Franchise Alternative

Life is Good has another simpler method of selling its t-shirts to the public instead of using corporate owned or franchised storefronts (Inc. magazine):

The ubiquity of its products notwithstanding, Life Is Good doesn’t want to be Starbucks. The Jacobses detest the homogenization of retail that is turning downtowns into Stepford zones and possess an abiding affection for the mom-and-pops that have always been their backbone. Rather than Gap-ify, they plan to open no more than five to 10 corporate stores in total.

But without a glut of company stores, Life Is Good had no widespread physical showcase for its eclectic product line, which fills a 136-page catalog and includes tire covers, picture frames, and dog toys. Franchising would send the iconoclastic Jacobses down cookie-cutter lane and entail the assumption of legal liabilities; in addition franchisees couldn’t benefit from corporate advertising, given that Life Is Good doesn’t do any. So the brothers hit upon an intriguing alternative: Genuine Neighborhood Shoppes. A GNS is an independently owned and operated business that sells Life Is Good products and nothing else. GNS owners get some signage, a 10 percent discount on merchandise, a few exclusive products, and as much or as little help setting up stores as they desire. They pay no franchise fees, but they do agree to propagate the Life Is Good philanthropy model (more on that later) in their communities. The company expects to eventually have 300 such stores; there are now 40, most run by retailers who have a history with the company or by former or current Life Is Good employees.

So, for example, Shannon and Michael Bourassa and Shannon’s brother Sean Patel recently opened Blue Monkey Trading Co., a GNS in Tucson. The Bourassas are steeped in Life Is Good culture–Michael has worked there for five years and is head of the receiving department–so they eagerly accepted the company’s help with layout, merchandizing, website art, signage, and fixtures. “We really haven’t come up with much ourselves,” says Shannon Bourassa, who handles the finances from the couple’s home in New Hampshire while her brother manages operations in Arizona.

Bob Ehrlich, by contrast, designed his own layout and décor for Simply Comfortable, a GNS in Lahaska, Pennsylvania. Ehrlich needed flexible shelving to accommodate a very small space and chose white fixtures to make the products’ colors stand out. (Life Is Good favors natural wooden floors and walls made from dismantled barns.) “They’re up in New England so they have a somewhat different point of view, but they looked at my plans and understood what I was doing,” says Ehrlich.

“I think this notion of avoiding the cookie-cutter approach is cutting-edge, like mass customization where you’re able to adapt something to a local market,” says Frank Hoy, director of the Centers for Entrepreneurial Development, Advancement, Research and Support at the University of Texas at El Paso. “It also gives both the licensing company and the licensee more flexibility in their relationship.” The cost is in control, says Hoy. As GNSs proliferate, “they will end up with more people in their network they don’t know, and so trust counts for less.”

While the franchise-less approach to distribution is not new, it should remind folks that buying a franchise is not the only way to enter into a paved path to small business ownership.

Similar Posts:

• Krispy Kreme Example – Leases
• Pet Franchises
• McDonald’s Margins
• Giordano’s, You Fool
• Ground Round on Rebound