In 1951, Joe Oberweis, son of dairy founder Peter Oberweis, opened the company’s first retail outlet, selling the company’s products along with ice cream sundaes and other concoctions.
So it seems fitting and pleasantly circular that Joe’s grandson, president and CEO of the Oberweis Franchise Systems and also named Joe, is in line to take the concept started by his grandfather national.
“A retail storefront really drives a brand a lot more than trucks driving around because people don’t really know what it is,” says the younger Oberweis. “When they see a storefront, they can go in and try it. That changes the brand pretty significantly.”
The company has signed agreements with franchisees to open stores as far west as Kansas City and as far east as Detroit, and plans to open 300 stores by the end of 2009. There are 35 company-owned stores around Chicago and in St. Louis, and there are agreements for Indianapolis, the Milwaukee area and additional stores in Chicago.
Smart Business spoke with Oberweis about how he plans to build the franchise business as carefully as employees craft a Cowabunga Cappuccino Moo-Cooler.
Why did the Oberweis Dairy create a franchising division?
The logic behind it was twofold. We believed that we had built the systems that could take our store concept beyond the regional Midwest to the national scene. There are different ways to grow a business, and we believe that franchising is the best for our business for a couple of reasons.
No. 1, it allows people who are investing in the brand — they’re not actually investing in the Oberweis company — by entering into an agreement with us. They’re also physically working in the store.
If you’ve got the money closer to the (franchisee), when they’re making a business decision, they’re making it with their own money. We believe that could be a substantial advantage to us.
What’s involved in opening a store once the deal is signed?
First, you’ve got to find a location. Then you’ve got to negotiate with the landlord and enter into a lease. Then you have to find a contractor; then you have to get your plans approved.
Then you’ve got to all the construction, all the pre-opening stuff, hire, train, find all the people, do your marketing and finally, open the doors. We’re look at nine months to one year from the time people sign to the time that they opened.
What risks did you identify before moving ahead with a franchising approach?
I wouldn’t necessarily say it was a risk. For us, it was a comfort level and that was, what happens to the brand? How do we make sure that we are maintaining the quality of the brand that we have built?
We felt that it came down to two things. No. 1 is setting the deal right and structuring the agreement — protecting ourselves from a legal standpoint, and then (No. 2) building the relationship with the franchisees after they’re on board. It does mean that we have to be ready to enforce the agreement to protect ourselves and also to protect the other franchisees.
The reality is we want to take this agreement, put it on the shelf and let it collect dust. We don’t want this to be about the franchise agreement, but at the end of the day, if we have to resort to it, it’s there.
What has adding a franchise business done to the structure to Oberweis’ operations?
It really hasn’t changed it that much. At the end of the day, we are really maintaining a single operations channel so that our company-owned stores and franchise stores are going through the same process for opening for training. A company store manager is going to be going through training side-by-side with a franchisee.
How do you make sure franchisees follow the Oberweis philosophy?
Training, training, training. I’m exaggerating a little bit. It’s a combination of training and building relationships with them so that they understand why.
With a franchisee, the best thing we can do is to leverage their buy-in and provide them with training — get them to understand our philosophy, get them to agree with it and buy into it, and then train them on how to live it. Those things together should give us a pretty good result.
How will you communicate with franchisees on an ongoing basis?
We will have a field operations manager that will be interacting with them. A field operations manager is going to basically be their primary point of contact. They’re going to be their mentor, their trainer, also play a little bit of the enforcer role as well — make sure they are following system standards.
They’ll also have a marketing manager — someone who will be there to help them build their sales plans and grow their sales, etc.
What do you look for in franchisees?
We’ve been extremely picky. The vast majority of people who’ve wanted to move forward in the process have been eliminated by us. We are eliminating about half the people (even) after the very last step.
We’re looking for raving fans, people who love our products, know that they are the best in the world, and take them to their area. We are looking for people who are excited to be in that environment.
It’s a different environment. It’s not working in an office. The last part of it is, there has to be some basic level of business experience or understanding.
How do you find those franchisees?
Word of mouth has been one of the biggest things. We’ve had a lot of response from articles that have been written about us. We’ve had a lot of people who are from the area — they are transplants or they have family that lives in Chicago, and someone says, ‘You’ve go to try this place. It’s great.’ They inquire from that standpoint.
We’ve run a couple of seminars. We run a couple of ads in newspapers, and then people come in. Really, we’re looking for the former group — the group who is really, really excited.
How will your management style change as the company adds franchises?
Certainly, as you go from 10 franchisees to 200, from an economic standpoint, you have to allocate this scarce resource of time. I’m going to be further removed from being able to know everybody personally, but it’s fully my intention to do everything I can do to maintain that connection, to know them all as well as I possibly can.
What has been the biggest surprise to this point?
I couldn’t say there were any unpleasant surprises. The pleasant surprises abound. We had terrific response from people. Maybe the fact that there haven’t been more surprises — things have gone as we expected.
We’ve had a good number of people responding; we’ve done a really, really good job of getting ahead of the queue, building relationships, getting to know everybody.
What has been the biggest challenge to date?
The biggest challenge is what a friend of mine calls the organizational lag theory. That is, at any given point, someone who is a change agent is ahead of where (others are) in terms of interest and buy-in to a new idea, to a change in direction of the company.
It’s a fairly basic concept, but living it is something different. One of the biggest challenges has been trying to get everybody on the same sheet of music and let them really truly understand where the company is going.
HOW TO REACH: Oberweis Franchise Systems, (630) 801-6100 or www.oberweisdairy.com
