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Lesson #1: "Loyalty of your people is a key to most any business success"
Article Overview: Cathy has built his reputation not only on the success of his business, but on the unique model with which he chose to expand. Instead of following the usual franchise route, he opted to form joint ventures with individual operators, thus guaranteeing “quality, supervision and the motivation of partnership.”
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Lesson #1: "Loyalty of your people is a key to most any business success"
Cathy has built his reputation not only on the success of his business, but on the unique model with which he chose to expand. Instead of following the usual franchise route, he opted to form joint ventures with individual operators, thus guaranteeing "quality, supervision and the motivation of partnership."
Cathy's model was as follows: in exchange for a one-time fee of $5,000, interested operators would receive a fully stocked restaurant, assistance with advertising, a trademark, and five weeks of training at company headquarters and in the field.
"In my first meeting with a potential Operator, I explain that our commitment is going to be like a marriage, with no consideration given to divorce," says Cathy. "We're much more careful about selecting Operators when we know we can't easily get rid of them."
Operators receive a guaranteed base salary of $30,000 and also get to keep 50% of their net profits. The average Chick-fil-A operator receives in the neighbourhood of $82,000.
But in return, they have to operate by some strict rules.
In keeping with Cathy's religious principles, no Chick-fil-A is allowed to open on Sundays. Each operator is also only allowed to run one single restaurant in order that they are truly hands-on, and get to know their staff and customers.
"At first this policy might seem counterintuitive," notes Cathy. "Many companies reward success by enlarging territories or bringing them into the company to oversee operations of other franchisees. I want our best people right there full time in the restaurant they've built, serving the customers and team members who have become loyal to them."
Operators are also not bound to designated geographic areas, as with franchising. They can open an outlet even if it is in proximity to another one. As a result, the chain has grown in clusters, which Cathy believes is more effective.
All of this is in an attempt to build operator loyalty.
"Our operators work closely with us, but they are owners of their own business," says Cathy. "After we make the necessary investment - buying the real estate and building the restaurant - we turn over the responsibility of running a $2 million-plus business to these independent franchisees - many of whom have not yet turned thirty years old. We support them with training, technology and anything else they need. But the bottom line depends on the Operator's honesty, integrity commitment and loyalty to customers and to us. We trust our Operators to make good decisions - and they do. I don't know of another restaurant company that places so much responsibility in the hands of its franchisees."
It seems that Cathy's strategy has worked. In an industry where operator turnover reaches 35%, Chick-fil-A lost just 2% of its operators in 1998.
"Even though you are operating a big business, you need to run it as a small company and take advantage of the small things," he says. "There are some changes that have to be made when you get large, but remember, it's a series of little things that make a company work."
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Related Forum Posts
Re: From Sales to Marketing
- Loyalty,
Glad to know a little about you. Yes, this forum holds quite a bit of useful information. We hope you will join into the conversations and get to know us. Welcome!
Re: Success? When does an inventor feel successful?
- I agree with Jude.
Success is different to different people, and it is different for one person in is different aspects of life.
You can have personal success, business success.
For me finishing a very challenging picture puzzle is success.
You are only successful if you feel successful.
Re: what makes your business unique?
- Certainly it depends upon the change! Like now days people are more busy on internet so whatsoever is your business it should also get success on internet as well. Business grow when people take interest in it. Internet marketing is the new technique to get success over the web.
Craigslist/Kijiji Sales
- Would like to know who on this forum is having any success with generating business through Craigslist or Kijiji by posting ads there?
What kind of business do you run and what do your ads state?
I've been using the sites to generate leads for Foreclosure properties and I've been having some success.
One of my Business Coaching client is a software developer and he's been having a lot of success with Craigslist - almost $7000/month.
what's your view on it ?
Re: Are Economic Recessions Good for Franchising?
- I am in the franchise lending business and I haven't really seen any decline in the amount of loans we do daily, if anything i have seen them increase. More and more people are turning to opening their own businesses. Feds lowered the rates in hopes to encourage people to go for it. Franchising is a good first time business owners choice, because the franchise helps you with training and ongoing support. having a name people recognize is going to help that busiensses sales. I think overall, most franchises are not going to suffer in these times. However, your business being a success is more dependent upon your location and competition, how well you run it, advertise it and what type of business you are in.
Is it a business with a product or service that is in high demand in your location? Is there a lot of competition near you so you aren't continuously competing & fighting to get customers into your own business?
If I could, I would open a franchise in my area. I can think of at least 10 franchises off the top of my head that would do fantastic where I am, because I don't see much competitin, if any at all for them. I know they would do well here because I know the area and what people would like to see here and what the neighborhood needs.
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