Nigel Toplis has been in franchising for over 20 years and is currently the Managing Director of The Bardon Group which is the home of leading UK franchise brands Recognition Express, Kall Kwik, Techclean and ComputerXplorers. A former chairman of the bfa he was made an honorary Fellow of Lancaster Business School in 2007 for his ongoing work with its Franchise Elective.
What is franchising?
According to the British Franchise Association (bfa) ‘Franchising is not an industry, nor a business. It is a practical marketing concept employed for the effective distribution of products and/or services. The business format franchising formula is a sophisticated way of doing business where the franchisor agrees in exchange for an up-front fee and on-going fees to lease to the incoming franchise owner, for a specified period, the use of its proven systems including operating methods, know-how, good-will, corporate identity, trademarks and the services of its corporate personnel.
In consequence, the franchise owner is able to launch, without a demanding period of apprenticeship, an independent business fully equipped by the franchisor. The franchisor is offered the opportunity to establish within a few years a significant market share via a substantial network of identifiable outlets thereby creating a valuable economic enterprise by employing the financial commitment and business dedication of its franchise owners.’
This may sound good, but the first question to ask yourself is ‘can my business be duplicated – do I have a model that could be easily learned and followed by others in a reasonable period of time and in multiple locations?’ All good and successful franchises are simple propositions (ever seen a franchise for brain surgery?) easy to understand and can be envisaged as a working model.
Additionally you need to consider ‘can this business generate enough money to create a profitable business for the franchisee and in turn for me as the franchisor? ‘
If you can answer yes to these questions it may well be worth investigating further.
Franchising is not a get rich quick scheme. It requires a great deal of hard work and meticulous planning at every stage of the process, but there’s no doubt that creating a successful franchise is an excellent way to start up or expand an existing business.
Control is critical – the processes of the business must be as fool-proof as possible. First you will have to formalise the business model and prepare all of the necessary manuals and documentation to enable another person to follow your system. Try to keep paperwork to a minimum as it tends to over-burden franchise owners and eventually they will ignore much of it leading to a reduction in control of the concept.
Next it’s time to embark on the process of recruiting, training and then nurturing a network of franchisees.
Once you think you have your franchise opportunity worked out and documented I recommend investing in a pilot operation to prove and test the business system and identify and correct any problem areas. If you are confident that your model works well you will be able to bring it to market more quickly.
There are two different methods of ‘piloting’. A company franchise where the ownership of the business and territory rests with the franchisor who continues to experiment and develop the franchise concept or an introductory fee franchise – where a ‘real life’ prospective franchise owner invests in the business at a significant discount on the understanding that the business is in its development phase and that they are part of a pilot programme.
When you have a system that works it’s time to get out there and market it. At this point I would recommend joining the bfa. As the industry body and trade association representing franchising in the UK this organisation can help guide you through the early stages of franchising and give you best practice advice. Steer clear of so-called consultants, particularly those who have never actually set up a franchise in their life!
There’s no doubt that a successful franchise opportunity provides franchisees with an off the shelf, proven business that is far more likely to succeed than eight out of ten start-ups.
In its 2017 bfa/NatWest Survey the British franchise association reports that the contribution of franchising to the UK economy to be £17.2 billion (up 14% on 2015), whilst the number of franchisee owned business in the UK exceeded 48,600 (up 10%), with over 710,000 people employed, – significantly more people than are in the combined UK armed forces!!