Case Studies

by Crispin Caldicott

last updated 13/05/2011

Crispin Caldicott has written for Franchise New Zealand since 2001 and interviewed many franchises and franchisors during that time.

Rapid response helps as Christchurch franchises start recovery

by Crispin Caldicott

last updated 13/05/2011

Crispin Caldicott has written for Franchise New Zealand since 2001 and interviewed many franchises and franchisors during that time.

When the earthquake struck Canterbury, how did franchisees and franchisors fare? Crispin Caldicott finds out

The following article was written in November 2010 to investigate how franchises responded to the needs of their franchisees following the earthquake that hit Canterbury in September. Since than, the February 2011 quake has changed the landscapes and the lives of many in the region for ever. Kia kaha, Christchurch

When news came through of the big earthquake in Christchurch on the morning of Saturday September 4th, many of us wondered just how big the list of casualties was going to be. Incredibly, the city was spared death on top of destruction, but the calamity brought – and continues to bring ­– considerable disruption. Some businesses were destroyed, some were unable to operate, others were severely affected.

While Cantabrians of all ages were quick to help each other on a personal level, getting a business going again was more difficult. It’s at times like this that being part of a franchise can really help. The old adage about owning a franchise is that you are ‘In business for yourself but not by yourself,’ and in several cases initiative taken by the franchisors was crucial to restoring morale and helping franchisees get up and running again or start to minimise their losses. Equally, a number of franchisees pitched in spontaneously to help their clients out and ensure business could go on as well as possible.

Families, Franchisees, Customers

With its emphasis upon networking, camaraderie and monthly meetings, V.I.P. Home Services was quick off the mark to determine the extent of the damage. The wires were hot and buzzing on the day of the earthquake, as franchisor Estelle Logan recalls. ‘For most franchisees it was a matter of checking on their families first, then their fellow franchisees and then their customers. Sadly, two or three franchisees’ homes will probably have to be demolished. One told me how they used to walk down to their lounge, but today they have to walk up to it as the house is so twisted. It is not easy for Cantabrians generally – some homes that were untouched initially have developed cracks later, which creates an atmosphere of unease and uncertainty.’

Needless to say, Estelle was in Christchurch as soon as feasible checking on the welfare of her franchisees, and has paid several subsequent visits. While she has done what she can, it’s the reaction of other V.I.P. franchisees that has made her most proud. ‘The franchise as a whole has rallied to the cause,’ she says. ‘After a meeting in Tauranga, one franchisee raised the question of what they could do to let their Christchurch colleagues they were thinking of them and were prepared to help them through this time. He suggested clubbing together to send them the price of a box of beer or a couple of bottles of wine.

‘We thought this was an excellent idea so we put it out to all the other franchisees and said we would match anything they raised dollar-for-dollar. The bank set up an account for donations for us, free of charge, and then our counterparts in V.I.P. Australia said they would also chip in to the tune of two-for-one! The end result will be a nice bonus to all our Christchurch franchisees at Christmas from their fellow franchisees and franchisors in both New Zealand and Australia.’

It’s not the first time the V.I.P franchisees have shown that sort of community spirit – a few years ago, a relatively new franchisee had all his equipment stolen, but a single phone call to the support office had him back in business the same day with borrowed equipment from all sorts of places.

Fortunately, the fund-raising effort has produced rather more than the price of a beer as the after-effects of the earthquake have affected work in the area. V.I.P’s customers have been affected too and many people were obliged to take time off to deal with varying situations, with subsequent loss of income. ‘The franchisees have been very supportive toward each other, both morally and physically,’ says Estelle. ‘Many of their customers are in very difficult positions, so that makes it very hard to charge. It’s certainly not a short-term business building opportunity, but it is being seen by us and all our franchisees as a great opportunity to help and build goodwill.’

Ian Watson is one of those V.I.P franchisees who will have to watch his house come off second-best to a bulldozer in the future. Built on destabilised land, it is one of several that has been condemned although it is at least inhabitable for the time being. ‘We were all pretty numb after the quake,’ he says, ‘and the strange thing is it all feels so long ago. Having our regular franchisee meetings has been a great outlet for us all here – quite a bonus at this time, and it’s been great to be able to share experiences with others. But things are getting back to normal, and one certainty is there will be a lot of landscaping work to share around amongst us over the next few years!’

Losing Half The Franchise ‘Just Another Challenge’

Franchising your own business has many pitfalls, but earthquakes aren’t usually among those listed even by the most thorough consultants. In the last issue of Franchise New Zealand, we featured New York Deli’s two outlets in Christchurch – sadly, there’s now only one, the original store having been demolished even before assessment. Franchisor Ian Coker jokes that it pays to maintain an excellent relationship with your insurance broker under those kinds of circumstances. ‘It’s something that people don’t always think about, or take for granted, but if you want a quick payout it can make a difference.’

The New York Deli, famous for its ‘Big Hero’ sandwiches, had been operating in Victoria Street for three years, and was only recently joined by its second company-owned pilot store in Regent Street. Despite the disaster of losing an entire outlet, Ian and his team have taken a lot of positives from the experience. Ian says that it has allowed them to concentrate their efforts on franchise development and has certainly proved his belief that the business offers something special. ‘The vast majority of clients have simply transferred their custom from one store to the other; we’ve been very impressed at how loyal our customers have been to our brand. There really isn’t anything like us in Christchurch and many customers wanted to come in and shake us by the hand and say how sorry they were at our loss – it was really quite touching. So we were fortunate that we already had the second site up and running and it is now doing double the business!’

Ian believes that business will be back to normal in Christchurch after Christmas and has determined that expansion of the brand will be broad. ‘The more you grow, the more franchisees, you have in different places the less any individual disaster impacts upon the whole business,’ he says. ‘Overcoming this set-back has been just another challenge, and I think we are on the other side of it already. In times of crisis, it is essential to increase contact with people. It is too easy to assume people are working through the problems because they don’t pick up the phone to ask for help. You must be pro-active and that is a lesson we will carry into the future.’

Focus On The Immediate Business

Like New York Deli, Acardo Workplace Safety Supplies only began franchising this year after 15 years in business. As Peter Gillman admits, the move to franchise new outlets has been severely interrupted by the upheaval.  A full-time fireman for 18 years Peter is very familiar with the psychological effects of accident and trauma upon people. ‘We found a lot of people, including some of our staff were just not functioning. It was hard for them to think about ordinary things like work when they were worried about the state of their homes or the fear of another earthquake.’

And despite being in the workplace safety industry, the quake did set Acardo’s franchising plans back a few months. ‘We decided the immediate need was to concentrate on the existing business rather than try and expand. Our own office was damaged; although we didn’t actually have to evacuate the building, a big section of the floor has been pushed up and will need to be planed and refixed. A lot of people and businesses are a lot worse off than we are, though, and there are years of work ahead.’ Despite mourning the loss of so many of Christchurch’s distinctive and venerable buildings, though, Peter can still smile. ‘We sold out of safety tape and hard hats quite quickly!’

On The Plane, On The Spot

One problem in the aftermath of an upheaval on this scale is hygiene, and possible water contamination. Garry Croft, general manager of Muffin Break and Jamaica Blue, was very glad he flew down to the city on the Monday immediately following the quake, as few people realised that espresso coffee machines do not actually boil the water delivered to the coffee cup. Apart from helping with the tidy-up, with his extensive experience Garry was also able to provide some important leadership. ‘We disconnected all the stores from the town water supply, bought dozens of plastic containers and spent much of the night boiling water to use. We were a day or two ahead of most in the industry, and all bar one of our eight stores was up and running safely within 24 hours as a result. Civil Defence and the health authorities got involved very early, quite rightly, and without these measures we would have been unable to provide the shaken Cantabrians with their much-needed coffees.’

Garry worked closely with his franchisees and one of the things most noticeable was that the coffee shops became a kind of safe haven for people to meet and exchange experiences. ‘Understanding the vulnerabilities of the situation and being able to serve our customers made all the difference to our franchisees,’ he says. ‘To ensure food and hygiene safety for our customers, we moved everything to paper cups and plates to avoid using water for dish-washing. We ensured batches of muffins went to community support groups on a regular basis and in some ways, I guess, the days immediately following the quake turned into quite a positive experience for us because meeting over a coffee at Muffin Break became a kind of city institution – people appreciated a familiar and reliable face.’

The Franchise Spirit

For Paramount Services franchisees, cleaning up is all in the day’s work but few ever anticipated anything on this scale when they bought their businesses. Nonetheless, they responded spontaneously with a level of commitment that amazed Andrew Clark, Paramount’s South Island regional manager. ‘I started ringing round all our clients early on the Saturday morning immediately following the quake to find out what assistance they needed, but in many cases the franchisees had already called them or arrived and started work. We have contracts with Hoyts Cinemas and quite a number of 24-hour operations. Many had sprinklers which had gone off so there was a lot of water damage to deal with, quite apart from all the other muck. What was so heartening for us was seeing the community spirit our people demonstrated. One franchisee actually cycled in from his home only 90 minutes after the quake to re-do the job he had completed the night before. He had practically completed the clean-up before the owner even turned up!’

‘We have all very much taken it on the chin,’ says Andrew. ‘In the centre of town, a lot of the high-rise buildings were closed off but rather than getting upset over loss of income, our people have knuckled down to help clients who have in many cases been less fortunate. They are very philosophical about it: they reckon they are very lucky still to be in business, whereas a lot of small businesses – including some franchises – don’t have any premises left or anything to trade with.

‘We were very proud of our people’s spirit. Just as they have supported others, so we are proud to go on supporting our franchisees as things slowly get back to near-normal.’

Read one franchisee's experience of the February 22 earthquake.

Download the support kit for franchisees hit by disaster.

Do you have stories of how you, your family and your franchise fared after the quakes? We'd love to hear from you.

Crispin Caldicott has written for Franchise New Zealand since 2001 and interviewed many franchises and franchisors during that time.

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