Franchise as a business model

27/06/2016
You run a successful business and you want to expand. One way to do this is getting franchisees to pay you for the benefit of your business model and support. But it is only a no-brainer if you set it up correctly.

The franchise sector is in rude health, research from the British Franchise Association (BFA) and NatWest suggests.
The number of franchisee-owned businesses has climbed 14% in two years to 44,200 and 97% of franchisee-owned units say they are profitable.
Pip Wilkins, BFA chief executive, says franchising is a “robust” model that can give national coverage for those with a proven business.
People who become franchisees are those who want to run their own business. “So you’ve got a different drive, commitment and passion from those people to make that business a success,” she says.
Franchises come in all types: office cleaning firms, business consultancies, legal services, restaurants and care services, for example. They include household names such as Starbucks, McDonald’s, Toni&Guy, Marston’s, Papa John’s and Clarks.

Get the practicalities right

Prospective franchisors should seek expert advice and attend seminars, says Wilkins.
“It’s really about working with somebody to set up your pilot operation, your operations manual, your training course and what the fee structure needs to look like to make sure the franchise is profitable for both the franchisor and the franchisee,” she says. “If you are looking at a business that is underperforming and isn’t making a lot of money at the moment, all you will do is replicate that.”
Wilkins says franchisors should keep the following points front of mind:
Franchising is a specialist area and you must have a brand that you own and protect.
Ensure you have a system in place that is both proven and transferable.
Look at what ongoing support you are going to give your franchisees – not just to get people up and running.
Be ready to transfer know-how to a potential franchisee within two to six weeks.
You need to have piloted the model and started to develop support packages, initial training and an operations manual, which should be the bible of how to do everything in that business.
“A franchisor will know these things inside out but actually writing it all down so someone else can pick it up and run with it is difficult. It’s everything from sales, marketing, finance, human resources – the day-to-day operation,” says Wilkins.
“If you fry fish and chips and that’s what you’ve done all your life, suddenly your job isn’t to fry fish and chips any more.” It is to manage a network of franchisees, Wilkins explains.

Benefits and risks

Franchisors can focus on research and development to keep the business thriving.
“No business ever stands still and as a small business you don’t necessarily have the time to research and develop, says Wilkins. “Franchising gives you the opportunity for that. The big win is national coverage, promotion and marketing.”
When you have franchisees all over the country, you can get national contracts on behalf of an entire network. “It really is about growing a business with the backup and support of lots of different franchisees,” Wilkins adds.
The biggest risk is not paying for the right advice at the start to get everything set up. The expense of doing so is probably the biggest barrier to people not franchising. Franchisors have to be tough from the start because entrepreneurial franchisees sometimes try to run the business their own way.
“We say to people, you are buying into a franchise because you a buying into a proven business model. You’re not there to reinvent the wheel.”

Case study: Business Doctors

Rod Davies and Matt Levington launched Business Doctors in 2004 to make management consultancy accessible to small businesses. They spent their first three years perfecting their craft on Merseyside.
The pair were confident they had hit upon a winning formula that filled a gap in the marketplace between the Big Four consultancy firms and a host of one-man bands.
Levington says: “It seemed small businesses were crying out for our style of no-nonsense help, including sales planning, performance management, recruitment fundraising and team building.”
They raised £200,000 in 2007 from the Royal Bank of Scotland, NatWest and Merseyside Special Investment Fund to start growing Business Doctors as a franchise.

“Our plan has always been to develop an instantly recognisable brand that SMEs turn to for support – and franchising was the fastest way to achieve this”
Matt Levington, co-founder, Business Doctors

“Our plan has always been to develop and grow an instantly recognisable brand that small and medium-sized businesses turn to for support. And we understood that franchising was the fastest way to achieve this,” says Levington.
Davies and Levington say franchising was the only option because people of the calibre required to grow the company wouldn’t settle for anything less. “With 30-plus years of experience behind them and employed at board level, these were not people who were open to a job offer within a start-up small business,” says Levington.
“By offering franchised territories, we were allowing these high-flyers to invest in Business Doctors and become part of the company. They would be able to run their own business on their own terms, but still be part of a team. Our reckoning was that anyone who was prepared to make a cash investment into our brand would be fully engaged and tuned in to making a success of it.”
Business Doctors launched its first UK franchise in Bedfordshire in 2009. It now has 40 in the UK with a five-year plan to have 130. It has master franchisors in India, South Africa and Malta and it is looking at Australia, New Zealand, Canada and the Middle East.

Fonte:http://natwest.contentlive.co.uk/content/7d44e709-b5e0-812d-9fb9-bcce06d33d9a

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