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Partnering with the Health-Care Industry
April 2008 Franchising World
From automotive aftermarket chains to quick-service restaurants, forming partnerships with the health-care industry can benefit a franchise system on multiple levels. By Keith R. Albright From attracting new customers through the introduction of fresh product offerings to funding grants for medical research, there are many ways for a franchise system to enhance its visibility in any industry by forming strategic partnerships with the health-care industry. Any way one looks at it, the U.S. health-care industry has a huge economic footprint. It is one of the largest business segments in the country, generating estimated annual revenues of $1.6 trillion (Census Bureau), employing a workforce of more than 14 million (Department of Labor) and representing 5 percent of the nation’s gross national product (National Coalition on Healthcare). Beyond those economic indicators, the plain fact is that, in one way or another, the health-care industry repeatedly touches every American throughout his entire lifetime.
Identify the Partnership’s Costs and Benefits
To the extent that the answer to any of these questions is “no,” the franchisor should consider revisiting the structure of the partnership before discussing it with a potential partner. A partnership that delivers benefits to the health-care industry, but doesn’t bring sufficient value to the franchisor or the franchise system will be difficult to implement and, ultimately, be an embarrassment to each stakeholder.
Additional Points to Consider
Keith R. Albright is the senior vice president of franchising for Gold’s Gym. He can be reached at 214-296-5010 or kalbright@goldsgym.com.
According to the U.S. Department of Labor, the U.S. health-care industry consists of more than 580,000 individual businesses, most of which vary greatly in terms of size, staffing patterns and organizational structures. For example, nearly 77 percent of all health-care businesses are offices of physicians, dentists or other health-care practitioners. On the other hand, hospitals represent only 1 percent of all health-care businesses, but employ 35 percent of all health-care workers nationwide.
So, it’s no surprise that franchisors have begun to reach out to the health-care industry as a way of building brand awareness, increasing the profitability of their franchisees and adding value to their franchises. More often than not, that outreach takes the form of a strategic partnership that introduces the franchise system’s products and services to a new category of consumers.
Map out the Process
As franchisors begin to consider strategic partnerships with the health-care industry, the first step is to identify a segment of the industry that complements the concept so that everyone can benefit from the partnership. Franchisors should start by looking for a segment of the health-care industry in which the franchise system has the ability to improve patient outcome. For Gold’s Gym, that process has produced a long and mutually-beneficial relationship with the American Diabetes Association. Other franchisors need only pick up a newspaper, listen to talk radio or watch the evening news to see a wide range of partnership opportunities within the health-care industry.
Once a segment has been identified, the franchisor needs to think through the structure and operation of the partnership and be able to clearly articulate how each of its stakeholders (the franchise system, the health-care provider or association and its patients or members) will benefit from the relationship. For instance, a quick-serve restaurant chain hoping to establish a strategic partnership with groups like the American Heart Association might showcase its low-fat, low-cholesterol menu items as a way to improve the health of people at risk for heart disease, support the association’s objectives and introduce the franchise system’s products and services to new consumers.
However, to become successful, franchisors must also remember to look beyond the obvious and find more creative ways to demonstrate their commitment to a mutually-beneficial partnership. A franchise system that makes a commitment to sponsor medical or scientific research may be able to procure research grants and tap other sources of funding that will amplify its commitment. In addition, franchisors who enhance their business model by adding training procedures, educational seminars and new customer communication techniques will increase the value that they build into the partnership.
Franchisee Involvement
The franchisor has access into the entrepreneurial creativity of its franchise system and should tap that resource to identify innovative ways to enhance the value of the partnership. Involving franchisees in the decision-making process as early as possible will also help the franchisor successfully implement the partnership and fulfill whatever commitments have been made to the health-care provider or association and its patients or members. It will also help the franchisor create an environment in which the franchise system will enthusiastically support and implement the partnership at the store level.
If the franchise system has the benefit of an engaged advisory committee, the franchisor should enlist its support and ask for help to shape the partnership by collecting, consolidating and delivering input from the franchise system. If that’s not possible, a franchisor can schedule a series of conference calls, open up an e-dialogue on its Web site, hold regional seminars or introduce the topic at its annual convention. By engaging the franchise system in the process, individual franchisees are more likely to take ownership of the partnership and enthusiastically implement it at the store level.
Once the franchisor has gone through this process and come up with a partnership structure that looks like it benefits all three stakeholders (the franchise system, the health-care provider or association and its patients or members), the franchisor needs to shift gears and put every element of the partnership through a second filtering process to make sure that it meets the internal needs of the franchisor and the franchise system.
To do that, the franchisor must answer questions like these:
• Will the partnership enhance brand awareness and the public image of the franchise system?
• Will the partnership help franchisees succeed in their markets?
• Will the partnership help sell franchises?
• Will the benefits of the partnership justify any costs associated with it?
• Will the partnership create new marketing, advertising and public relations opportunities?
• Will the partnership boost franchisee morale and increase productivity?
• Will the partnership encourage consumers and industry insiders to view the brand more positively?
• Will the partnership attract additional customers, in turn creating a new source of revenue for the system?
As mentioned earlier, franchisors need to think beyond just their products and services when considering a health-care partnership. Their challenge is to find a unique link between the franchise system and the health-care industry.
One option could be funding health-care research. For example, a franchise system operating in the carpet and textiles industry could fund research that studies improvements in air quality for asthma patients. There are an unlimited amount of examples like this one. To assist franchisors in this effort, the National Institutes of Health, the world’s largest biomedical research organization, is available to direct public and private franchise companies in their efforts to fund an appropriate project.
The NIH, a part of the U.S. Department of Health and Human Services, is the primary federal agency for conducting and supporting medical research. NIH hosts more than 48,000 research programs for all types of causes. The Department of Communications at NIH can help guide a franchisor in choosing a particular program for research support. Contact information is available at the institution’s Web site, www.nih.gov.
Overall, partnerships between franchise companies and organizations in the health-care industry present a great opportunity for franchisors to introduce a new, unexpected dynamic into their business model. Whether the franchisor funds medical research or introduces new products and services, the partnership can be beneficial for driving awareness, revenue and franchise development.
There is a growing connection between health care and every industry. From automotive aftermarket chains to quick-service restaurants, forming partnerships with the health-care industry can benefit a franchise system on multiple levels.
