Franchise Leadership and Development Conference Profile: Greg Tanner

By BRIAN DIGGELMANN For three days in October, some of the best and brightest minds in the franchising community will assemble in Atlanta for the 14^th Annual Franchise Leadership and Development Conference. Experts from over 40 industries will gather to discuss the current state of franchising and how to take their businesses to the next level. We asked five franchise development professionals from attendee brands to share their wisdom and insights into how development strategy has evolved over the past twelve months and where their companies are headed. On September 28, Aaron’s will open its 2,000th unit. One of the driving forces behind the lease-to-own concept’s milestone is Greg Tanner, a 38-year veteran of the franchising industry. As National Director of Franchising, Tanner takes the complicated Aaron’s concept and breaks it down in a way that makes sense to investors.  He will also be speaking at this year’s conference on lead generation tactics. How has Aaron’s been doing in terms of development? Aaron’s has, for the last 10 or so years, been on an extremely successful path. We’ve done enormously well, and the problem we’re getting into now is that our markets are becoming limited. Has that changed where you’re growing? We’re focused on the West Coast. The South, Northeast and Mid-Atlantic are pretty well saturated. There are opportunities there but they’re becoming more difficult to find. The franchisees we attract have strong net worth, and they’re not looking to buy just one. They want a pocket, but the pockets are becoming more difficult to obtain. There’s plenty out there, but you can’t get somebody in Atlanta to move to one in Kearny, Nebraska. As a result, the ad and lead costs per deal have gone up. Has there been an overall increase in the number of inquiries Aaron’s gets? It’s about the same. We don’t get a lot of inquiries. We’re not like fast food franchises where people can relate and our customers at our stores are not our potential franchisees. Someone with a strong net worth would be familiar with McDonalds because they’ve eaten there. With Aaron’s, our customers are from households under $50,000, and they don’t buy franchises. Do you use social media to connect with potential investors? No, we don’t. Most of my budget goes to hard print and ad costs. We find we do better there. The investment level is so high for Aaron’s that we’re looking for an average worth of $6 million to $50 million, and they’re not on the internet looking for a business. They’re looking in the Wall Street Journal and Forbes, publications they’d have on their coffee tables. Have you tailored your advertising plan to focus on the West coast? Our advertising is pretty consistent throughout the nation. You’ve got Forbes magazine across the country. I don’t use a zoning approach to the Wall Street Journal, I use the whole distribution. Same with Entrepreneur magazine. I don’t try to portion where the dollars need to be spent -- I look at the country as a whole. There are still markets in the Northeast and Midwest. If I was just targeting the Midwest to be able to capture three or four opportunities, it would be too expensive. Do you target multi-unit franchisees? We’ve always done multi-units. Franchisees are starting to mature and our business is about sales margins and appreciation. Once a business has appreciated out over three years, either they’re going to pay the government a lot of money or they’re going to open up new stores. They lean towards opening new stores and having a growth spurt rather than settling back and paying taxes. It’s not like restaurant business where you appreciate over five to 10 years. Our stores can be accelerated out in a three-year appreciation. Franchisees want more territory. Are conversions also part of your development strategy? That’s a big portion of our market. There are about 6,000 independents in our business. They have to be formatted to our model, our size and fit with our systems to protect their investment, but they up the value of their business by putting Aaron’s name up there. Do you draw many franchisees from other brands? It’s coincidental you say that. We just had a discovery day with two people -- one from a pizza franchise and one from a sandwich franchise. Do we often have that? No, but there’s a fair amount. I’d say 10 percent of existing franchises own another brand. Do your franchisees face any obstacles when trying to get up and running? This is probably the perfect time for someone who needs real estate to get into a business. There’s a great deal of real estate out there for them to choose from. There’s also some great value out there if they want to buy a building and great opportunities if they want to go inline. We’re not seeing any problems that would slow someone down from opening up right now. Three years ago I would say yes. Real estate was climbing and becoming difficult to get, but the tables have turned. Most franchise concepts out there are doing well because real estate is so readily available. Is Aaron’s planning any international development? We currently are exploring international. We’ve made an investment in a firm similar to ours in the UK and we’re baby stepping on that right now to see where it’s going to take us. It’s not like the food business where you could go over, get food suppliers and adjust menus for appetites. Ours a little bit more complicated. What are your best franchisees doing to succeed? It’s a simple answer – they’re following the system.  The one who struggle at first try to do it on their own find it costs them a great deal of money. One of our most successful franchisees, who now has 90 stores, didn’t follow the system in the beginning and he’ll tell you in a heartbeat -- if you’re not willing to follow that recipe don’t do it. What benefit do you get from attending the Franchise Leadership and Development Conference? It’s important that everyone shares their success and shares the problems that they’re having. With so many of us attending, you learn so much from it. It’s kind of a safety check to make sure we’re all on the same page and not getting too far out there without knowing where we’re going. It’s a great sharing of information.