Franchise View: Owning your Online Reputation
Karl Lewins - Franchise Support and Business Development Manager, Spoton.net
For any local business owner, having a good local reputation is essential. Whether you are running an independent business, or you are investing in a franchise, the importance of this is exactly the same and great customer service is paramount for this.
When buying into a franchise your job is made slightly easier as you are buying into a recognised national brand. It is the responsibility of the head office to ensure the national image and reputation of the franchise company is shown in the best possible light. But locally, where you are customer facing, your reputation is still the key.
Once upon a time it was a fairly easy to manage your reputation as customer service has always been at the forefront for any business. I remember watching a training video for Argos before the boom of the WWW and they said that a happy customer would tell 3 or 4 of their friends if they have had a pleasant experience, but an unhappy customer would tell 14 of their friends if they had a bad experience. At the time I was surprised by these figures, but looking back I now see that 14 people is not even a drop in the ocean compared to what damage could be done now!
With the rise of the ever expanding World Wide Web and the very influential power of social media, you now need to own your reputation on-line – and not just your domain name.
The damage that can be inflicted on a business if customer service is not managed correctly can be devastating. Customers and potential customers have a multitude of platforms at their disposal where they can vent their frustration and anger towards a business should they wish, and this can easily snowball (and has) to have a long lasting, damaging effect on the reputation of your company.
The idea of social media platforms such as Facebook, Twitter, Linked In etc is for you to build up advocates of your company. But also from here you can address any problems or situations when they occur so people know you are a customer focused company. Every company will make mistakes along the way and that is to be expected, but it’s how you deal with them that will set you apart from your competitors.
Social media is such a powerful tool if it is embraced correctly. Not only does it actively promote your company but it also gives you the ability to manage your online reputation. You can prevent a potentially damaging situation and turn it into some great PR.
Karl Lewins, Business Development Manager at Spoton.net. For further information on the Spoton.net franchise please see their full feature.
Graduates faced with Unemployment turning to Franchising
Joel Caws - Technical Director, Select Your Franchise
A recent article by the Guardian outlines how some enterprising graduates are turning to franchising as a route to starting their own business, rather than sit in the lengthening job queues.
Graduate unemployment is reported to be at the highest level in 17 years so its no surprise to see why many have grown tired of chasing that elusive employed position and are beginning to take their futures into their own hands.
The wide range of franchise business options available means there is likely to be something to appeal to everyone. There are reported to be over 800 different franchise concepts currently running in the UK. With this kind of choice, and the fact that you are effectively building up your own business rather than working for someone else, franchising will likely become an ever more attractive option for those fresh, enthusiastic graduates.
The biggest challenge is likely to be the initial franchise fee, which can run from a few thousand for small scale to tens of thousands of pounds for larger franchises. For a graduate, fresh out of university, several thousand pounds might not be that easy to come by. However, it seems that families have rallied around for some enterprising graduates to give them the head start they need to get established. Of course, finance is often available from banks providing its presented with a good solid business plan.
If more graduates were to realise the potential offered to them through a franchise business, it would be interesting to see how this affects the average age of those running a franchise business which is typically focused around the 40′s in the UK.
Franchise View from HSBC: Out with the old, in with the new
Cathryn Hayes - HSBC Head of Franchising
As we say goodbye to 2010, our thoughts turn to next year and the challenges that lie ahead for the UK franchising sector.
Public sector cuts
Franchisors need to look at any existing public sector contracts they have, and the potential impact on their business and those of their franchisees if these are lost. The British Chambers of Commerce has warned that small firms supplying the public sector will be hardest hit by the Comprehensive Spending Review’s cuts, as local authority funds from central government will be reduced by almost a third.
BCC director of policy and external affairs, Adam Marshall, said that a lot of small firms are dependent on local authority contracts. “There is a high risk for businesses in public sector supply chains, which will see a number of contracts go, particularly those working with local authorities.”
However, he added there was a silver lining as some departments would outsource more work to cut costs – meaning additional income streams for franchisees. “Over the next three to six months the impact of the cuts will become clearer. Firms should keep an eye out for new opportunities,” said Adam.
Franchise owner recruitment
The other impact of the public spending cuts is that many public sector workers could lose their jobs. Are these the next generation of franchise owners? Many will have received redundancy payments and therefore have the funds to buy a franchise business – but are these the most suitable individuals to become franchise owners?
Many franchisors have commented that this pool of individuals could be looking at franchising as a last resort if they are unable to find full-time employment, raising concerns about their motivation and suitability for franchise ownership. They may also be tempted to pull out of the recruitment process if they do secure another salaried job, wasting the franchisor’s time and money.
Franchisors need to ensure their recruitment process is robust to avoid situations like this.
January VAT rise
George Osborne announced in his June Budget speech that the main rate of VAT would increase from 17.5 per cent to 20 per cent from 4 January 2011.
Franchisors will need to consider if their franchisees are to pass this price increase on to their customers, or absorb the cost themselves and the resulting affect on cashflow and profitability.
Looking to the future
Despite all this uncertainty, the UK economy enters 2011 with four consecutive quarters of growth under its belt and an overall annual growth rate which has not been bettered for over 50 years. Franchising has performed strongly, demonstrating resilience in very difficult trading conditions over the last year or so.
HSBC remains committed to supporting franchising, and looks forward to working with franchisors to overcome the challenges the New Year brings to ensure the sector remains successful.
Posting from the monthly HSBC Connections newsletter. For more information or to get on the mailing list for the newsletter please email franchiseunit@hsbc.com
Tags: cathryn hayes, economy, franchise business, Franchise Finance, franchise recruitment, franchising, spending review
