One of the biggest trends in franchising is the Hub-and-Spokes Business Model. We’ve seen this with central commissaries in Dunkin Donuts and Panera Bread as well as many emerging franchise systems. Few people recognize that the very first hub-and-spokes business started in the dry cleaning industry. Dry cleaning naturally lends itself to this model as it is very easy to scale a dry cleaning operation with the addition of satellite stores or stores that simply take in the dry cleaning work and send it to the plant to be processed and returned.
Our organization has followed this model and a majority of our owners are “multi-unit franchisees”. Our “hub” features a state-of-the-art plant to accommodate pickup and delivery to five additional satellite stores. Those satellite stores can be opened for as little as $100k per unit. The typical hub-and-spokes enterprise for Lapels franchise owners incorporates a market of approximately 150,000 people, when fully built out. That translates to about six towns in a suburban market and several city blocks in an urban area.
Without minimizing the effort it takes to build up the business and clientele, the idea is to put a system in place where you can operate the dry cleaning plant and manage the transportation of clothes to the satellite stores. Sometimes it’s the franchise owner who acts as the hands-on manager who manages that. In other cases, a franchise owner will hire a manager to handle the day-to-day while he/she oversees the operation from a higher level.
Many of our new owners join our organization with the idea they will have a dry cleaning plant to start and a plan to open a satellite store within 30 days of the plant’s opening.
Starting out with two stores puts franchise owners in the multi-franchise mindset from day one. That means developing a system of management for multiple locations. Doing this at the beginning of their ownership gives them an advantage over another owner who enters our system with just one location. As the multi-location owner grows their business, they are in a much better position to add a third, fourth, fifth, etc. location since balancing multiple locations is how they learned the business.
When you have a system in place where you can run multiple locations efficiently, you can start to see how dry cleaning owners can enjoy a high level of success. The wheel starts with a hub and maybe a spoke or two and then continues to add more. If you have ever ridden a bicycle, you know the more spokes to the wheel, the smoother and faster the ride.
While the discussion here has been for dry cleaning, the hub-and-spokes model can work for a number of businesses and franchises.
Another reason for the success of dry cleaning owners is how nicely the industry lends itself to complementary franchises. In other words, two different franchise types that can be run simultaneously because there’s some overlap in efforts. Several of our franchisees own and operate multiple dry cleaning locations as well as multiple locations of other franchises. In some of those cases, the types of franchise complemented each other.
For example, the owner of a restaurant franchise might be interested in owning a dry cleaning franchise. The dry cleaning franchise could provide laundry service for linens and employee uniforms. Similarly, the owner of a chain of hotels might also have an interest in a dry cleaning franchise to provide dry cleaning services to guests and staff.
Two of our current franchise owners owned nearly 30 hair salon franchises prior to purchasing their dry cleaning franchises. While there may be some cross-marketing opportunities, for the most part their franchises don’t overlap. What the franchises do share are the systems. Each has a manager in charge so that the franchise owner is not bogged down by the day-to-day operations and can view both operations on a global basis. Each also has a reporting system where the franchise owner can get a real-time report on the performance of all locations.
Owning multiple franchise locations is not for the faint of heart. You must possess a certain number of skills and character traits. You must know how to hire good people, specifically managers, develop them and keep them incentivized to want to successfully run and grow your business. Another part of that is having your manager be able to hire and groom potential managers.
Being tech savvy and able to use and understand reporting applications certainly helps. You should be a multi-tasker but also have the ability to compartmentalize and focus on the specific task at hand. You can jump in and help on the day-to-day, but the big picture should be part of your every activity.
Kevin Dubois is the CEO of Lapels Dry Cleaning and co-author of Entrepreneurial Insanity in the Dry Cleaning Business. To learn more about franchise opportunities with Lapels Dry Cleaning, call toll free (866) 695-2735 or email firstname.lastname@example.org. Additional information and up-to-date company news can also be found on the company’s Web site, www.lapelsdrycleaning.com.