Cathryn Hayes - HSBC Head of Franchising

Thanks to the British Franchise Association, banks, exhibitions, trade magazines and the internet, potential franchisees are better informed than ever before.

Growing your network quickly while only selecting new franchisees with the skills and qualities to suit your business is a difficult balance to strike.

The most successful franchisees will:

• demonstrate they fully understand that this is their business, which they are going to make successful
• have fully researched the franchise and know that it will suit their skills and lifestyle
• take ownership of their business plan
• above all, be passionate.

It’s said that you only get one chance to make a first impression, and that is certainly true in the franchisee recruitment market. Potential franchisees generally take about five seconds to decide if an advert interests them, so it’s critical that your adverts attract attention, promoting all your unique selling points clearly and simply.

A potential franchisee will want to know straight away what the business is, what it will cost, what they can expect to make from it and what support is available. You should also explain whether it is a new concept or a long-established business.

Each franchisee will be an ambassador for your business, and you are the best judge of whether they have the right qualities to be successful. Have a clear idea about the essential skills a franchisee needs and plan your interview and vetting process to test these thoroughly.

One of the common mistakes a new franchisor makes is to accept new franchisees that do not really have the skills required. Equally, be careful about letting a third party recruit franchisees on your behalf on a commission basis.

Before considering an application from a potential franchisee, the banks will also be looking for evidence that they have completed their “due diligence”.

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

Dan Archer - Franchise Development Director, X-Press Legal Services - Director, BFA

Whether you believe that the secular tradition of New Year’s resolutions has its birth with the Babylonians over four thousand years ago or with the ancient roman king Janus, they have become a seasonal focus for the year ahead. The Babylonians used New Year as a time to return borrowed farm equipment which I am guessing is not one of many people’s resolutions and Janus is believed to have kept one watchful eye on the recent past and the other on the future. So apart from lending his name to January he was thought to be the guy to please with your good intentions for the coming months.

For most people New Year Resolutions will be to quit something such as smoking or to lose weight, exercise more, give more to charity or save more. What sits behind all of these sentiments is taking control of the year ahead and improving yourself or having a positive effect on others.

For some 2011 will be their chance to gain the independence and fulfilment that comes from running their own business and for many of those franchising will be their preferred mechanism for entering self-employment. Based on the replication of proven business systems franchising is statistically proven to provide a far better chance of success than stand alone small business. It does however give the “control over your own destiny” that most looking at self-employment seek.

Now this talk of Self-Actualisation is on the one hand all a bit Maslow but in truth the decision to run their own business is usually for the franchisee about not having to bow to a manager’s will, about being in control and about being responsible for their own success. For me it is less about Abraham Maslow and more about the late nineteenth century poet William Ernest Henley who wrote;

Out of the night that covers me,
Black as the pit from pole to pole,
I thank whatever gods may be
For my unconquerable soul.

In the fell clutch of circumstance
I have not winced nor cried aloud.
Under the bludgeonings of chance
My head is bloody, but unbowed.

Beyond this place of wrath and tears
Looms but the Horror of the shade,
And yet the menace of the years
Finds and shall find me unafraid.

It matters not how strait the gate,
How charged with punishments the scroll,
I am the master of my fate:
I am the captain of my soul.

For the unconquerable souls who enter the franchise sector in 2011 welcome to the family and for anybody caught in the employed clutches of circumstance it is not too late to become the master of your fate.

Right, time to return the plough that I borrowed last year from my Italian neighbour before Janus sees that I still have it, which should clean up my slate!

Dan Archer is Franchise Development Director for X-Press Legal Services and is a Board Member of the British Franchise Association. You can follow Dan on twitter by visiting www.twitter.com/therealdarcher

Dan Archer - Franchise Development Director, X-Press Legal Services - Director, BFA

It could be the empty feeling as the rest of the country gets snow and in the North West we don’t. It could be the disappointment of the unsuccessful World Cup 2018 bid but I find myself writing this without my usual joie de vivre. My inherent militant vigour has also deserted me and at the moment I would probably lose a debating competition with a “tuition fee” rioting student.

It is at times like this that I have the fortunate position that every franchisor occupies to fall back on. As a franchisor, at times of reduced enthusiasm and moments of questionable motivation, I have the luxury of turning to the boundless commitment of franchisees for inspiration.

Problems with snow? Not for the franchisees of X-Press Legal Services who have cleared driveways, braved the elements and risked hypothermia to keep their businesses running smoothly. Frustrated by the international politics and duplicity of the FIFA voting process, then take solace in the straight forward way that a franchisee wants to know, how can I do more, better and quicker.

I have suffered the rank apathy of large corporate businesses, occupied by thousands of employees who are happy to maintain the status quo. Franchising’s biggest benefit as a structured business format is that franchisees do challenge received wisdom and push the boundaries of proven methodologies, by doing so they improve systems and benefit businesses.

McDonalds’ biggest selling product world wide is the Big Mac, this item is a classic example of a franchisee pushing the boundaries and a franchisor having a system in place to trial, evaluate and incorporate the ideas that improve the system. Franchisors provide a structure and good franchisees provide skill, capital and enthusiasm which cannot be matched in either standalone SME’s or large corporates.

Many considering franchising for the first time miss the importance of a passion for the franchise business that they will be running. Money is important and return on investment is why you are doing it (in most cases) but the desire to throw off the duvet on even the most wintry of mornings is the ace in the hole of your business, something that we explore in a series of free educational seminars on franchising: www.franchise-seminars.biz

So as I return to a more positive place inspired by franchisees’ tales of triumph over meteorological adversity and mini victories at a local level over council bureaucracy what does it all mean? I suppose it means that franchising can beat the weather and enthusiasm can overturn most forms of politicking, but FIFA remains a lore unto itself.

Have fun (throws a snowball).

Dan Archer is Franchise Development Director for X-Press Legal Services and is a Board Member of the British Franchise Association. You can follow Dan on twitter by visiting www.twitter.com/therealdarcher

Dan Archer - Franchise Development Director, X-Press Legal Services - Director, BFA

History is littered with commonly held beliefs which were disproved by a mixture of scientific development, endeavour and bravery. Until 330bc many believed that the planet was flat. Aristotle was amongst many freethinkers who suggested an alternative theory which turned out to be pretty accurate. Nowadays, not withstanding the foundation of Samuel Shenton’s “Flat Earth Society” in 1956, the spherical planetists are in the ascendancy.

In the same way many in the scientific community believed that the pressures created by flight at faster than 343 metres per second would destroy both the pilot and the plane. Then in 1947 along came Chuck Yeager and proved them all wrong by breaking the sound barrier.

So what relevance to self employment does the shape of the planet and faster than sound travel have? I have been amazed in the last 6 months by the nervousness of some prospective franchisees when it comes to starting their own business. I understand entirely that anybody considering self employment will be having a bout of caution induced nerves which feels much the same as MajGen Yeager must have experienced before his sound breaking flight.

I also respect the fact that taking the step into self employment will be as alien to some as the suggestion must have been that the seemingly flat planet that we inhabit is actually spherical. What I cannot quite comprehend are the instances in the past 6 months of prospective franchisees considering self employment and also applying for jobs. I have so far this year heard on 4 separate occasions “Thanks for your help Dan but I have decided to accept a job offer as I think it is more secure at the moment.”

Far be it for me to suggest that people could be wrong and in truth if they were considering employment alongside franchised self employment, they were probably never fully bought into working for themselves in the first place. I do however have to point out some of the practicalities of what this suggests.

If you are self employed, you are fully in control of your own destiny, you are fully responsible for the business that you are running. You can and history tells us will, do more, sell more, make more, better, faster and more efficiently than you would if you were working for somebody else. Franchised outlets are regularly found to provide better service and to be more successful and profitable than corporate owned and employee managed outlets.

If however you work for someone else you are a cog in a gearing system which has to turn at a pace governed beyond your control and with a greater dependency on the actions of others. You will have less control and will be less in a position to influence the direction of your destiny.

Now neither of these options is without risk and neither is insulated from the impact of market forces. But I cannot accept that working for someone else would give anything other than less security than a self employed position where you could stand and fall by your own actions.

So does my view make me the guy holding Aristotle’s scroll as he shares his thoughts for the first time or the guy from the scientific naysayers with a “Go Chuck” banner. Neither, I respect anybody with the drive to take a step into self employment. In uncertain times, which for sure we have at the moment, those being brave are being especially bold. They are however captains of their own destiny in a way that an employee never can be.

The world is not flat Mr Shenton and we have surpassed Mach One flight several times over. It is only by challenging these norms that we develop. Employment should not be a default position and it certainly does not provide any more insulation from the effects of the economy than self employment does.

Dan Archer is Franchise Development Director for X-Press Legal Services and is a Board Member of the British Franchise Association. You can follow Dan on twitter by visiting www.twitter.com/therealdarcher

Carl Reader, Dennis & Turnbull Ltd

Franchisees should by now be aware that their Self Assessment Tax Return is due for filing by 31 January of each year, through online filing. The deadline for this is fast approaching and it is essential that this deadline is met to avoid penalties and surcharges.

Sarah Walker of HM Revenue and Customs (HMRC) said: “If you haven’t yet sent in your 2008-09 tax return, you need to start thinking about it now.”

You can file your tax return online at http://www.hmrc.gov.uk, or if you have an accountant they should be able to deal with this for you and ensure that the return is submitted correctly and in time.

Carl Reader is the head of franchising at franchise accountants Dennis & Turnbull, a leading firm of accountants in the franchise industry.

The above information is provided as general advice and no liability is accepted by the author, Dennis & Turnbull or Select Your Franchise in respect of individuals or businesses acting on the above. Independent advice should be sought in all circumstances.

Carl Reader, Dennis & Turnbull Ltd

Most franchisees who are VAT registered should have received a letter from HM Revenue & Customs in relation to online filing. As of 1 April 2010, franchisees and franchisors with an net taxable turnover of £100,000 or more will need to file their VAT returns online and pay their VAT electronically. Any franchise businesses registering for VAT on or after 1 April 2010 will also have to file their return online and pay electronically, whatever their turnover.

Stephen Banyard of HMRC said: “Filing VAT returns online has a number of benefits: it’s secure, convenient, does arithmetical checks and calculations, and provides firms with an immediate online acknowledgement that their online return has been safely received.

“So, if your turnover is £100,000 or more, and you’re not already filing your VAT return online, sign-up now for VAT online services – that way, you’ll avoid a last-minute rush, and be able to enjoy the benefits of online filing sooner rather than later.”

Further help in relation to this is available on the HMRC website

Carl Reader is the head of franchising at franchise accountants Dennis & Turnbull, a leading firm of accountants in the franchise industry.

The above information is provided as general advice and no liability is accepted by the author, Dennis & Turnbull or Select Your Franchise in respect of individuals or businesses acting on the above. Independent advice should be sought in all circumstances.

Nick Strong - Franchise recruitment advisor

When considering setting up in business for yourself it is vital that you choose a route that is a suited to your skills and interests.  You must also be sure that the market of interest is timeless and not a fad. 

Many people contemplating going into business for the first time are looking closely at franchising.  Why is this and how can you tell if franchise business is right for you?

Below is an outline of who and who is not cut out to run a franchise business. 

Business format franchise profile definition.  A business format franchise will comprise of the following elements,  It will be-

A proven business system
Replicable  
Supported nationally and locally
Governed by contract
Owned and protected intellectual property, logos that make the system valued

Ideal franchisee profile.  The brand owner is called the franchisor.  The local operative is called the franchisee or franchise owner.  Every successful franchise owner will have at least the following attributes.  They will be -

Able to follow and replicate the proven system
Enthusiastic about the system
Enthusiastic when serving customers
Good with people
Have their family’s backing from the start
Able to raise sufficient capital to buy and run their chosen franchise business

Bad franchisee profile.  Not everyone is cut out for being a franchisee.  Avoid franchising if you -

Do not have your family’s backing
Have insufficient money to set up your chosen system
Do not like following other peoples ideas and systems
Have difficulty in organising your time and priorities

Franchise research – to research franchises for sale in the UK visit www.SelectYourFranchise.com.

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.

Just about any type of business that operates as a branch network has been already franchised somewhere in the world.

Examples of what makes a good franchise

In the US for example, you can be born in a franchised maternity hospital, buy just about every product and service you will need in your lifetime from franchised outlets, then be seen off by a franchised undertaker, and finally buried in a  franchised cemetery. 

However, not every business that has tried to franchise has been successful, and this is due to a number of reasons. To create a successful franchised network certain key elements need to be present. These are:-

• A business with a clearly defined image and system of operation, both at branch and head office levels.
• A business with a proven and successful format suitable for franchising with a product or service that has stood, or will stand, the test of time.
• A business that is easily duplicated and easily learned.
• A business that generates enough profits to support both the franchisor and the network of franchisees.
• A business which has, or can adapt to, a culture of mutual respect and support, and in which it is clear who is responsible for what, and how often, and how well they will perform their obligations.

In my next post I will be outlining the image and system of a franchise and what makes a good franchised proven format.