Most well established franchisors, whose own business and the business of its franchisees have successful track records of operation, will usually make the franchise sections of the major banks aware of their franchise offering. The banks then take a view on whether or not to lend to new franchisees for that system in principle, and they then put in place a procedure for the franchisor to introduce candidates to them.
The most important part of the process, once the franchisor has satisfied themselves that a candidate is likely to be able to run one of its franchises and has sufficient collateral to obtain the required funding, is for the franchisee to complete a business plan, usually with some guidance from the franchiser or a third party, and submit this for the bank to consider.
Even if you don’t need to borrow money to acquire and run your franchise, it’s a good idea to discuss your proposed venture with your bank because they can get a view on the system in question from their franchise Section. It may be that they wouldn’t lend on it anyway – in which case that’s a warning to you to steer well clear.
Brian Duckett is Chairman of The Franchising Centre with over 30 years experience in the franchise industry. The Franchising Centre helps and supports potential and existing franchisors. Click here to find out more.
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
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.
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.
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.
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.
The UK’s business landscape is set for its biggest shake up since the industrial revolution, according to HSBC’s Future of Business report, released at the end of May.
The report, from HSBC Commercial Banking and The Future Laboratory, predicts that the economic downturn, increased emphasis on internationalisation and changing demands on business will profoundly alter the UK’s ‘business map’ as the 21st century unfolds.
It is forecasting a new regional geography with the birth of five new ‘supercities’ and a map of tomorrow populated by nanotech, cybernetics and a growing emphasis on bio and tech sciences driven by new economic income streams.
According to the report’s authors, the changes are being driven by the recession, which will create an emphasis on interpersonal skills in business; technological advances; the demands of many for new and flexible ways of working; more business trade taking place across international borders, and a rise in entrepreneurship.
According to the research there will be a new-look UK with business hubs focusing on:
· Robotics – Edinburgh, Birmingham, Essex, London, Manchester, Plymouth
· Biotech – York and Dundee
· Nanotech – Oxford, Cambridge, Newcastle, Durham, Bristol, London
· Stem cell research – Edinburgh, London, Cambridge, Liverpool, Manchester
· Nutraceuticals – Dundee / Southampton
· Renewable energies – London, Wales, Cornwall, Glasgow
· Cybernetics – Reading
· Gaming – Dundee, Edinburgh, Glasgow
The HSBC’s Future of Business report also identifies four new ‘types’ of entrepreneurs that are set to capitalise on the current environment and drive the changing landscape forward. From transpreneurs (an elite new breed of super-global entrepreneurs with connections and workspaces all over the world) to referral economists (who’ve emerged from the social networking boom, are ‘always on’ and are building businesses on word-of-mouth alone), the report finds these groups are rapidly shifting the way we work and do business in the 21st century.
Noel Quinn, head of HSBC Commercial Banking UK, said: “The face of business is changing and while we are in tough economic times, the HSBC future of business report unveils some positive new trends that could alter the working world tomorrow”.
To download a copy of the HSBC Future of Business report, go to http://www.hsbc.co.uk/1/2/business/info/resources