Franchising Special.
Starting a business is fraught with risk. Franchising is a superb way to lower that risk and increase your chances of success; Civvy Street spoke with Chairman of the British Franchising Association, Michael Eyre to find out how.
Michael Eyre has 30 years experience of franchising under his belt. During this time he’s developed a keen eye for the skills and qualities that add up to an effective franchisee. Top of the list, according to Michael is: “Undoubtedly, a genuine desire to work for one’s self. I say that because many people considering franchising think that they’re buying themselves a job.” He says, before wisely adding: “Particularly in times like this when employment is uncertain and redundancies are rife. They’re not. There’s added value in taking on a franchise. Whilst you’re working for yourself, you’re not by yourself. It’s like a midway point.”
Michael has been both franchisee and a franchisor. His first experience as a franchisee was in specialist car servicing, a line of business that he had no previous experience in. Michael admits: “With the support of my franchisor I was able to operate an extremely successful business which I clearly couldn’t have done on my own.”
Training to franchise
Even though the franchisee is preparing to put in a significant investment, it’s essential that the franchisor feels confident that the individual is the right person to carry the brand. Michael explains: “First of all they have to identify the skill level and the experience level of a new franchisee. In our instance we look at training in two different aspects: firstly, there’s training on the general skills and requirements for running a business (compliance with legislation, health and safety matters, employment law, skills specific to VAT and inland revenue – all of those sorts of things will apply to any business).”
The other area of training refers to the particular business type of the franchisor. “We treat those two things separately. We look at the existing franchisor business and how that franchisee might fit in. You need to do an assessment to find out what skills are required to perform the required duties. Where the skills aren’t in place, those are the skills you’ve got to teach.” Far from being seen as a hurdle by the new franchisee, this assessment should be viewed as a foundation with further support being the tools for success.
Of course ex-Servicepeople may not have specific ‘business’ training and the road to day one might necessarily be slightly longer. All of this will bear dividends. Michael agrees saying: “The pre-opening training is of critical importance, even more so perhaps than some of the hands on stuff. It’s during the pre-opening training that the franchisor has the opportunity to make a greater assessment of the franchisee and what support they’ll need. You can’t just walk into it without forethought.”
Franchise opportunities
There are literally hundreds of franchise opportunities to select from, spread over every conceivable business type. With such a choice, the right selection might seem like a difficult task. There are approximately 800 franchisor companies in the UK with around half being members of the BFA. “The only reason why only half are BFA members is because the other half can’t get in,” quips Michael, adding, “The BFA is a standards based organisation and in order for a franchisor to become a member they have to go through a very thorough accreditation process. Part of that is to see what support measures are in place in that particular franchise network. If a potential franchisee is going to select a member of the BFA to work with they can be sure that a certain level of standards already exists.” This provides an ideal starting point for potential franchisees that are concerned about the safety of their investment.
“They look more than anything for a track record of achievement in franchising; clear evidence that the franchise network is robust and that the franchisees are performing in line with expectations” says Michael. In fact, it’s also true that the BFA speaks with a number of franchisees to make sure that they are getting what should be delivered and getting a view from the real cutting edge.
What emerges through our discussion might seem surprising to some potential franchisees. The franchisor and franchisee are far from ‘employer and employee’ and much more like a team with each requiring input from the other. Indeed, Michael is quick to underline the significance of this point saying: “In my organisation, we have a very popular phrase: ‘commitment matching’. If we have a franchisee that’s keen to develop his business and is putting in the effort in the right places; business building activities and doing the other things that we recommend that he does. If he makes that commitment we will match it and support him. On the other hand, a whinger who complains about the state of his business but isn’t doing the things that we recommend isn’t showing any commitment.”
Positive statistics
Any franchisee will tell you that franchising isn’t easy but it certainly is, statistically at least, a safer route into business. According to Michael the survival rates for start-up businesses in the UK are as low as 20% after two years. Incredibly, in 80% of cases, franchisees survive the same period. “It’s a fantastic record; that’s why franchising is recognised as the safest route into business for anybody at any level.”
Even with all of this good news to feed on, some potential investors may still be biting their fingernails. Again Michael draws on his own experiences as a franchisee saying: “Good advice for a potential franchisee who, whether they admit it or not, will be thinking: ‘Can I do this job?’ is for them to ask their franchisor for a job description outlining particular responsibilities and what have you (in the way of skills and experience). This allows them to make a very honest assessment of themselves. They’ll find that extremely useful.”
Michael summarises: “They’re buying a business to develop and eventually capitalise on their investment, they’ve got something to sell on to somebody else. That brings it home that they’re building a business. Without that goal, it is nothing more than having a job.”
Saying that, it isn’t a sink or swim situation as Michael reminds me: “By having a franchisor you do have a responsibility to somebody. So even though it was my business and I put all the money into it, under the terms of my franchise agreement I had to report to the franchisor which is a good discipline. That makes sure that you monitor and manage your business effectively. It’s your own business but you’re not on your own (but) the incentive is stronger to work harder. It’s a fact of life.”
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Hed: Case Study: Belvoir Lettings.
Mike Goddard spent 17 years in the RAF and was commissioned into the education branch. During that time he rose to the rank of Wing Commander. He has since become a successful franchise owner and runs the Belvoir Lettings chain and explains why he’s always on the lookout for ex-Servicepeople.
Mike Goddard left the RAF in 1995 on the redundancy scheme that was then in place. He took advantage of the offer, using it to fund his new business. “We didn’t have any intention of franchising to start with. After about 12 months I started to get ambitions to grow my business nationally” he explains.
This is when Mike started to consider franchising as an option. “I went to a franchising consultant who did a feasibility study on my then business and he said that if I had the right investment and followed his guidelines there would be every chance of succeeding. In 1996 I used the majority of my redundancy pay to set up a company called Belvoir Property Management UK Ltd and launched my franchising operation; the pilot project being my original business.”
Starting out ion franchising
Mike was joined by his wife in the business and whilst she ran the lettings business, he concentrated on the franchising side. “It took six months for us to prepare it and in June 1996 I attracted my first franchisee – an ex Corporal from Lossiemouth, Scotland who opened an office in Elgin.” Says Mike, adding proudly: “He’s still with us and celebrated his 15th anniversary recently.”
Mike sidestepped the ‘franchisee’ aspect of business and jumped straight from being an entrepreneur to a franchisor. Being an ex Forces man, he can see not only what his military background gave him but also the key attributes it gives to potential franchisees, saying: “My military career taught me two very important things, firstly: how to build up teams of people and secondly: how to systematically break down a complex task into its simplest components to achieve a major goal. That’s what you do with franchising.”
The qualities that Mike identified in potential franchisees meant that it was a no-brainer to fall back on his view of what military experience really means. “I did look for people with a military background because I could relate to them and they could relate to me. When you’re starting a franchise network one of the problems is getting those first few franchisees. It’s so important to get it right. I knew the sorts of people I’d be getting” he says, adding: “I target anybody who has the right attitude (but ex Servicepeople have a head start). They’ve learnt how to follow systems, they are usually financially stable which is also important and they are generally trustworthy and have integrity. Those are key things for being good franchisees.”
Running the business
Although Mike has never been a franchisee, his insight is welcome from the perspective of understanding what the required qualities and standards are. His advice to any franchisee is simple: ‘Go for it.’ If you analyse it too much we call it ‘paralysis by analysis.’ Go with your gut feeling. The opportunities are superb. If you feel that you want to run a business and control your own destiny and want to work for yourself rather than for an employer but are slightly concerned about going it alone, then franchising is a fantastic opportunity.”
Although the move is a big one, the formula is simple: “If you follow the advice and the business format that they set you, then you have a very high chance of succeeding” encourages Mike, continuing: “Go and meet a few franchisors like me and they’ll tell you. A ‘glass is half full’ type of person will be able to withstand the knocks and blows of the early days of the business. My advice for anyone with that type of attitude is to give franchising a serious thought. It’s a very good way of getting into business using somebody else’s brand and know-how.”
www.belvoirlettings.com