Franchisees Lead Unishippers Executive Team

Interview with Dan Lockwood, President of Unishippers, a $300 Million Shipping Franchise

Mr. Dan Lockwood, President of Unishippers Association, Inc.. and a franchisee, sat down to explain Unishippers' unusual practice of hiring its executives from among its franchisees. Most members of its executive team (four out of six) are franchisees. Nick Bibby, Principal of the Bibby Group and a 25-year veteran of franchising, described such a practice as unusual and impressive. “A franchisor's move of promoting franchisees to key franchisor management positions even trumps acceptance of franchisee associations," says Bibby. This and the company’s recent decision to begin selling new franchises after a ten-year hiatus sparked further investigation and this interview.

The result is a fascinating inside look at leadership decisions and structure in a seemingly collaborative franchise system.

Q: From your point of view, why promote from within your franchisee ranks and what advantages or disadvantages have you found with such a practice?

[Mr. Lockwood] The credit goes to Steve Nelson, one of the original founders of this company. He decided that if he could fill executive positions with successful franchise owners who would be able to lead and influence the system, then we would end up with better results than if we hired people outside the system. We all operated our franchises before we were officers here.

It speaks to the nature of our company culture, which is a highly collaborative one in the relationships that we have with franchise owners. The relationship between franchisor and franchisee can tend to be adversarial at times in some systems. We work closely with the President’s Advisory Council in bringing them into all of the decisions we make in going forward. We think it is a better way to run a company when franchise owners have a say in the decisions we make, when they share in the ownership of those decisions.

We are not just talking the talk, but we’ve also done everything that franchise owners have done in growing their businesses. There are few decisions that we make that test us in terms of whether it is good for the franchisor, but not good for the franchisee. From our perspective, the decisions have to be good for both.

There’s also a credibility factor. Although franchises are impacted one way or another on a regional basis, the executives here make system-level decisions. We have brought 10 leaders into our system (President’s Advisory Council members) who help us make those decisions. We rely on them heavily. It is the best way for the system to grow.

Currently, our roles as franchisees are very minimal. We have equity partners that are running the day-to-day operations of the franchises. We focus 100% of our time on our roles as executives for the franchisor.

Q: People can think alike if they are from similar backgrounds. Do you feel limited in having so many executives (four of six executives are franchisees) promoted from within the system?

Mr. Lockwood: The system decisions we make are done with 10 franchise owners. When that President’s Advisory Council was put together, it was with the thought of having a group of franchise owners more effective than a typical franchise advisory council. Some systems out there have a somewhat obligatory position in which franchise owners don’t really believe that they are contributing. It’s just something that the franchisor has to do in putting that group together. Whereas we were interested in putting together large-, small-, and medium-size franchises. We picked some who we knew were adversarial and brought them all into the mix. We agreed that when the majority came to a conclusion, everyone would support it.

We also have a Board of Directors with business experience outside of the franchise system that we draw on. There is sufficient diversity there. And we are more about looking for execution than innovation at this point.

Q: Why would someone buy a franchise that gives them the right to sell Unishippers services as opposed to just being a salesperson for a shipping company and receiving a commission with no franchise fees?

Mr. Lockwood: Franchise owners can sell their business to outside buyers. Employees cannot. That’s one of the things that separate an employee from an entrepreneur. Many franchise owners either want to sell the business or have a succession plan for passing it on.

Unishippers franchise owners can start off with a home-based business. But our franchise system is close to 300 separate franchises owned by 114 owner groups. The majority of owners have multiple franchises and commercial space where they carry on their business.

In our franchise, it is a lifestyle as well. Ours is different from many franchise systems in that we sell to small- and medium-size businesses during business hours. It is not working in retail or in food where you work nights and weekends. We are looking for the individual who is looking to own their own business, but wants standardized processes that will help them be successful.

Q: Last year The UPS Store network struggled to expand, as did PostNet. Yet FedEx Kinko’s announced major expansion plans to tap into small businesses through a new smaller retail model. In this given market, why is a UniShippers franchise attractive?

Mr. Lockwood: There is a distinct difference between FedEx-Kinkos, The UPS Store and us. That model — brick and mortar, retail presence — has really been there for the convenience of home-based businesses. Not to say that there aren’t some small-to-medium business (SMB) customers that they go after. But I’m not convinced that they provide much value for our niche of 50 – 100 employees. SMBs don’t go to the corner to do their shipping. They have daily stops.

The SMB market is driving a lot of the economic growth. That business segment is highly, highly profitable for a lot of businesses in this country. If you look at FedEx, UPS and DHL, it is where the bulk of the profitability comes from. The Fortune 1000 may fill the planes and trucks and keep the equipment moving, but the profits are driven by the growth in the SMB market. And that is our niche. It always has been.

There is increased competition, but it is a gigantic SMB market out there, which is increasing in size. There is a long way to go before the competition has a negative impact in that market.

Q: After ten years of not selling new franchises, why the aggressive franchise growth goals now? Is there something happening in the market to spur this on?

Mr. Lockwood: To stay in business, you have to aggressively grow. We take an approach in creating additional franchises to sell through the existing territories that we have, where the performance standards are not being met. Some franchises want to stay in the system, but they might not want the aggressive growth. This allows them to exist with some reduced growth requirements. And we put another franchisee in there with the right profile that’s ready to build the business. We just came to a point in time where there was a common agreement with our group of franchise leaders and much of our system that we needed to create aggressive growth strategies for sustainable growth in our system. We are looking at every avenue to bring on more market share.

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