A recent Bloomberg News article focuses on what P&G’s FutureWorks is thinking: Tide dry cleaning franchises and Mr. Clean car washes. What?
When the world’s No. 1 consumer products brand decides to get into franchising service-based businesses, it’s worth talking about.
Interestingly, P&G broke from its long-standing tradition of promoting from inside the company by setting up a separate company called Agile Pursuit Franchising Inc., P&G put William Van Epps, formerly of PepsiCo Inc,. in charge.
Why dry cleaning and car washes? The article says, “P&G wants to put its brands to work selling services as a way of boosting U.S. revenue and increasing awareness around Tide and its products.”
Andrew Cherng, Panda Restaurant Group Inc. founder, says, “I wasn’t around when McDonald’s was taking franchisees. I’m not going to miss this one.” Cherng has plans to open 150 Tide-branded dry cleaning franchises within the next four years.
In 2008, P&G tested three Tide dry cleaning locations in Kansas City, working on the model before deciding to take it national. Over the past three years, the company also launched Mr. Clean Car Wash and now has nine franchisees. More are planned.
Why these services and why now?
P&G is moving into services that Michael Stone of The Beanstalk Group in New York calls “virtually unbranded.”
P&G execs say “they look for a fragmented market where consumer expectations aren’t high,” according to the article.
There are opportunities to not only leverage two powerful brands: Tide and Mr. Clean, but to create new models.
Though Tide dry cleaning will cost about the same as the industry average, its stores will be more eco-conscious. They won’t be using the chemical solvent perchloroethylene. For another, customer convenience premiums will include double-lane drive-thrus and lockers for pickup after hours. Kids will be given lollipops,and the family pooch gets Iams biscuits (another P&G branded product)!
It seems the concept has a lot of upside. So what’s the potential downside?
Disputes can and do arise between franchisers and franchisees.
Poor service in certain units, or dirty stores could hurt the Tide brand.
The model might not be perceived as anything better than the dry cleaning stores (or car washes) consumers frequent as a rule.
P&G has a lot at stake here. Marketing consulting firm Millward Brown ranks P&G as the fifth most significant global brand in terms of its brand equity value. P&G CTO Bruce Brown acknowledged, “If we did anything to damage that, we’d stop.” Van Epps said these risks keep him “up at night.”
So, Daily Fix faithful: what do you think? If done well, could this new business model be a boom for P&G, or will it be a bust?
I’d love to hear from you.
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