As a franchisor, we have long encouraged our franchise owners interested in expanding to employ a Hub-and-Spokes model. Little did we realize this same model would be a catalyst in surviving the pandemic and providing opportunities to thrive beyond Covid.
Prior to the pandemic, the Hub-and-Spokes business model was one of the bigger trends in franchising. Dunkin Donuts and Panera Bread were prime examples. What a lot of people don’t know is that the very first Hub-and-Spokes business started in the dry-cleaning industry. So, it stands to reason that tweaking that model during a trying time like the pandemic would start in the dry cleaning industry—at a time when dry cleaners saw a reduction in revenue between 40 and 80 percent during the initial lockdown.
Before we get to the tweak, here’s a brief explanation of how the Hub-and-Spokes model has worked for our organization and our multi-unit owners. The “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.
The concept of the Hub-and-Spokes model 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. In some instances, the franchise owner acts as the hands-on manager who manages that. In other cases, an owner will hire a general 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 notion they will open a dry cleaning plant to start and then plan to open a satellite store within 90 days of the plant’s opening.
After the pandemic and the initial lockdown, we noticed a certain trend of many mom-and-pop dry cleaners getting out of the business. We began in earnest in steering our existing franchisees and prospects to purchase these dry cleaning plants/stores. These properties are desirable for several reasons:
- Built-in clientele from day one.
- Customers already used to bringing their dry cleaning at that location.
- Minor upgrades to convert and open
Converting an existing plant/store or Hub also makes it easier for prospects to scout out satellite locations. And while most satellite locations require a live human to staff the store, technology is making it possible to have satellite locations without full-time staff.
For example, Chris Cooley, multi-unit owner of Lapels Cleaners of Nashville, will soon install kiosks at two of his locations—Brentwood and Bellevue. These kiosks, located within a vestibule inside the store, will provide customers with 24/7 access to pick-up and drop off items without a staff member present.
With technologies like the kiosks and lockers, it’s conceivable that every franchise owner could start out with two or more stores. That 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.
Chris Cooley will also soon install a Metalprogetti automated assembly / bagging system. The Metalprogetti Gullieta looks very much like a futuristic device, featuring an assembly conveyor and carrying extension arms to transport complete orders to the auto bagger. At the auto bagger, a sticker invoice is applied to the right corner of the package. With the current labor shortage, this will enable his plant to process clean items at a faster pace.
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 this model for 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 current and past franchisees owned and operated 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.
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.
Michael Eisner is the vice president of franchise development for Lapels Cleaners. To learn more about franchise opportunities with Lapels Dry Cleaning, call 781-829-8780or email sales@lapelsdrycleaning.com. Additional information and up-to-date company news can also be found on the company’s Web site, https://lapelsfranchise.com/.