“You’re not the kind of franchise applicant we usually get,” said Harry Robertson, company lawyer for the Body Shop Canada, as he opened his meeting with potential franchisee Richard Paul. “I suppose we’ll find out whether that’s an advantage or disadvantage,” replied Mr. Paul. Mr. Robertson’s comment had taken Mr. Paul by surprise, and though he was pleased with his response, the comment had produced a sinking feeling in the pit of his stomach.
Mr. Paul, age 36, was about to graduate from the M.B.A. program at the University of Western Ontario. His employment background included a stint as a high-school business education teacher and seven years of retail management. He had managed independent stores and also had managed for one of Canada’s national department store chains.
He had investigated a number of job possibilities, but had received no offers and was still unclear about the direction he wished to follow. His strengths appeared to lie in the marketing and human resources area. He had little interest in joining a major retail company: “I’ve been on that treadmill before,” he said. He felt that whatever his eventual career choice would be, he wanted to do “something that will make some differences to me and to others.” The idea of working for himself was appealing: “At least I’d be sweating to put money in my own pocket.”
While perusing the job advertisements in the Globe and Mail, he came across one placed by the Body Shop Canada. The notice stated that the company had a number of operating stores available for franchise, including locations in City A and City B. Mr. Paul was aware of the company’s enormous international success and was surprised to discover that franchises might be available. Furthermore, he had never known the Body Shop Canada to advertise for franchisees.
The Body Shop
The Body Shop was the brainchild of Anita Roddick, a forward thinking Briton with a strong commitment to an ideal. The company offered conventional consumer products with a twist: it sold only naturally based products and disdained its competitors’ exaggerated product claims. In fact, it did no advertising at all. The company positioned itself as a champion of social responsibility and activism. It promoted holistic health, environmental responsibility, charitable acts, Third World development, women’s issues and other causes. It generated considerable publicity for itself by these means.
In the 14 years since its founding, one little store had grown into a chain of over 450 stores located in 37 countries worldwide. In Canada there were 72 shops – 56 franchised and 16 corporate owned.
The Body Shop Canada stores, averaging about 100 square meters, were in prime retail locations, either on main shopping arteries or in mall. Stores sold only proprietary products, always at “list prices.” There were no sales and there was no discounting. The line consisted of nearly 400 items that could be purchased at every store or ordered from stores through the mail. All stores were of similar appearance; they were decorated in identical colour schemes, with displays, fixtures, and even window displays standardized from store to store across the country. Customers tended to be loyal, even fanatical, in their support of the company. Once someone became a customer, he or she would probably not purchase a competitor’s product again.
The Initial Contact
Mr. Paul was well aware of the success record of franchise operations, and of this one in particular. In fact, he had just attended a conference where a major national retailer had spoken of the Body Shop Canada in glowing terms! However, he had never given any serious consideration to purchasing a franchise. He thought that for someone with imagination and good business sense, a franchise would be far too restrictive. However, with a “what have I got to lose?” mentality, he wrote to the address listed in the...