have the capability in our stores to build batteries," says Schulze, who studied marketing in college. "This sets us apart from our competitors and is our guarantee to the customer. We are their one-stop solution when it comes to batteries."

Most people are familiar with cell phone batteries and regular alkaline batteries, but batteries in general are complicated. "That's why people search the Internet, the Yellow Pages, everywhere to try to find them. That's why we're shouting so loud," Schulze says.

That promise is backed up by an almost-unheard-of level of customer service, he says. For example, "Our operating guidelines ask that staff come from behind the counter with a personal handshake to introduce themselves to new customers and ask how they can help," Schulze says.

"We also want their uniforms clean and pressed and their nametags on the right way. That's unusual, I know. But we want to create relationships with our customers--get to know them by name, pass out business cards, tell them about any marketing and advertising opportunities they might want to get involved in. We want long-term relationships on both the retail and commercial sides.... I rank word of mouth above any other media advertising. If we can nail that and continue to have positive equity in the big brand, we know we'll be the company that guarantees to be the solution."

The three-week training initiative that franchisees undergo to become battery experts is part of an ongoing program. "It's all about consistency and just leadership. And that has to come from above into our training programs, sales and operating guidelines, in marketing, and in building a national brand. We're the only national branded all-battery concept in the nation and we want to make customers for life," Schulze says.

Despite all the talk about customer service, he believes that service, in general, is not good. "The average associate we encounter in a store doesn't seem to care. It's not easy, but you have to develop that consistency and get people to buy into the program, never lowering the bar on that initiative. We take pride in how we train people to operate their stores, but that's almost secondary to the development of the concept of 'have it, find it, build it,'" says Schulze, who is a big proponent of "mentoring standards."

Brought on to focus on the retail side of the business, Schulze has developed a focus report, which has 15 categories of business that focus on every minute detail of sales and operations, tracking, and finances. He and his staff regularly record and rank every store in the chain, according to the performance categories. "This creates a healthy competitive atmosphere, because nobody wants to be at the bottom of the list on the report that everybody sees," he says.

Schulze believes that, in business, the devil really is often in the details. "I've always been a proponent of getting into details and being analytical and educating people how the smallest detail metrics of finances can end up being a profit at end of year."

Schulze and staff then go in and coach franchisees so that they can improve in the rankings. In the last 18 months, every category of the 15 has seen double-digit improvement, he says. "We ended last year (our fiscal year is May to April) with the best fiscal year in company history. All indicators are that we'll set records in volume this year. We couldn't be more excited."

Staying with your strengths

Bill Knight, COO of Dallas-based Wingstop, says he loves everything about his job, from the chicken wings ("the best in the world," he boasts) to creating career paths for young people and even watching some of them go from "bottle washer to millionaire."

Before he joined Wingstop in January 2003, Knight was president of Hartz Restaurants International, a small chain of chicken buffet restaurants, and even owned a couple of the restaurants. Prior to that, he was vice president of operations and purchasing with a Manhattan-based grilled chicken salad restaurant chain. In the formative stages of his career, he rose to the rank of regional vice president with Church's Fried Chicken. "What can I say? I'm a chicken man--chicken wings, fried chicken, fried chicken salad," he grins.

He knows well the challenges of both running a franchise system and operating restaurants. "Anytime you run restaurants, you obviously have to hire right and train right. When you do that, you're going to be successful, or your success is going to be greatly enhanced," he says.

Since he's been at Wingstop, the system has been growing rapidly. "When I came here we had 90 restaurants open. Right now, we're right at 300. We're growing rapidly, but we're also having a lot of fun. Members of our management group are all adults; we like to think now that we know what to do," he says.

And what they do is stay with their tried-and-true concept. "We believe we have the best wings on the planet--I'll take the 'Pepsi Challenge' any day of the week. But we also are what we are. It's a simple, focused concept: all we do is wings."

Growing a franchise system properly and "without losing heart and soul" means having the right operating principles and beliefs, says Knight. "Right now, we feel it's important that we establish who we are, what we are, how we treat each other, our employees, franchisees (we call them our brand partners) and how we treat our vendors. And we're putting that into writing and our mindsets," he says. In order to get that in writing, the management team held a three-day retreat at the top of Copper Mountain near Denver over the summer.

Another way in which Wingstop is growing "properly," Knight says, is its mystery shop program. For more than three years now, each restaurant in the system gets shopped once a month. "We get real-time info via the Internet," he explains. "Once the inspection takes place, our partner gets a copy, our franchise business consultant gets a copy, and I get a copy. We don't have to wait for any paperwork. We've found, over time, that these reports offer a good reflection of how a restaurant performs. They're a good tool for us."

In addition, the company's five franchise business consultants, who are scattered geographically across the country, visit each restaurant four times a year; two visits are announced and two are not. They consult on partners' marketing programs, profit and loss, and plans for the future; and if there are problems at the restaurant, they help resolve them.

Knight is also excited about the company's new push for hospitality. They have implemented a secret service hospitality program, which is a mixture of non-negotiables and best practices, based on the book, {ITAL}Secret Service: Hidden Systems that Deliver Unforgettable Customer Service,{ITAL} by entrepreneur-consultant John DiJulius, III. The practices are "invisible" to customers and can be something as simple as using a customer's name at least four times while talking with him.

"We heard John, who owns salons, speak at a conference and were very impressed with his ideas. He knows that often, the small attention to detail is what surprises and delights customers and keeps them coming back. The value is not just the cost. It's the whole perception of service and ambience that so many businesses are sorely missing, and it's worth 5 to 7 percent," Knight says. DiJulius now runs the system for Wingstop.

Debbie Selinsky is a North Carolina-based freelance writer.

Published: November 14th, 2006

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Franchise Update Magazine: Issue 3, 2006
Franchise Update Magazine: Issue 3, 2006

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