Words: Annie Blinkhorn
In 2019, I published a piece celebrating Vodafone’s 100th franchised store opening. But on arriving at their central London HQ, I learn that figure is now 200! By the time you’re reading this, it will undoubtedly have leaped again – rapid growth is an understatement to say the least. I talked to Jon Shaw, head of consumer sales, Mark McKenzie, retail divisional manager (South), and Lee Taylor, retail divisional manager (North), about yet further expansion, cutting-edge 5G and why the concept of ‘global becoming local’ is close to their hearts.
Why did Vodafone embark on the franchise expansion?
Jon: We were one of the last countries in the Vodafone family not to have attempted franchising. If you go abroad, Spain, Germany, Italy – our other big markets – they’ve all got franchise operations, so it was: “Why aren’t you doing that in the UK?” We realised we had to do something to revitalise our smaller stores in the UK. What tends to happen in any good business is your top talent ends up working in your top and biggest 100 stores because that’s how they get noticed… and then they move on to greater things. We weren’t getting, therefore, the right level of energy and passion in our smaller stores that we knew a franchisee could give us. There had to be a way of unlocking that and having someone who really cares about local community, driving much harder for us.
And so you’re discovering the franchise industry yourselves first-hand?
Jon: I’ve been wowed by how big it is. I’ve also been amazed that more of our bigger retailers in the UK at the moment aren’t considering it – why don’t brands, instead of giving up on their smaller locations, consider a different model? Because we, and several other businesses, are showing that franchising is a fantastic way to keep your brand alive. We’re a global brand getting more local, and now that I’m more involved in the franchise industry, I see the potential there is huge.
Mark: We’ve learned so much from franchisees and they have from us, too. A relationship that started out as a trial has really blossomed because we’ve shared best practice all along. Vodafone, globally, is already franchised, just not in the UK – now we have, we’ve seen the benefits.
Lee: Ultimately, the best benefit is that these really good store managers grow their career in a way they wouldn’t otherwise have expected. The performance in every store has improved – it’s their life, they really put themselves into it. What we learned most from the partners is that they invest more in people, and that gives better service, which gives better sales. They paid higher bonuses to their staff, so the first thing we did was replicate that! Because we’ve seen the benefits of what franchisees have done.
What are the benefits of running a Vodafone franchise?
Jon: That we can still be local and be a global brand. The franchisees are better at articulating to us what they need locally to appeal to our customers. And no matter how big you are as a business, it does come down to: are you doing the right things for your customers in every town, in every postcode? A lot of big brands can be very London- and city-centric and if we’re looking out for our customers in, for example, Scotland, the South West and Wales properly, will we hear about it? Maybe not. But with franchisees we definitely do, which is fantastic.
Mark: Franchising is now integral to Vodafone. We have the opportunity to open in locations we’ve not been before, to partner with somebody who can absolutely grow our market share. The fact that Vodafone is supporting individuals as businesspeople and helping them become franchisees is incredibly inspiring – it’s the faith you’re showing in people.
In what way does Vodafone differentiate itself in the franchise market?
Jon: The one thing we’ve tried to be is a support for people without allowing it to get too big. We’re teaching them to nurture and love the brand. We’ve also said: “Look, we don’t mind if you use this as a stepping stone to other interests in your areas, that’s brilliant. Use us as that stable base in which you can experiment with other things as well.” That’s been really popular with people.
Mark: For us, I can’t stress the word ‘partnership’ enough. The partner takes on lots of responsibility and not so much of the risk, although they are putting their money where their mouth is. But I don’t recognise any difference between core [company-owned] stores and partner agent stores, they have the same purpose – to deliver value back into the business and equally to make themselves successful and give themselves career options. So it is very much a true partnership, and throughout the company – whether core store or franchise partner agent – it’s very much a ‘one-team’ ethos.
With no franchise fee upfront, what do you ask of a potential owner?
Jon: We use the slogan: “We give you the keys for free”, but clearly they need to cover the costs of their operational expenses for the first few months while they wait for their payments to roll in. We didn’t want to prevent people we knew would be brilliant local ambassadors for us from getting on board because they didn’t have a lot of capital to support them. Luckily, we’ve also had some brilliant partnerships with Hitachi Capital Franchise Finance, who do our training for us. We’re linked in really well with the big banks, thanks to a lot of franchising contacts we’ve met at the conferences, and they’ve been brilliantly supportive of buying into our scheme and helping people when they’re there. We’ve actually helped a couple of people who didn’t have the money, saying: “Look, we’ll support you for the first few months and not ask for any money until we have got this up and running because we believe in you so much.” That’s been the case for three or four of our franchisees in different locations because we knew we had the right person and knew they’d do a great job for us, so we provided that funding. Not only is it a great thing to do but also it’s the right thing to do, not least because those people are now paying that back tenfold.
How do you support franchise partners?
Jon: Everyone goes on the Hitachi Capital Franchise Finance course before they get their keys so that we know they can run their books, have a limited company, know how to get an accountant and so on. That’s working really well for us because that’s getting people ready. The franchise expansion has also made us reinvest in training our regional managers and how they support franchisees. So, all our regional managers have now been on that same business and finance course. They are also trained so that when they visit franchisees they’re able to say: “Let’s look at how you performed last month and let me sit down and show you how you can make more money.” Or: “Here’s where you missed an opportunity.” Or: “Did you realise you could’ve made more if you’d just driven this part far harder?” Because at Vodafone we don’t sell just one thing, we sell broadband, we sell connectivity, we sell IoT devices. There’s amazing ways in which we can help those franchisees unlock those conversations with customers. The other thing I’m determined about is that I always allow any store to carry out any part of the service journey they are able to. A lot of companies are just redirecting their customer to the app every time, for every little thing. We keep every service journey open, so anyone in any store can help a customer with any enquiry as well, because hopefully that should unlock other conversations and build up the rapport locally, because that’s what we want. The customer will decide how she or he wants to interact with Vodafone… and we want to make sure there’s a local point of contact for you if you want to have a conversation.
Mark: I think the support comes in terms of the regional managers and myself being able to look at their business – we do lots of quarterly reviews with them – put another set of eyes on the operation and ask: “What if we tried this, what if we tried that?” I present it to a partner agent as: “If I come into your business and I haven’t added value, then I’m not doing my job. Ask yourself: ‘Would you pay for my time as a consultant?’” Thankfully, the answer’s mostly yes! We always strongly advise a direction for a partner agent but we never tell them. It’s a partnership at the end of the day; they’ll have their decision and our role in that is to protect the brand and make sure everything is geared toward that brand advocacy.
Lee: There’s a really rigorous recruitment process: they meet the franchise manager, they meet the regional manager, we put them on a finance course for two days. Then, they bring their business plan to me, we talk about their ideas... and that’s when we start with launch support, a full induction programme, put them in-store to train, teach them the Vodafone way, etc. We bring them to our centre here and establish an ongoing relationship with the regional manager – who then supports the business with quarterly reviews, regular visits and coaching as and when needed.
Is this a growth sector?
Jon: The UK demand for data on mobile and connectivity in the home is insatiable. Everyone wants fibre to their house, they want a certain number of gigabits per second, they want unlimited data. Vodafone now offers unlimited data packages to customers because we don’t want you to worry about how much data you consume, just be on the network that gives you the best access. The best thing about Vodafone is that it’s such a huge corporation – it’s a FTSE 10 company. Plus, the investment levels from us into the network ensure that connectivity so we can always keep up with consumer demand. And that’s great news versus lots of businesses where, yes, the investment is there – but is it in the long run? We are – we’re on a 15- to 20-year planning cycle, we’re not going anywhere.
Mark: In terms of growing our franchisee network I think we’re unique in terms of what we do versus everybody else, and that leaves a lot of room for growth. In terms of territories for interested parties, there’s lots of stores available. We’ve got big patches on the South Coast and South East of the UK and in East Anglia. There’s a wide and varied option of locations. We’ve got our eye on some places about Greater London as well… at least where it’s affordable. We’ve got some great locations – the likes of Poole and Bournemouth and Peterborough – good hustle and bustle towns you can bring that entrepreneurial spirit to.
What do you value in a franchise partner?
Jon: Primarily that they’re really passionate about the area we’re talking to them about and they’re really knowledgeable. People that are willing to be where they get their store. That’s absolutely number one because we need to get more local as a global brand. That’s what all big brands struggle with: really understanding their customers locally. So it’s someone who’s willing to get local and get involved in local community. Don’t forget Vodafone does lots of business contracts so we do what we can to support the franchisee with all the business opportunities there as well, and so it’s being local and it’s being energetic and excited. That’s it. That earnestness, that willingness to tell us what there is locally, and driving the brand for us locally, that’s what makes all the difference and that’s what we’re looking for. When we’ve been at The National Franchise Exhibition, that’s what we want to get across. We don’t need someone with loads of money – that’s okay, we’re not worried about that. We’re looking for those people who are really going to give it 100 per cent, that’s what’s important to us.
Mark: I’m looking for somebody who’s going to operate as a true partner – no lone wolves! Somebody who’s going to represent the brand really well. And also someone that’s going to bring some knowledge of their own to Vodafone. Some of the stuff that we’ve learned from our external partners has been great. We’ve managed to do some interesting things, such as our bonus scheme, because we’ve learned how to operate a little bit differently inside franchising because people brought outside experience in. Also entrepreneurial spirit, absolutely, and somebody who wants to work side by side with a protected brand and promote our name as well – a brand advocate. You can work really hard in retail and achieve nothing or you can work that little bit smarter – and that’s what you get with a partner agent. They really put a lot of thought into how they are going to do that. We don’t want any of them to burn out or not have the right resources. What we do want is for them to make money, and be able to have enough energy to give back to the business as well, and part of that is absolutely about striking a worklife balance. That means they need to have some good-calibre colleagues and a store manager beneath them, and they work really hard on getting their people plan right and that’s what allows them to strike that right balance. That’s what we stress to new partner agents – you’ve got to grow your people to grow your business – it’s very straightforward. We want to invest in people, and when you’re part of the Vodafone family, we want to reverse engineer that talent from partner agent back into the Vodafone machine and then back out again.
Lee: I think everyone’s completely different, but yes, it’s: “What can the external investors, from every walk of life, bring to the party?” They need to meet the criteria of being a good ‘shopkeeper’ because that’s key. Have you got the experience to run your own business, and if you haven’t, can we help? Because we’ve got a good team of regional managers out in the field to help with that. Ultimately, for me, it’s about the culture – are they a good cultural fit? Would that person fit into our organisation, would they have the right relationship with me? With the regional managers? With the teams at HQ here? Are they the right person for us? The true entrepreneurs are good at running their own business but they need to learn about telecoms, so that’s where the relationship is key with the regional manager that that works together. More importantly, what can they learn from our internals and what can our internals learn from the externals? And what can our retail estate of company-owned Vodafone stores learn from them and each other? It’s a kind of information gathering – what can they bring to the party that we can implement in the main estate as well?
What does the future hold for Vodafone?
Jon: We’re now looking to open in another 50 to 60 locations next year. The franchise model has made us realise that in a lot of smaller towns where before we wouldn’t have considered opening, well, now we can! So we’ll cover the cost of the fit-out and then, to the franchisee, we say straight away: “Here’s the keys, it’s your business” from day one. We’re trying to launch entrepreneurs onto the ladder, so I’m not going to ask someone to invest loads of capital into it, we’ll do that, that’s what we’re here for. We’re a global brand, we should be supporting you. We can be that supporting partner for you to get on your way in the world of entrepreneurship... become a franchisee for the first time and then use us to scale up and do other things. There’s bigger, wide-reaching plans, too! Next year, we’ve got more stores coming, which is great news. We’re sitting here in our new London digital HQ, we’ve got a thousand people now based in London driving our digital platforms – and that should be great news to our franchisees out there, because a lot of those people are working on improving the app so that customers aren’t coming in for low-level queries, they’re coming in for genuine acquisition. They’re working on lots of improvements to make things faster, make it easier to buy from us. In terms of Vodafone as a global brand, we’re investing a huge amount of money in the UK – £500million a year on a new 5G network, which will revolutionise the UK economy. With 5G, no one really knows what’s going to happen next, but we all know it’s going to totally change how people work and live. So our partners are brilliantly placed to work with a global corporation that’s going to continue to invest in a key market and enjoy the footfall and the customer base that’s going to come with that.
Lee: Speaking personally, I’m about to go into my 39th year in retail. When I look at the last 40 years, it’s unbelievable what the sector has gone through... What’s the next 10 going to bring? Who knows? I think all we can do is be real, good and true agents of change and respond to whatever the market wants us to do – and part of that is that all the stores we’re opening now are franchise partner agent stores.
Mark: For me, the more people I can make business owners that I personally brought to the business – and this is certainly a personal ambition – the more people we can do that with, the better! And, of course, put a bit more money in their pocket at the end of the day, too!