Franchise Leadership and Development Conference Profile: Kurt Landwehr

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. It takes a lot to make the complicated job of growing a franchise look easy, but Kurt Landwehr seems to have found a way. After helping Great Clips* open 2,000 salons, he co-founded a franchise development outsourcing firm in 2006 and purchased a growing franchise called Roosters Men’s Grooming Center in 2008. Three years, 200 units and 65 franchisees later, the brand’s success caught the eye and pocket book of Regis Corporation, who bought the partners out and brought Landwehr on to run franchise development for the entire company. With so many brands making up the Regis Corporation, how do you help franchisee finds the right fit? Although we do have a lot of brands here at Regis, we’re really focused primarily on growing four right now: Supercuts, the flagship brand, Pro-Cuts Sports, which is a new sports-themed concept we’re developing very aggressively throughout the country, Roosters Men’s Grooming Center, an upscale men’s grooming business, and Cost Cutters, our female value brand. Those are the four brands that we spend most of our time on, with the first three representing 95 percent of our activity. Surprisingly, most of our candidates come to us interested in a specific brand and they have specific reasons for their interest in that brand. Usually it has to do with the market segments the brand serves. For example, if it’s Supercuts they like the value segment of the industry, or if it’s Roosters they tend to like the scale aspect and full-service nature of the men’s grooming business. There are personal reasons why they are attracted to different brands. Has growth within Regis been on an upward trend? It’s been extremely upward. Our sales are up over 200 percent in the last 12 months. Is that due to market factors or strategic changes? It’s more internal rather than external. If you talk to most of the development professionals at the conference, you’ll probably find their sales are either flat or up a little bit. Our sales are up dramatically because of some of the things we’ve done in the last 14 months to move the needle pretty dramatically. We went from recruiting about 17 franchisees in 2010 to recruiting 50 last year. This year we’ll probably recruit closer to 75. How do you reach out to prospective franchisees? We use a variety of different lead generation strategies. Certainly electronic media plays a very important part of that. Web-based or internet lead generation has really evolved beyond the web portals, and it’s very sophisticated today. I don’t pretend to understand all of it so we hire experts in the field to help us with it. We do a lot of work with franchise consultants – that’s a growing and important part of the business. We also work franchisee referrals and in-store referrals pretty aggressively. The nice thing about Regis is that we have about 13,000 salons, and because we know our customers are also our franchisees we can leverage that presence in the marketplace. Is social media part of the web-based strategy? That’s really what I mean by electronic media. We have a public relations firm that does all our social media. They’re very aggressive with blogs, parent-child websites, and keeping us present or front-of-mind with social media. All of that helps not only get the word out but also helps us with our SEO rankings. It’s all about content today. Have you seen an increase in the overall quantity or quality in inquiries? We really have, absolutely.  Not only have we seen a dramatic increase in the overall numbers that are reflected in that 200 percent increase, but we’re also seeing an increase in the quality. I think people are adapting to what I call the new normal – we’re in a jobless recovery, and it’s very difficult to find a full-time job if you’re over 40 years old. Jobs are not at the same salary levels that they were before the economic slowdown, so people are forced to look at other alternatives – I refer to them as reluctant entrepreneurs. They’d like to have a job if they find one, but need other options if they can’t. One of the other options is to start a business. We’re seeing a lot of people today who have either come out of Corporate America in middle or executive positions and can’t find jobs, or people who are in still in Corporate America but are very uneasy about their future. Those people are moving towards franchising in numbers that I have not seen in a long time. They sound like they could be your ideal candidate. They are, absolutely. We’ve got an offering that’s very compelling for them because it fits either option. If they’re out of work and they’re looking for a job, our approach is “continue to look for a job, start our business and when the right job presents itself, take it.” For people still in Corporate America, we tell them keep your full-time job, quietly grow a manager-run business on the side, and if you ever get laid off you’ll have a contingency plan in place. It’s a message that resonates with both of those groups quite a bit. If someone wants a job but they also buy a business that requires their full-time effort, they just closed the door on ever getting a job. Our manager run business-model provides more options. Do you target experienced business owners from other brands? A lot of our franchisees are what I just described--they work in corporate America--but a fair percentage of our franchisees are guys and gals that own other businesses who like the idea of diversification and owning our business. We certainly go after business owners, but do we target people in other franchises specifically? No, because it’s not easy to do. I’ve been doing this for almost 20 years and I've still yet to find an effective way to get in front of those people. Everyone wants to find the McDonald's franchisee who owns 15 restaurants and get him to join their system, but that’s tough to do. Do most of your franchisees own multiple units? The average number of salons our Supercuts franchisees own is six. Some have two or three, and our largest franchisees have over 100. There’s really no limit to how large you can build the business. At our core, we are a multi-unit concept. I would say 75 percent of our deals today are probably multi-unit deals. Even the franchisees that start with one certainly intend to open more stores down the road. Does Regis do conversions? We typically don’t, primarily because we’re generally not looking for people with a cosmetology background to be our franchisees--it’s a different skill set that we’re looking for. The other problem is that it’s usually not very good real estate. They’re one-off small businesses, and with that usually come sub-par real estate. We do some from time to time but we don’t actively pursue conversions. Is real estate an issue for newer franchisees? Real estate has always been a challenge in brick-and-mortar business. Even during the depths of the economic slowdown, quality real estate has always been a scarce resource. There’s a lot of real estate out there but not a lot of great real estate, and we want great real estate. The reason we’re successful in finding real estate is that we bring the strength of the Regis balance sheet to the relationship on behalf of our franchisees. Regis will sign leases corporately and then sublease those locations to our Supercuts franchisees. We’re not just competing against other hair-care companies. We’re competing against every other business that can go in the same 1,200 square feet that we can. If you’re a landlord and you can rent your space to Regis, a publicly traded company with the balance sheet we have, or a small sandwich shop, usually that’s a pretty easy decision for the landlord. What barriers might prevent someone from buying a Regis franchise? Fear of the current economic situation is probably the largest barrier. People are just a little bit uneasy about that future and that keeps them from moving forward and taking action. If you would’ve asked me a year ago I would’ve told you financing, but Regis has been able to put together some very unique and compelling financing programs for our franchisees. What are your most successful franchisees doing? They really understand the importance of the guest experience and making sure the manager and stylists inside the four walls of their salons are executing the system and delivering a great guest experience. That’s what the business is all about. If you’re able to deliver on that great experience, then it’s likely that your customers are going to come back and tell their friends and family. Our business is an operations driven business. I was just talking to a Las Vegas Roosters franchisee the other day and all around her businesses have closed – restaurants, dry cleaners, everything. According to her nothing is left standing, but her business is still cranking because of the recession-resistant nature of the hair care industry and the great customer service they provide their customers. It seems like that constant demand would be a huge selling point. It’s one of the great attributes of our business. We all have hair that grows and needs to be cut. That’s a nice starting point if you’re going to be a small biz owner. What’s special about the Franchise Leadership and Development Conference? Number one, it’s the industry event for franchise development folks. Number two, great education. I learn something every time I go. Number three, it gives me a chance to connect with my peers, meet with vendors who serve our segment of the franchise industry and stay connected. In my case, it also allows me give back and help smaller franchisors who are still trying to figure it out. Tell me about the class you’ll be teaching. I’m facilitating the Mastering Franchise Sales class, a workshop that goes from 9 a.m. to noon on Wednesday. I’ll be facilitating discussion with a group of other well-regarded industry professionals. The big topics that we’re going to cover will be creating effective sales process to lead your candidate through, lead generation strategies so you can get in front of quality candidates, pipeline management and selling techniques that are effective in today’s environment. All of it will be overlaid with the legal aspects of franchise developments.