John Baladakis says he is high on life. He has every right to be. In partnership with his brother, Peter and father, Alex, the self-proclaimed headstrong 40-year-old has achieved what many entrepreneurs can only dream of – ownership of seven highly successful Pick n Pay supermarket franchise stores, Pick n Pay liquor stores and Pick n Pay clothing stores, all within the retail giant’s thriving franchise system.
Born into a family of entrepreneurs, even as a teenager Baladakis knew that he would run his own business and never work for anyone else – being employed was just not an option.
He began his relationship with Pick n Pay in 1994, acquiring his first franchise when he was just 24. The supermarket in the Kempton Gate Shopping Centre located in Edleen, Kempton Park, flourished from day one. That was the beginning of a relationship with the retail group that has endured for 16 years and is still going strong. Baladakis recalls: “I had a BCom degree and a lot of retail experience which I’d gained through working at my father’s Spar supermarkets. Pick n Pay had just started franchising and my father, my brother and I were very keen to buy into a business with such a strong brand.”
Innovating within the box
How does an entrepreneurial spirit succeed within the franchise system? It is a well known fact that entrepreneurs have an almost uncontrollable urge to reinvent the wheel based on their confidence in their ability to figure out how things should be done. “I believe the key to being a successful franchisee and, at the same time giving free rein to your entrepreneurial drive, is to recognise that you can have the best of both worlds,” says Baladakis.
“A successful franchisor offers proven operational, marketing, HR and financial systems, as well as a trusted and highly valued brand. Combine that corporate systems thinking with your entrepreneurial flair, and you have a winning formula that enables you to avoid making mistakes and to become successful more quickly.”
Baladakis believes that while innovation may sometimes be curtailed by a franchising system, this has not been his experience with Pick n Pay. “We actually have a fair amount of freedom when it comes to issues like new marketing ideas within our stores. As one example, we have developed a hot food section that is quite unique in its offering. I believe in working within the box rather than trying to break it. What’s the point of expending your energies on things you can’t change? Rather find ways to work innovatively within the parameters.”
Traditionally the franchisee-franchisor relationship can be fraught with problems.
But Baladakis’s attitude has paved the way for a profitable partnership built carefully over time. Franchisors have to understand how important it is to nurture their franchisees and the franchisees need to trust the franchisor. Baladakis has this to say about his franchisor: “We have never had issues with head office.
The people I deal with are people I have built a long and healthy relationship with – they trust me as I trust them. In my view, every new franchisee has a duty to become trustworthy.”
Choosing the franchise
Baladakis stresses that two-way communication between the franchisee and franchisor is a key element to the success of the relationship.
He also notes that he was fortunate in choosing to partner with a franchisor that ‘got it right’ when it comes to franchise management. “It’s a system,” he says, “that creates wealth for people.”
Although the Pick n Pay franchise system was new at the time that Baladakis bought into it, there were several compelling reasons driving his decision. The strength of the brand and its power were amongst those, as was the company’s history and profitability. He believed in the brand. But his own passion for retail played a role too. “You have to love the business you choose to go into,” he stresses. “It becomes an integral part of your life. Understand that as a franchisee you have to sacrifice any of the comforts that a regular job gives you – there are no coffee breaks, corporate lunches or long weekends.”
Baladakis has some words of advice for people who are thinking about buying a franchise: “Speak to existing franchisees; look at the history of the franchise as well as the number and location of stores; get a detailed model of the business operation; and find out how profitable the franchise is. In addition, make sure you know what the set-up costs are and what that includes, such as design, building costs, equipment and so on. Determine upfront what the ongoing fees are, like joining fees, royalties and advertising costs.”
Building a successful outlet
In the retail industry, a customer-friendly environment is critical. Baladakis has succeeded in getting it right time and again. “You have to believe in the franchisor’s customer service philosophy, otherwise you will not be able to transfer it to your employees.”
Standards are important too, he adds. Consistency is vital – from cleanliness, to merchandising, to the way a till packer packs a bag – these all need to comply with a high standard. “The customer has to be able to rely on a certain level of service that is associated with the brand, so you cannot deviate from the standards that have been set because you will sacrifice customer loyalty, and that is what impacts the bottom line,” he says.
Site selection is another vital aspect. “A good franchisor will assist franchisees with the identification of a great site. They have the resources and experience to do so. It’s also in their interest to ensure the site is viable, as failure is bad for the brand.”
Another consideration when it comes to site location is the position of the store itself within a centre. “You need to determine how accessible the store is and whether it’s located close to the parking lot so that people can easily unpack their trolleys. When it comes to location, it’s also important to understand the local community. Who is your target market? Are they low income earners or affluent consumers? This has a major impact on the items you stock,” he explains
But the Baladakis team also did something different that has helped to cement the success of the stores they operate. “Although I love being on the shop floor, I have moved into focusing on growing our property portfolio, while Peter runs the actual stores,” says Baladakis.
“As a result, we now own five of the seven centres in which our stores are situated. This gives us an enormous advantage as we are able to pick and choose tenants. By turning the centres into better places for people to shop, we are able to drive traffic to our stores. It’s a level of control that not every franchisee has.”
Developing the team
Baladakis has been fortunate to have two partners who are family, and who bring their own retail and financial experience to the business. They now employ more than 500 people in their stores. “We make our own employment decisions,” says Baladakis. “Every store has a manager and a second-in-charge individual. When we appoint people, we look at the individual, rather than his or her experience. Systems and skills can be taught, but drive and commitment are rare qualities. It’s also important to know at what stage in its lifecycle a business is in when you are making hiring decisions. An older, established business that has been around for a while needs a stabiliser, while a new business requires the energy of a go-getter. A store that has high shrinkage rates needs someone who pays attention to detail and cares about security.”
When it comes to staff motivation, every single employee is inducted into the business and learns about the brand ethos from the outset. Having access to the franchisors’ training policies and procedures obviously has a positive impact on establishing and maintaining one’s staff complement, but giving staff inspiration is also of vital importance.
Contact Pick n Pay Franchising on: +27 11 856 7000
Pick n Pay franchising fast facts*
- There are currently 291 franchised Pick n Pay stores in South Africa, Botswana, Namibia, Lesotho and Swaziland
- The minimum investment required is R9,152 million, including stock, for a family supermarket
- Ongoing operating costs vary from store to store
- Franchisees must have previous retail management experience
- Pick n Pay won the FASA Franchisor of the Year award in 2009. The award celebrates the success of a franchisor which has made a significant impact in the marketplace and has, through effective business management and marketing, achieved outstanding financial results and significant growth in a sector. The group converted 49 Score Supermarkets over 2008 and 2009 to Pick n Pay Franchise stores
* Information supplied by Anton Smith, GM, Franchise, Pick n Pay
The habits of effective franchisees
John Baladakis shared his ‘habits of effective franchisees’ at a recent franchisee networking breakfast hosted by Standard Bank and the Franchise Association of South Africa. They were:
- Engage the customer
The closer you are to the customer, the higher your success rate. Excellent service should be seen as an investment because bad customer service loses you business and therefore profit.
- Set the standards
Every day should be opening day. Your business needs to be consistent and maintain the same standard you set on your opening day.
- Lead the team
Leadership is more than just being the boss. You need to pick a direction and stick to it. Don’t lose focus on the target, adjust the course when necessary to get there, but never take your aim off the goal.
- Improve one thing daily. Innovate
Find ways to cut costs, to improve the customer experience, and to basically run your business more efficiently.
- Make excellence happen
Find ways to push the goals further. You should strive to make your success today bigger than yesterday’s excellence.
These habits combined, Baladakis says, will ensure that franchisees run successful businesses, giving them the opportunity to make a positive contribution to the economy.
A Franchisee’s Perspective is published by superbean.net. For more information visit www.superbean.net