Economic Stabilisation Confirmed in British Franchise sector
It is no surprise to learn today that the UK economy contracted by 2.4% in the first quarter of 2009. On a more positive front however, The National Institute of Economic and Social Research suggested this month that the UK has started to grow again. Clearly hastening the end of the recession and getting people back to work remains the number one political priority for Government.
Some good news this summer includes the recently published British Franchise Association national franchise survey. The survey outlines how the UK franchise community is weathering the economic storm well. By following best practise franchise businesses can protect themselves from economic slowdown.
Many franchisors are also working closely with their franchisees to help with recession alleviation strategies. I encountered one example last week when I was invited to attend the franchise conference of Gymophobics franchisees.
Gymophobics franchisees offer their customers a high level of support in a women’s only gym franchise. To help customers at this time of financial challenge Gymophobics have worked with their franchisees to adapted their payment method to monthly direct debit rather than annual payments for memberships.
This action, and others like it, take the interests of the customer’s finances to the heart of the franchisee’s offering to their customers. In the case of Gymophobics it also provides the franchisees a rolling income and removes the need to resale the membership each year. Win – win and high customer retention is the outcome for all involved proving that recession can bring opportunity.
Proven Format Franchising
Following on from my previous article about what kind of business makes a successful franchise, we can now look at components of a franchise and its format.
Image and System
The clearly defined image and system are what we call the interllectual property. This includes the trade name, the method of operation and the way in which the various elements of the business come together to make up the franchise formula. None of the elements of the package need to be individually secret. What matters is the way that the franchisors ha combined them to create a successful franchise system.
Naturally, the trade mark or name has to be owned by the franchisor as he is licensing others to use it, but don’t worry if your name is not yet well known. That will not stop franchisees from joining you. After all, even McDonald’s and Marks & Spencer started with only a single outlet.
All the elements of the package from design and layout of the premises, through marketing campaigns, to accounting and administration will be detailed in the franchise manual, and it is the system in the manual that the franchisee agrees to operate.
Proven Format
Pilot operations prove that the concept works and it is the evidence of their success that will convince your first franchisees that they should choose your franchise. Even if you have run company-owned branches for years, you must be aware that things will change when you franchise and you must be prepared to run pilot units at arm’s length.
This is just as important if you currently have company-owned outlets which you are planning to convert to franchises and even if the franchisee is going to be the existing branch manager. Something different will happen when it becomes a franchise, so it is wise to find out what that is before you take the plunge.
Pilot units should, of course, mirror the proposed franchised outlet as far as possible in terms of size, location, catchment area, population profile, staffing and so on. It is no use doing brilliant business from a site in London’s Leicester Square and then expecting a franchisee to be equally successful in the high street in Leicester. Ideally, you should pilot the concept in two or three places for at least one complete trading cycle.
Pilot operations help to prove that what you thought on paper will work in practice. If it doesn not, then you still have the chance to adapt it before offering it to franchisees. Pilot units also give you the opportunity to write the manual from practical experience rather than theory.
British Franchise Association- BFA – National Conference 2009
I attended the British Franchise Association – BFA – National Franchise conference last week. The event brought together around 150 franchisors and affiliate suppliers.
The Conference was titled Built to Last – creating stronger foundations for business to prosper. This conference was influenced by three key factors this year -
1. The recession and franchise businesses response
2. Honing the fundamentals of quality franchise business to help ensure long term success
3. One Vision – focusing on establishing the BFA’s structure for its future
Recruiting franchisees
There were a number of break out sessions during the conference. The first one I attended was focused on franchisee recruitment. Clearly the recession has had an effect on recruitment. Franchisors reported a slowing of lead flow over the first two quarters of 2009 compared to the same period in 2008. Many franchisors also indicated that banks are taking longer to agree and release funds for new franchisees. The result has been a slowing in the number and speed of recruitment.
Obtaining funds
In 2009 banks have made clear that all franchise buyer’s business plans must be bespoke. No standard ‘gap filled’ off the shelf busienss plans will be accepted. This is especially so when it comes to local market research. The would be franchisee must demonstrate a knowledge of the franchise, the market and the local competition in their business plan. The findings of the franchise buyer’s report must be reflected in the projected earning predictions included in the plan. Banks are clearly being banks now. They require assurance before lending. Franchisors need to put increased focus in supporting franchise buyers in business plan development before approaching banks for borrowings.
Integrating new technology
I chaired this break out session. The speaker was Alan Fairclough of Driver Hire. Alan explained at length and detail how Driver Hire has used bespoke software, hosted remotely to improve the flow and quality of management information though the network. The outcome for Driver Hire and its franchisees was faster service and invoice times. The result of this system is a franchisor who is in control of their network, franchisees who are well supported and fast action times in all aspects of business from job processing the invoice generation and collection of payments.
One Vision
The British Franchise Association’s – BFA – one vision document was discussed at length. The vision is being slowly developed via working commissions. The commission’s job is to fine tune how the vision, and those it includes, will be managed in the future. The BFA’s goal is to be the recognised authority on all matters franchising.
At the present time there is no franchisee representation withing the BFA. One key goal of the One Vision proposal is to give franchisees representation in the BFA. This may include membership and board level representation. How this will be implemented is currently being explored by the commission.
Franchise Awards
On Thursday evening of the conference the franchise awards were held. The Brand Builder Award was won by Green Thumb. The Award for Enterprise was won by Home Instead and the British Franchise Association – BFA – Franchisor of the Year award was taken by Countrywide Ground Maintenance. Congratulations to all who were nominated and that won.
Tags: BFA, British Franchise Association, economy, finance, franchise, franchisse awards, funds, integrating technology, nick strong, one vision
