Industry changes can bring succession issues to your door when you don’t expect them. Like many retail and service businesses, the travel industry has been consolidating into larger corporate groups, which share back-end operations, marketing campaigns and purchasing power. Stand alone, independent outfits find it hard to compete against these national or international chains.
Six years ago, Mary Shields worked for an independent travel agent in Milford on Auckland’s North Shore. While she didn’t own it, Shields was an integral part of the business. But she had ambitions. However, when she was ready to take a step into business ownership, she faced two problems. First, in the small community of Milford, there wasn’t enough room for two travel agencies. “I didn’t want a situation where I was simply walking out and taking files clandestinely,” she says.
So instead, Shields took a deep breath—and bought out the business that had employed her. “It meant a clean break. I took the customers, phone number and fax with me across the road. It was ideal—if expensive. Competition was eliminated, and there was no bad feeling.”
So far so good. But Shields could also see the larger industry trend towards consolidation. So instead of waiting for a group to put her out of business, she joined up, with House of Travel, New Zealand’s largest travel franchise chain.
“I’d known [House of Travel founder] Chris Paulsen from an earlier job with an airline. I’d always thought if I did go out on my own, House of Travel would be the way to go.”
With an existing House of Travel branch already in nearby Takapuna, Shields didn’t raise her hopes of becoming a House of Travel franchisee.
“But then House of Travel approached me to see if I’d be interested,” she says.
House of Travel operates a 50/50 joint venture approach to its franchises. Franchisees like Mary benefit from the enormous buying power and marketing reach that the big brand can play.
Not all franchises are created equal and Shields has advice for any business owner looking to buy into one: “investigate the franchise very carefully. Make sure the model is right long-term and you have trust in that hierachy. A solid line of communication is essential.
“Work blimmin’ hard,” she adds. “Your franchise brand will carry you to a certain extent, but you do have to market within your own community. People don’t shift their brand loyalty very easily, they have to feel very comfortable with the new brand.”
This story originally appeared in Succeed.
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