When it comes to setting up shop in nontraditional locations,
it seems everyone wants to get in on the action these days. And
while not “everybody’s” actually doing this (some brands simply aren’t suitable), it may look and feel that way—especially
to cash-strapped franchisors whose growth has stagnated in
the past few years, and who are willing to try anything new
to increase franchise sales and royalty streams.
According to a report from market research firm Tech-nomic, foodservice sales in 2010 are projected to rise at colleges and universities, senior-living centers, supermarkets,
primary and secondary schools, and military bases; remain
flat at limited-service restaurants, convenience stores, hospitals, and long-term care facilities; and continue to decline at
full-service restaurants.
So why not focus development where the growth is? For
many franchise brands, nontraditional locations are the “new
new thing” as they seek growth in a faltering economy. Many
of today’s best-known brands are banking on expansion into
new venues to keep their numbers up. But as Vojnovic discovered, it may be lucrative, but it’s not a slam-dunk.
On the plus side, nontraditional locations allow franchisors
to expand their options within a territory, reach new customers
Beef ’O’ Brady’s
(and franchise candidates), experiment with new formats and
footprints, reduce entry costs and risk, open sooner, spread
their brand to captive audiences, deal with experienced land-lords/operators, and in the ideal scenario, make one deal for
multiple locations nationwide.
However, operating in this realm demands flexibility and
a willingness to make tradeoffs that may stretch beyond a
Can you boil down a franchise concept into a 3-by-4- foot board? What about a 2-by-8-foot panel? You may not make megabucks from that, but with enough of
them, they’ll add up—which is one of the strategies Radio
Shack will be testing out in the coming months, says Marty
Amschler, who joined Radio Shack in November as vice
president of franchising.
Think airport bookstores and
a display stocked with earbuds,
batteries, and other electronic
items travelers pick up waiting for
their flight. Land a deal with the
company that manages all those
bookstores, and the sales pile up
quickly, providing another revenue stream for the brand.
Or it can be AV cables in an
electronics store, headphones at
a fitness franchise, AM receivers with headphones at a college football game, or memory
cards and camera batteries at a
concert.
“We believe there is opportu-
nity in many of those to sell our
private brands,” says Amschler,
adding that this shop-within-a-
shop idea is already in place in
some Ace Hardware stores. Radio Shack is also evaluating
the possibility of expanding this idea into military bases,
convenience stores, and more, he says.
“It’s appealing. We can go into a marketplace, and whether
we dominate 100 square feet or an entire store, we have to
figure out what that audience needs. There’s not a space in
the USA where we couldn’t be
operating,” he says.
Also, he says, experimenting with these micro-sites is
a low-cost, low-risk strategy
that takes little time to implement and evaluate. “The possibilities are endless. Some
may take off, some may wash
out,” he says.
Support, he says, is still the
same as for a traditional franchisee. For example, with the
bookstore idea, “It looks like a
dealer licensee, but we would
call you a franchisee, you sign
a franchise agreement,” he says.
“We’re not doing anything different. We still offer new owner training—it’s just a smaller
segment of our product being
carried.”
Shop-within-a-Shop
