Want a Free Franchise? A Hypothetical with Real-World Implications

Let’s pretend I gave you a company. Awful nice of me right? Well, maybe not! The company is a chain of video stores. Remember those? If you are old enough to recall the video rental phenomena, the landscape for that industry was dominated by Blockbuster and Hollywood Video, but there were a panoply of local video providers as well – one in virtually every strip mall.

The VHS tape days rich with labels telling us to “be kind and rewind” gave way to the DVD movie distribution platform but the industry chugged along making “bad profit” plucking from the wallets of those of us who struggled to get our movies back in time – thus, incurring oppressive late fees.

So, thanks to my twisted sense of generosity, you have (for the sake of this blog) been gifted a chain of video stores (chock full of DVD movies). Your mission is to survive and thrive in the world of on-demand streaming video subscription-based options like Netflix, Hulu, and Amazon Video. Impossible, right?

It is happening right before our eyes, and the secrets to this improbable tale of sustainability (in what many might call an antiquated product/delivery model) are:

  • Visionary financial stewardship
  • Extraordinary employee and customer care
  • An emotionally engaging in-store experience

The brand to which I am referring is Family Video Movie Club, a 775 store chain with locations across the US and Canada. Founded in Glenview, Illinois, Family Video stores are largely concentrated in the midwest. Since its inception in 1978, Family Video has consistently focused on its mission:

To be our customers first entertainment choice. We do this by providing a unique mix of great customer service and low prices. Customer service is our top priority.

Much has changed since 1978, so let’s look at the choices leaders at Family Video have made which have maintained the brand’s relevance and value despite technology shifts in movie consumption.

Visionary Financial Stewardship

One of the many competencies required of leadership is knowing where to invest a company’s finite resources. While some brands in the video rental world looked to lease more and more property to rapidly position themselves as THE national brand, leadership at Family Video grew more slowly and purchased the strip malls where it opened stores. Reinvesting profits in commercial development allowed Family Video to avert rising lease costs encountered by other video stores but it also created a revenue stream from other tenants such as Starbucks, Walgreens, and Subway.

While leaders at Family Video were investing in real estate, they were also investing in leadership development incentives. In fact, Family Video (whose umbrella company is named Highland Ventures, Ltd) provides payment for tuition and books to an accredited undergraduate four-year university/college for qualified children of eligible employees. That eligibility extends to leaders who have been with the company for five years in a position of District Manager or higher.

Extraordinary Employee and Customer Care

From the perspective of frontline talent development and customer service prioritization, Family Video emphasizes that they:

..hire friendly, intelligent, positive people, and then give them the ability to think and solve problems. World-class customer service isn’t the exception, it’s the expectation. Working in our stores isn’t a typical retail job. We don’t wear name tags and we don’t wear uniforms. We never ask a manager for permission to solve a customer problem. We solve it. We “wow” them. We run our stores fun and friendly and we always have.

An Emotionally Engaging In-store Experience

In addition to prioritizing employee empowerment and instant problem resolution, leaders at Family Video view the in-store shopping experience as an important “family outing.” Speaking on NBC’s Sunday Spotlight, Family Video’s president Keith Hoogland notes:

People forget the great days when you used to come with your kids, shop, and have an experience….I think that what is happening in the world is that all these electronics are separating you from society and I think that the pendulum is going to swing back to where people are looking to go the coffee shop, they are looking for their local grocery and they are looking for the local video business.

Beyond the opportunity to shop through the racks of video offerings, Family Video is serving up a local and relevant experience that celebrates children and academic performance through a program titled .

Family Video enables students from kindergarten through college to receive a free movie or game rental at Family Video for each final “A” grade or (equivalent mark) they achieve in a core subject on their year-end report card.

Bummer a Hypothetical?

So, I’m betting you are wishing that my hypothetical gift of a video chain was not hypothetical and that my offer was for Family Video. The good news is that each of us can learn from the wisdom of Family Video without having to survive a cataclysmic industry revolution.

What lessons will you take from leadership at Family Video?



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Joseph A. Michelli, Ph.D. is a professional speaker and chief experience officer at The Michelli Experience. A New York Times #1 bestselling author, Dr. Michelli and his team consult with some of the world’s best customer experience companies.

Follow on Twitter: @josephmichelli

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