Sometimes tough decisions have to be made, just ask WSI president Ron McArthur. In 2008, WSI lost 350 franchisees – 18 percent of the WSI network at the time – as a result of a major shift WSI made in 2006 to focus on consulting and education: educating companies on how to leverage the Internet and profit from it. The value that WSI had previously delivered to clients through web site building had diminished as technology improved. Businesses had a new need – Internet marketing solutions – and WSI was poised to deliver.
“The Internet moves so fast. Over the years, WSI has had 19 major franchised competitors and only two remain,” McArthur said. “The reason is because the industry changes so fast.”
A certification program was offered to all WSI franchisees when the transition was made. Twenty-five to 30 percent took advantage at the onset and more have followed suit, but for many of the “tech-oriented” franchisees that WSI had attracted in its earlier years – those who were entrenched in web site building – the transition was a difficult one. As their five-year franchise agreements expired, they were left with a difficult decision.
“They fast realized the value they were bringing to end clients was diminishing,” said McArthur of those who chose not to renew their agreements. “Those that didn’t make the shift saw their revenues decline substantially.”
While the departures were substantial, WSI quickly absorbed the loss, awarding 174 and 175 franchises in 2007 and 2008, respectively. WSI expects to add another 225 franchisees in 2009, many with strong general business and sales and marketing backgrounds.
Through its Internet Consultant Advisory Council (ICAC), area representatives and many other avenues, WSI has proven extremely successful in leveraging the intellectual capital and experience of its franchisees in the field to make decisions that best serve the entire franchise network, and in turn, WSI’s end clients.
“Franchisors typically have very rigid standards about what a franchisee can and can’t do,” McArthur said. “We realized if we put those rigid standards on our business, it might actually constrain our ability to adapt. We see our franchisees as on ongoing learning laboratory.”
While some WSI franchisees were not willing to change, it was a majority of their peers who recognized the need to change and backed systemwide adoption of WSI’s new focus on Internet marketing.
“Those who had become very profitable as a result of the transition wanted continuity across the network,” McArthur said. “You can’t have some franchisees focusing on different things. When companies like Google or Yahoo approach us to form partnerships, they want to know we’re committed to the continuity of the network. They don’t want to train some of our franchisees who may or may not be willing to promote Internet marketing.”
While such a loss of franchisees might have hobbled other companies, WSI overcame it with little disruption and this year is projecting its systemwide revenues to increase 12 to 15 percent.
“The numbers of franchisees diminished, but we have continued to experience outstanding growth,” McArthur said. “Some of the franchisees had lost interest. What they had really purchased in a franchise didn’t exist any longer because the franchise had evolved so dramatically. They elected to say ‘no’ and moved on.
“There was very little, if any animosity from those who left. We work very closely with our franchise network to develop and enhance relationships. By and large, our franchise community is very pleased with what we’re doing. Our business model changes regularly. We have to be on top of changing trends and technology and I think we do a decent job of it. But a few years ago when the market shifted so dramatically along with the needs of our clients, some of our older franchisees simply said it wasn’t their game anymore.”