How To Franchise PR
On a rainy morning in Charlotte, Mike and Kathy Butler, founders of the PRstore, are hunkered down in a conference room, teaching the intricacies of logos, letterheads, and lamination to some new franchisees. "Let your customers know that you'll help them look like a big company even though they don't have a lot of money to spend," Mike tells his audience. The goal is simplicity, a theme that extends to almost everything the company does. The PRstore is a growing national chain that aims to demystify marketing for small businesses.
The Butlers both spent careers in advertising agencies and in public relations firms before they launched the PRstore (prstore.com) in 2001, so they knew how those businesses worked and how they could be streamlined. Instead of the retainers or hourly billings that a typical marketing firm demands, the PRstore offers a menu of basic services to walk-in customers (almost all small-business owners) and charges flat rates. A press release runs $295, while ten press kits cost $975. On the higher end, a 30-second television commercial is $8,000 - about half what a typical ad agency would charge.
That savings is made possible by the company's hub-and-spoke business model: Franchise owners take orders from customers, but the creative work, such as designing brochures and copywriting, is generated at the company's 12-employee headquarters in Charlotte. "We provide small companies a level of service that big companies are accustomed to," says Michael Butler. In the five years since they started the company, the Butlers have been expanding using a franchise model.
Recently that effort has gotten a boost from Ira and Linda Distenfield, whose background and skills match the PRstore's needs. Back in the mid-'80s, the Distenfields ran We the People, a national franchise that helped customers handle basic, do-it-yourself legal tasks without hiring an attorney. That unique enterprise brought the Distenfields national exposure - and several lawsuits claiming that their firm engaged in the unauthorized practice of law, most of which were settled in their favor. Late last year the Distenfields sold We the People to Dollar Financial for $17.5 million and planned to retire. "We were supposed to be on a beach right now," says Ira, 59.
Instead, the couple heard about the PRstore within a few days of cashing out and called the Butlers to see how they could get involved. Since then the Distenfields have purchased 20 PRstore franchises in California, and they opened their first two in Santa Barbara in January. The remaining 18 should open within the next five years.
"I wanted more skin in the game," says Ira (who does not own an equity stake in the parent company). "I wanted to be the guy who really helps grow this franchise." He has also assumed the role of national franchise director and heads a strategic-planning committee focused on growing the company in a hurry. His first decision: In an effort to attract more experienced, wealthier franchisees, he increased the fee from about $40,000 for a location to $59,000. The plan is to open as many as 350 across the country between now and 2011. "Within six years, we'd like to take PRstore public," Ira says.
Some advertising agencies hold that while the PRstore offers cheaper prices, small-business owners seeking topflight marketing strategies should splurge on agency expertise. "It's a stereotype that advertising agencies care only about big companies," says Kelly Major, a partner with 70-employee Brogan & Partners, a 22-year-old agency in Birmingham, Mich. "That's not us at all - we can be small and nimble, just like PRstore. But often the ability to provide lower-cost solutions means a less customized solution. Our agency does a lot of research so that we understand our client's audience and can craft the best message for them."
Scott Batey, owner of a Bloomfield Hills, Mich., law firm called Batey-Turkelson, is one small-business owner who now considers himself a PRstore loyalist. A few months ago he wanted a logo for his firm and talked with three agencies that requested retainers of as much as $5,000. "The bigger agencies couldn't just do a logo, and that's all I needed at the time" says Batey, 40. His local PRstore franchise designed a logo for the firm for $1,500. Batey has since turned to the PRstore for press releases, as well as coffee mugs and pens for clients, and he credits the franchise with helping to double his caseload from 60 to 115 since July.
Unleashing the Power of PR: A Contrarian's Guide to Marketing and Communication