Franchise Focus: Franchising Leads The Way
Brian Duckett - Chairman, The Franchising Centre
The Franchising Centre is reporting a big upsurge of interest in franchising from businesses looking for new ways to expand during these difficult economic times.
There has been a lot of talk recently about redundancies in the public sector and the need for the private sector to lead the way out of recession, creating employment as it does so. Interestingly, as painful as any job losses are, the statistics show that the current level of unemployment is not as high as many had predicted it would be by now and the transition from public to private sector is starting to happen.
Franchising has its part to play in the important task of getting the UK economy back on track and the good news is that the sector seems to be rising to the challenge. The Franchising Centre certainly endorses this view as both its domestic and international divisions, who deal with businesses who are aggressively chasing growth by seeking to franchise their operations, have seen vast upturns in enquiries since the turn of the year. This can be seen as an early pointer as to what is happening in the economy even though the impact may not be felt for some time.
Chairman Brian Duckett commented “It appears that the dam has burst and pent up demand is being released. During the last couple of years it was apparent that many business people were holding off from making big decisions. However, since the start of this year we have received more enquiries and taken on more new clients than ever before. It’s great to see the energy and drive of independent business people helping the cause and this seems to herald a new phase in the growth and significance of the franchising sector”.
Duckett also went on to say “We ourselves now have the challenge of growing and coping with the number of enquiries we are getting from businesses who wish to explore franchising as an option for growth. We are currently seeking experienced franchising practitioners to be trained to add to our team of franchise consultants so we can continue to play our part in helping the expansion of businesses across the UK and around the world.”
“Our team are at the coal face talking to businesses every day about what their plans are for the next few years and we can report that growth is very much back on the agenda and that franchising is leading the way.
Anybody fancy a flight with an unqualified pilot?
Dan Archer - Franchise Development Director, X-Press Legal Services - Director, BFA
Over many years of speaking to prospective franchisees I have often heard the franchisee say “we are also looking at XYZ Ltd (the names have been changed to protect me!) they have applied for bfa membership.” My response to this has always been that they may be a franchisor that meets the British Franchise Association’s (bfa) membership criteria, but until they have been accredited they may not be! This is the equivalent of taking a transatlantic flight with someone who is in the process of taking their pilot’s test, wouldn’t you rather be flown by a qualified pilot?
It may be worth starting with what bfa membership actually means and what role the organisation fulfils. bfa members are checked against a set of criteria which include the viability of the model, the background of the directors, whether the contract meets the bfa and by default EFF code of ethics and the marketing material used by the franchisor (disclosure). In addition for Associate and Full Membership references are taken from existing franchisees. All of this does not provide a guarantee of the prospective franchisee’s success but it does ensure benchmarking against predetermined best practice measures.
The bfa performs this function as the only self regulating governing body for franchising in the country. It is important as there is no specific legislation for franchising in Britain unlike the US. This is however another area where confusion can exist. The US association which is called the International Franchise Association or IFA (in the truest traditions of US global self image which gave them the World Series Baseball!!) does not perform the same quality checks as the bfa does on its members. It does not need to as the US market is regulated, and as a result IFA membership provides no quality assurance in this country.
Now there is a whole argument to be had about whether regulation is a good thing and I happen to believe that effective self regulation is far better at protecting the interests of a franchisee. Lawyers or Consultants may have a different view but they would also have a commercial interest in the institution of a regulatory framework so perhaps a pinch of salt in addition to those views.
So where does that leave us? The self regulatory function provided by The bfa protects the interests of franchisees by educating prospective franchisees, providing guidance to franchisors, rewarding best practice and limiting the exposure that poorly constituted franchisors have to the market for prospective franchisees. bfa membership (once won) can be checked on the website www.thebfa.org and is relevant to the British franchise market.
IFA membership is not international, but is relevant to the US market and so we end up where we started, “this is your captain speaking, we are cruising at 33k feet over the Atlantic just thought I should mention I haven’t passed my British pilots licence.” Parachute anyone?
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
Could a Franchise Business be your road to a Brighter Future?
Joel Caws - Technical Director, Select Your Franchise
With the economy still very slow to recover, many people are asking themselves if now is a good time to start a franchise business or any other business for that matter. Some people are biding their time, holding on to the security of their current employment because other options seem to carry uncertainty. Those who, prior to the recession, might have been considering a job change or branching out on their own, have chosen to sit it out and see what the future brings.
Then there is of course those who have been victims of cutbacks and redundancies; all too familiar news during the course of 2009.
Despite the doom and gloom of the turbulent last few years, franchising has remained a success story. The release of the 2010 Natwest/BFA Annual Franchise Survey confirmed once again that around 90% of franchisees trading in 2009 were trading profitably. This is a statistic that seems to have stood up consistently over the years and hasn’t wavered despite the recession.
The heart of a franchise business is its proven system. By proving a concept and then documenting the processes and formula which achieved their success, a franchisor can provide a system for another to follow and potentially replicate the same success. In addition, many franchise systems are based around highly desirable or ‘must have’ services and products which has helped to protect them against the downturn.
Statistics have shown that now is just as good a time as any for starting a franchise business. Indeed the success rate holds true
Of course no business investment is without risk. However, with careful research and deliberation, good professional advice and guidance from franchise lawyers and financial institutions, and good old fashioned determination and dedication to work hard and succeed, a franchise business could well be your road to a brighter future.
