What to do when your brand needs a facelift
The new Huddle House design
Though claiming to be the fastest-growing franchise in the $300- million paint and sip industry, Pinot’s Palette did not have a brand image that conveyed such a lofty status.
To fix the problem, the Houston-based franchisor in June 2016 launched a rebranding effort with a new mosaic logo to better reflect the services it offers. The makeover calls for fresh paint jobs and décor at all new studios across the system.
It is not alone, with many systems looking to launch a refresh. Those who have done it say it is critical for franchisors to consult with franchisees before making such a major move.
For one reason, rebrandings cost money. Co-founder and CEO Craig Ceccanti says Pinot’s Palette rebranding will cost about $1.5 million, with franchisees paying 30 percent of the expense. Explaining the significance of the revamped image, Ceccanti says, “Getting away from the ocean of mom and pop paint splashes was critical for us to stand out and show our sophistication.”
The old Huddle House design
Pinot’s Palette had 111 franchise units and four corporate stores in 37 states, plus one in Toronto, as of August. The update has been completed at 25 locations in 14 states . The company’s goal is 60 percent of the locations be updated by the end of 2016.
The brand is offering franchisees an incentive program that will pay 70 percent of their update costs if they complete the facelift by late this year.
Ceccanti says Pinot’s Palette was already experiencing 40 to 50 percent annual systemwide sales growth, and he sees the changes pushing those sales even higher.
The franchisor also launched a new mobile responsive website and a rewards program along with the new brand. These three initiatives in concert are expected to boost systemwide sales by an additional 8 to 12 percent annually, the company believes. Ceccanti projects sales of $37 million in 2016 for the entire company.
Alerting customers to change
So what strategic reasons might compel a franchisor to consider rebranding? Franchisors who are growing or expanding into new markets or adding new products or services may change their name or image to reflect their new concept and alert consumers of the changes to services, says Anya Nowakowski, senior research analyst at FRANdata, a franchise-focused research firm in Arlington, Virginia.
In situations where there are economic or consumer shifts, franchisors might rebrand to stay up to date with consumer preferences and trends as well as set themselves apart from competitors. “The best time to launch a rebrand is during a period of time with a lot of franchise agreement renewals, at which point, franchisees are already obligated and expected to invest additional capital in their business,” Nowakowski says.
Aire Serv’s old vehicle wrap; started in 1992, Aire Serv embarked on a brand refresh in February after working with its franchise advisory council and an outside agency.
Yet, franchisors should be aware of potential rebranding pitfalls. A big challenge for franchisors is maintaining brand and image consistency across all of its franchised units. “It’s important for the franchisor to work with franchisees from early in the decision-making process to ensure 100 percent franchisee buy-in. Helping franchisees understand the reasoning and strategy behind a rebranding initiative and how it will benefit their business’s sales and bottom lines, will increase their support and willingness to pay for it,” Nowakowski says.
As part of a new design model called “Evolution” started in 2014, Huddle House is continuing a rebranding that includes a fresh prototype and many enhancements for its restaurants.
The changes include a signature tall tower entrance on the exterior, updated signage, plush seating, contemporary furniture, warm colors and LED lighting. The franchisor slightly boosted the size of restaurants to allow franchisees to serve more people and hopefully drive up sales.
“This is the first time we have embarked upon a major remodeling of our exterior,” says Christina Chambers, Huddle House’s vice president of franchising. The 52-year-old Atlanta-based brand had 357 franchises and 14 company stores as of August.
Huddle House has paid $2 million to franchisees to make the upgrades since 2012 when it launched a systemwide remodeling program. The $25,000 incentive is still used today.
Chambers says the first remodels were corporate locations. The brand then offered the program to its highest volume, largest franchisees to get their buy-in and offered them the incentive to be the first group. “It worked and they helped influence other franchisees to join the program.”
Depending on the store’s age and level of remodel needed, Chambers says franchisees have invested anywhere from $100,000 to $200,000 per location.
As of August, 46 percent of Huddle House’s restaurants have been remodeled or opened with the new design. The strategy is paying off. Chambers says the average unit volumes of those restaurants are 29 percent higher than non-remodeled stores. By 2019, Huddle House expects 75 percent of all its restaurants will be remodeled.
Aire Serv’s new look
Waco, Texas-based Aire Serv Heating & Air Conditioning, with 208 franchise units in the U.S. and Canada, initiated a rebranding effort in February 2016 after working with its franchise advisory council and an outside agency to review all of its operations from a marketing perspective. Aire Serv was started in 1992.
The process resulted in a brand refresh that includes a new logo, website, uniforms, signage and all new marketing collateral. Another big change: new wraps for a fleet of 1,000-plus service vehicles used by franchisees. “The process included clearly defining our long-term objectives, identifying our very best target customer and then crafting an identify and positioning strategy to engage with our clientele,” says Steve Truett, president of Aire Serv, a unit of The Dwyer Group.
The major expense for franchisees is vehicle wraps. The franchisor is offering an incentive that allows franchisees to get a rebate on marketing, advertising and promotion fees paid in 2015 to help offset their cost of rewrapping their vehicles if they do so by December 2016. The plan could help a franchisee rewrap up to six vehicles.
Truett projects that more than 90 percent of franchisees will commit to the vehicle rewrap project by next spring. He says the franchisor and franchisees are investing a substantial amount of money and time into the new look, and so far, so good.
“We are still very early in the process but anecdotally, the refresh has been enthusiastically embraced by our franchisees and consumers,” he says.