Why the franchise model may be the "secret sauce" for success in specialty retail
There are many reasons why some of the most successful specialty retailers choose the franchise model to drive continued growth. Chief among them: the ability to stay connected to the local community.
“The people who own and operate the local stores live in the community. Their kids go to school with the customers,” says Matt Lafone, president and general manager of the Americas for The Athlete’s Foot, a specialty footwear and lifestyle chain that is almost entirely franchisee-operated. “I think that’s really the secret sauce: the connection to the local community and the knowledge of the customer.”
The Athlete’s Foot operates 67 stores in the U.S.—all franchisee-owned—and plans to open its first company-owned store in September near its new Atlanta headquarters. According to Lafone, no one in management has a better voice than the people in the community—the franchisees—when it comes to customizing store design, hyperlocal product mix, and community involvement.
A custom mural by Lisette Correa on the exterior of The Athlete’s Foot Atlantic Station store in Atlanta, Georgia. “We try to break it down to the SKU level of the consumer’s local needs and support local artists and brands that are more relevant,” Lafone said. “We rely on local partners and operating partners to help supply and fill those gaps.”
This connection factor is critical across all sub-sectors of specialty retail, whether it’s running or foot health. That’s because the channel tends to attract people who seek education and curation of products to meet their needs—and relies on relationships between sales associates and the enthusiasts who patronize them.
Community connections are equally important to Fleet Feet, a major player in the specialty retail category that also operates a strong franchise model. Of its 272 U.S. stores, 188 are franchised and 85 are company-owned.
“Every Fleet Feet store will tell you they’re involved in the community,” said Fleet Feet franchise owner Frank DeJulius, who with his wife, Stacey, operates seven Fleet Feet stores in Cincinnati, Ohio. “It’s part of our business model. I think we’re so connected to the community that we’re involved in every race, local fundraiser, run or walk.”
According to DeJulius, that commitment is reflected in the huge physical and experiential differences between all of his stores, each of which he calls its own “inspiration.” For example, one of his stores has a coffee shop inside, along with tables for people to work and hang out. Another store is located near a brewery and has its own beer cooler inside the store.
The assortment of merchandise varies from location to location, too: One store is stocked more with products geared toward fast runs, while another is stocked with more trail running items. Some stores may have a wider variety of apparel than others, depending on the preferences of the community.
“I want people who live in Cincinnati to have a reason to go to all of our stores,” DeJulius explains. “Not just the one closest to them.”
Running clubs are another way DeJulius is reaching consumers interested in more running products.
"Our stores are more than just places to buy shoes. They're places for runners to gather," explains DeJulius, who thinks running clubs are a given for a chain that specializes in running retail. "How can you be any type of specialty store if you don't engage with the community that's doing it? If you're a cooking specialty store, you better host cooking classes. If you're a toy store, you better let kids play with toys. For us, it's critical that we run and walk with our customers in the shoes we present to them."
Get Involved
The franchise model also enables store owners to be more actively involved than store managers at larger companies. That's largely because franchisees, as owners of their own stores, are more involved.
"No one cares about this as much as we do," DeJulius says. "I just don't think you'd get that level of commitment from employees."
Such commitment can also encourage franchisees to test new ideas that might not have come up in a corporate-level brainstorm. McDonald's breakfast sandwiches, for example, started as a test for franchisees and quickly grew into a menu staple.
Foot Solutions, a chain of footwear franchises that sells orthotics and specialty footwear, actively tries to tap into this creativity among franchisees, keeping new ideas flowing in the business.
“If your franchisees have an idea, we really encourage them to share it,” said John Prothro, president and CEO of Foot Solutions. “And then we share it throughout the system. People copy it, and we learn from each other.”
He cited the recent example of a Foot solutions store in Utah that created buzz and brand awareness by hosting an event at its store with another business, Stretch Zone.
“The whole concept of organizational learning means you have a lot of brains, so you better use them,” Prothro said. “Don’t try to over-manage it from the top down, or you can’t learn from each other.”