P&G plans franchised Tide Dry Cleaners

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By Lauren Coleman-Lochner
(c) 2010 Bloomberg News
Thursday, September 2, 2010; 12:24 AM

Procter & Gamble Co. is no longer content just to sell detergent to wash your clothes -- it wants to dry clean them, too.

The world's largest consumer-products company plans to roll out franchised Tide Dry Cleaners across the U.S. The strategy could be a hit, says one franchising veteran.

Andrew Cherng, founder of Panda Restaurant Group Inc., which operates Panda Express Chinese fast-food outlets in malls around the country, says he plans to open about 150 Tide-branded dry cleaners over the next four years.

"I wasn't around when McDonald's was taking franchisees," Cherng said in a telephone interview. "I'm not going to miss this one."

Cincinnati-based 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 other products.

P&G advanced 13 cents to $59.80 yesterday in New York Stock Exchange composite trading. The shares are down 1.4 percent this year.

Three years ago the company launched Mr. Clean Car Wash; nine franchisees are now in business. In 2008, P&G opened three test Tide dry cleaners in Kansas City. Having fine-tuned the concept, the company is now going national.

P&G is moving into services "that are virtually unbranded," said Michael Stone, head of The Beanstalk Group, a New York-based brand-consulting firm. "One would think consumers would trust a Tide Dry Cleaners because they know P&G is behind it," he said.

The Tide and Mr. Clean concepts sprang from P&G's FutureWorks unit, which identifies and develops new businesses. Nathan Estruth, who runs the division, said his staff must get "comfortable with ambiguity" and accept that most projects "get shut down."

P&G executives say not just any brand can be hitched to a service. They look for a fragmented market where consumer expectations aren't high. (Don't expect Pampers Day Care centers.) The company says its research showed that both cleaners and car washes fit the bill.

P&G lacked franchising experience so it broke its decades-old practice of promoting from within and recruited William Van Epps, who had managed franchising at PepsiCo Inc. P&G set up a company called Agile Pursuit Franchising Inc. and put Van Epps in charge.

Van Epps's team put a premium on consumer convenience. Each dry cleaner features a double-lane drive-through and lockers accessible for after-hours pickup. There are lollipops for kids and Iams biscuits -- yes, a P&G product -- for the family dog.

The company hopes to lure eco-conscious consumers with proprietary technology that doesn't use the solvent perchloroethylene. P&G says its stores will charge about the same to dry clean clothes as the industry average ($2.25 for a man's shirt; $11.50 for a woman's dress).

Opening a Tide dry cleaner costs a franchisee about $950,000; a Mr. Clean Car Wash up to $5 million.

Don Nix, a former accountant, operates a Mr. Clean Car Wash in Marietta, Georgia., and plans to open a second one with a partner next year. People won't necessarily identify with "Don's Car Wash," he said. "The brand and the logo of Mr. Clean [has] huge value for attracting new customers."

While franchising allows P&G to offload much of the financial burden, P&G executives acknowledge the model carries risks. Corporate parents and owner-operators don't always agree; witness the ongoing dispute between Yum! Brands Inc. and KFC franchisees over marketing strategy. And dirty stores or poor service could hurt Tide, which the New York-based consulting firm Millward Brown ranks fifth globally as measured by value derived purely from brand equity.

"If we did anything to damage that," says Chief Technology Officer Bruce Brown, "we'd stop." Van Epps acknowledged that the risks keep him "up at night."

P&G, which declines to discuss sales targets for its dry-cleaning strategy, argues the business is less of a departure than one might think. In the company archives, alongside such treasures as 19th-century wooden soap boxes and an early disposable diaper, is "The Washroom," an instruction manual P&G produced for commercial laundries back in 1927.


© 2010 bloomberg.com

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