How Smartline kept franchisees positive through ownership change
When a business is acquired by a big-name investor, a sense of dread can inevitably creep through the existing network, but in franchising, the effects are two-fold. It’s something mortgage-broking and personal finance franchise Smartline knows all too well.
Back in 2017, multi-national property service organisation REA Group acquired an 80.3 per cent stake in Smartline, worth around $67m. The strategic move sent shockwaves around the industry, but more was yet to come. Less than two years later, REA Group confirmed it had purchased the remaining minority stake for $16m, completing a full network acquisition.
From a business perspective, the acquisition was a major boost for Smartline, bolstering the franchise’s already solid structures and processes. However, from an individual operator point of view, new ownership signalled a return to the unknown.
New CEO Sam Boer knew it was a sentiment he had to address quickly, before network unrest caused disruption.
“People say they fear change, but they don’t really fear change, they fear loss,” Boer said. “It’s about being open with people around what’s going with you personally and understanding that there is a silver lining and a future here.”
So how did Boer and the Smartline team get franchisees on-side?
Settle the network
Takeovers and acquisitions regularly coincide with a brand restructure, with mass exodus the obvious concern. Being fresh to the role, Boer said that the first step in ensuring the network remained positive was making sure the franchisees felt heard.
“It has to be part of your dialogue to have that conversation over how you are travelling, and what we, as a franchisor can do to help elevate your business,” he said.
“Even if we disagree on certain issues, we can have a conversation about it and play on. That way, people have had a voice, they’ve been heard, they know we can’t do everything but we’ll make the decisions where we can that generally benefit everyone.”
Those decisions weren’t easy, however, Boer revealed that through his discussions with franchisees, certain patterns did emerge. Identifying the goals and objectives of individual franchisees allowed Smartline to better provide platforms for discussion and growth.
“Some (franchisees) want to write record volumes, some want to spend more time on the golf course, some want to spend more time with their family. It’s really about understanding that and providing a mechanism to help them achieve those objectives,” he said.
While the acquisition signalled a monumental repositioning for Smartline, it wasn’t the only factor proposing mass change. A difficult year for mortgage broking, headlined by a banking royal commission had left some partners questioning the next stage.
Rather than adopting the new REA Group mantra, some of the network’s legacy franchisees opted to exit the business. Boer said that while losing some established members was a challenge, it was a necessary process for the brand to ensure full network buy-in.
“Some of those guys that have been with us for 20 years decided that it was time to move on, but we always make sure that we have a succession plan. That’s an opportunity for a new franchisee to come in and pick up an existing book,” he said.
“Having like-minded people in the business makes it easier. We’re all on the same page, all rowing in the same direction.”
Promote the benefits
Once Smartline had refined its network of engaged franchisees ready to buy-in to the new ownership, Boer set to work on promoting the benefits.
For the first time, Smartline made the move into the consumer market. Having served as an industry brand for much of its existence, the backing of REA Group’s significant digital and consumer positioning allowed the brand to greatly improve client acquisition.
Boer revealed that despite the business boost, he knew further work on addressing the current industry challenges was needed.
“We also invested very heavily in our technology platforms,” he said. “Brokers have to ask more and more questions of clients today to meet their responsible lending requirements, so having the right tools is really important.”
Create a Smartline culture
Keeping the network unified was another critical component in getting franchisees on-board with the new ownership and direction. Smartline strengthened its mentorship program, partnering all new recruits with an existing franchisee, helping to bolster brand value and culture.
However, above all else, the Smartline CEO believes the most important element in maintaining franchisee satisfaction throughout the acquisition process was keeping franchisee goals front of mind. Going back to the original discussions and charting how things were progressing ensured that while changes were happening, partners were still being heard.
Boer said for any franchise brand undergoing a ownership change, the key to ensuring network buy-in is making sure partners feel supported.
“Ultimately, it’s about creating an asset that’s going to deliver value to you, put food on the table and help you feel like you’ve been successful,” he said.
“Understanding that as a franchisor is hugely important, because you’re not going to achieve anything unless your franchisees are subscribed the vision, mission or purpose behind who you are and what you’re trying to do.”