Each year the British Franchisor Association recognises three franchisors for their outstanding performance. The 2009 winners selected from 9 finalists include:
Gold: Countrywide Ground Maintenance
Silver: TaxAssist Accountants
Bronze: Wiltshire Farm Foods
Also recognised at the recent awards dinner was:
Green Thumb who the won Express Newspapers Brand Builder of the Year award and Home Instead Senior who won the HSBC Award for Enterprise.
Congratulations to all the franchise brands!
Despite the challenges in the economy, "2008 was a year of expansion for many franchises, with the total number of franchise systems now reaching 838 - an increase of 3.6% on the 809 systems recorded last year. " Furthermore, according to the 2009 BFA/NatWest Survey, "franchisors' expansion ambitions remain bullish, with an average of nine new franchise units planned over the next 12 months. The newer systems are looking to expand at a greater rate with an average of 14 new franchise units."
A few more finding from the survey include:
While the majority (60%) of franchisors and franchisees (66%) think that general economic conditions will become more difficult in the next 12 months, 82% of franchisors anticipate that that their business will improve or stay the same over this period, compared to 95% last year, while the remaining 18% expected business to become more difficult.
Franchisors and franchisees were taking positive action to protect their businesses against tough trading, with nearly a third increasing their advertising, a fifth improving productivity, 15% lowering prices and nearly a quarter increasing their existing client base.
Although the number of individuals employed in franchising has not risen over the last 12 months, the franchising sector still represents employment for 467,000 or 1.3% of the UK workforce.
Estimated start up costs have declined, and new entrants can expect to pay £50,400 in franchise fees and other associated costs to their franchisor, down from £64,900 last year.
It should be noted that this is the 25th annual research study among franchisors and franchisees by the British Franchise Association. The report concludes that overall, the Franchise industry in the UK continues to grow and is a key employer. Although recessionary pressures are being felt, the industry shows strong signs of resilience thus far. Brian Smart concluded, "It's clear from this survey that the franchise sector is proving resilient to the economic downturn by investing heavily in activities to drive business forward and ensure future success. It is a mark of the enthusiasm and commitment of franchisors and franchisees that they continue to drive new business and retain it with such vigour."
A master franchise opportunity requires a significant investment of time and money and choosing the right concept is extremely critical. You must choose not only a franchise you personally believe in but one that you feel is here to stay has a strong foundation and excellent management.
Here are some tips to consider when exploring master franchise opportunities as outlined at allbusiness.com.
1. Do Extensive Research
As a master franchise buyer, it's important for you to understand two entities: the franchise company and the master organization. Make sure, for instance, that the franchise system is based on a solid business model. Without a viable business model, it's unlikely that a master franchise could succeed. You will also need to research the market and territory demographics. Make sure that the territory has a population that can support your projected sales.
2. Know Your Role and Responsibilities
A master franchisee is generally responsible for recruiting individual franchisees. As a master franchise owner, you're also responsible for providing support and training on an as-needed basis.
3. Go See the Franchise and Franchisees
Your intelligence gathering should include actual visits to as many franchise locations as possible. If you detect any problems, cross this franchise off your list. Don't be tempted to rationalize red flags. If you sense trouble, regroup and consider another franchise system.
4. Choose A Franchise That Fits You
Even if the business model is solid, you'll want to make certain that the franchise suits your investment limitations and your goals. If you don't have the capital, then it's not a good match. If you're not interested in the business, then it's not a good match. Be prepared to walk away if the opportunity doesn't feel right.
5. Talk with Other Successful Master Franchisees
If possible, try to talk to other people in the master franchise field. Find out, for instance, what kinds of challenges they face, what kind of support is available, and if they had to do again, what they would do differently. If speaking with other master franchise company owners isn't possible, search the Internet, go to the library, and do whatever you can to immerse yourself in the language of a master franchise. The more you know the better off you'll be.
A few weeks ago, The Times published their 2009 Rich List. Via the interactive search feature, uncovered that 7 families on the list made their fortune through franchising.
Most of them gained entry by becoming a master franchisee. This involves the franchisor granting exclusive rights to offer and sell franchises within a particular territory using the franchisor's marks and system. This is what the Herbert family (worth £145million) did when they launched the KFC franchise in Ireland. Same for the Halpern family (worth £48million) who launched the Domino's Pizza franchisee in the UK & Ireland.
Even though the initial franchise fees are higher, a master franchise license can lead to greater growth than a single unit franchise. Particularly as the master franchisee keeps a good portion of the initial fees and royalties that the individual franchisees pay over time. To earn these fees, the master franchisee will most likely be responsible for providing a certain level of ongoing support (training, recruitment, marketing, operations, etc.) services to the franchisees within the designated territory. In addition, depending upon the agreement, the master franchisee may be required to open a certain number of units in a specific time frame or schedule, and may also be required to open and operate one or several units of their own.
In order to conduct an intelligent evaluation of any franchise - you need to "know the lingo." Every industry has its terminology, and franchising is certainly no different. Here are the 10 most important terms you will need to know before you buy.
Franchise: The legal rights (the surrounding trademarks, copyrights, franchise operating system, support, training, product or service) a Franchisee obtains from a Franchisor under a franchise agreement to operate within a designated contract period as their business.
Franchisee: The person, partnership or company who pays the Franchisor for the right to own and operate a business using the Franchisor's marks and system.
Franchisor: The person, partnership or company that controls the overall rights to the franchise.
Franchise Agreement: A non-negotiable contract between a Franchisor and a Franchisee in which the Franchisor grants the Franchisee certain legal rights to use the Franchisor's marks and system in connection with a business to be independently owned and operated by the Franchisee.
Franchise Fee: Often referred to as "initial franchise fee." This is a one-time, up-front payment by the Franchisee to the Franchisor for the rights to a franchise. This fee is due and paid once the Franchise Agreement is signed, is generally non-refundable, and precedes final payments.
Capital Required: The amount of money a Franchisee will need to ramp up their franchise business during the start-up phase (average 3 to 15 months) to the point of producing a profit.
Exclusive Territory: This is the region or area a Franchisee will have exclusive rights to operate within. It is generally defined and mapped in terms of targeted households or population.
Liquidity: The total cash available to a franchise owner for business operation or living expenses.
Net Worth: Your assets (i.e., the cash value of all you own) minus your liabilities (i.e., what you owe).
Royalty Fee: An ongoing fee paid to your Franchisor for support services received through the life of your contract - usually a percentage of gross income or a flat monthly fee.
"A goal without a plan is just a wish."
—Antoine de Saint Exupery(French writer and aviator)
Prontaprint Ltd, Wiltshire Farm Foods, Pirtek UK, Signs Express, Driver Hire, TaxAssist Accountants, Apollo Blinds, Countrywide Ground Maintenance and Snap-on Tools have all been announced as finalist for the British Franchise Association 'Franchisor of the Year' awards sponsored by Express Newspapers and HSBC. The winner will be announced at a special dinner being held on 18th June at the East Midlands Conference Centre.
Susan Boyle's moving performance on Britain's Got Talent reminds us that we should not judge a book by its cover. You have to read the whole things or at least a good portion to really understand what it is all about. The same rule applies when evaluating a franchise business. Specifically:
1. Keep an open mind
Just because you may be familiar with a company, do not assume that you can simply tell from the product or service what your income, role, or lifestyle will be like. Thus it is critical to focus on the business model, not the widget.
2. Keep your emotions in check
Emotions -- good and bad -- can get in the way of objectivity. Thus, if necessary, pretend like you are a reporter trying to gather as much information as possible about a particular franchise company.
3. Keep the main thing the main thing
Information gathered should be trying to answer four key questions:
a) Does the business model work?
b) Do you want to execute the business model?
c) Will this model take you to your goals and dreams?
d) In other words, is this an owner's role you will enjoy in the long-term?
By trying to answer these questions through a process of mutual due diligence rather than getting bogged down in the minutia of the details, franchisee candidates are better able to stay focus on what is really important -- finding and investing in a franchise business to help create their desired future.
"Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves, Who am I to be brilliant, gorgeous, talented, fabulous? Actually, who are you not to be? ... Your playing small does not serve the world. There is nothing enlightened about shrinking so that other people won't feel insecure around you. We are all meant to shine, as children do... And as we let our own light shine, we unconsciously give other people permission to do the same. As we are liberated from our own fear, our presence automatically liberates others."
— Marianne Williamson (A Return To Love: Reflections on the Principles of A Course in Miracles)
Lately when I review my weekly copy of The Economist, I am reminded of the fact that we are in "the eye of a storm." Major corporates have failed and others are barely holding on. Furthermore, while governments across the globe are working frantically to shore up the markets, things are far from being stabilised. To some degree we can blame the media for revelling in the story and talking up the notion of a crash or worse yet a major depression.
This has trickled down to would be entrepreneurs - either those starting up from scratch or getting into business via a franchise. And as I've seen in my own practice, this has caused some to sit on the sidelines. Others are swimming against the tide and doing all they can to pull themselves and the globe at large out of this cycle. Particularly as despite the challenges, having done their homework in regards to the market opportunity, they feel compelled to move forward and make things happen.
This makes me think about the famous "Citizenship in a Republic" speech given by former American President Theodore Roosevelt at the Sorbonne, Paris, 23 April 1910. A memorable quote from that speech reads:
"It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat."
Thus as I work with potential franchisees, I am honing in; looking for clues to determine - who amongst the many - will get in the arena. Truthfully, it is not always easy to tell. Sometimes even the most compliant franchisee candidates become overwhelmed with fear and walk away. Others surprise me and charge forth like raging bulls because they understand that while some large companies have failed, there are many other businesses out there thriving. In fact, some industries within the franchising sector could be considered recession resistant. Therefore with proper research and validation, the returns sufficiently justify taking the risk. Particularly as the British Franchise Association recently pointed out: "It's not a matter of pretending that the market conditions aren't tough, because they are, but the inherent strengths of franchising lets it stand out from the crowd."
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