YOUR BUSINESS SUMMER 2018 - 71

Franchising

you receive a licence and then you
will be given training afterwards.
As a prospective franchisee, you
should also do your own due diligence
on the brands you're considering. The
industry is unregulated, so make sure
you know a bit about the company
and speak to some of its independent
franchisees. BFA accreditation is
also a signifier of a healthy system.
"Do something you enjoy and
remember it's a business relationship
with human beings," says Price. "If
you have a shortlist of five franchises,
meet the people at the top of each
and decide based on that."

Follow the rules

WORDS GREG PITCHER

TV business expert Geoff Burch
says taking on a franchise is a good
way to be successful as long as you
understand exactly what you're getting
into - and follow the instructions.
"If you have a business idea, your
friends and family will lie to you," he
says. "Everyone will tell you what a
great idea you have. But a franchisor
will be run by people who will tell you
to your face that you're an idiot. You'll
find out if you're too scruffy. It's all to
the good; they want you to succeed."
Burch also warns that running
a franchise is not a way of buying
the benefit of the investor's money,
while the franchisee gets a brand
and ongoing investment in product
development and innovation."
According to Price, entrepreneurs
can buy into a franchise from as little
as £5,000. In other instances, the
up-front fee could be 100 times more.
"There will be an initial fee to pay
for the brand licence, equipment
and support," says Price. "We would
never expect franchisers to make
a profit from that. Then there is
investment, such as liquid capital, and
a monthly management service fee,
usually about 8 to 12% of income."

Due diligence

There is often quite a process to go
through to become a franchisee -
you will be intensely vetted before

a job. "It isn't employment," he
says. "It's nine-tenths of the way
to being self-employed. Running
a franchise is like buying a cake
mix - you're doing the cooking but
you follow the recipe. If it says to
put an egg in it, put an egg in it."
Franchisors have often run the
business on the ground before stepping
back and have made all the mistakes
for you. "They've refined the model
and put it in the instructions," he says.
"It's almost inevitable that you'll have
success if you follow them, but people
fail because they don't do this."
The scope for innovation can be
limited when you're running a brand
with clear guidelines and practices,
but it does happen. "The Big Mac
was created by a franchisee," says
Price. "Often, they will feedback
ideas and may be allowed to
trial something, and that could
eventually be rolled out centrally."
She adds that recruitment,
retention, people development and
team dynamics can often be the
key to success, and this element is
often left up to the franchisee.
"The better you set your team up,
the better you serve customers, the
more profit you can make," she says.
"A lot of franchisees are millionaires."

My franchise success
Entrepreneur Safwan
Adam graduated in
2011 in aeronautical
engineering and after
a fruitless job search
stumbled across the
franchise model.
Following research, he
applied to take on a
branch of secondhand
electronics store CeX.
"As part of the
interview process, I did
a three-day experience
at their training
centre and in store,

but I was fresh out of
university and they
said I wasn't ready."
Adam refused to give
up and "kept calling"
until they offered him
work experience. This
eventually led to him
opening his first store,
in Lewisham, in 2012.
"We broke all records
for buying and selling
equipment," he says.
"Within two weeks,
I was looking at my
second site and within

three years, we had six
stores up and running."
With his brother
now on board, Adam
has expanded his
empire into an umbrella
company investing
in various franchises,
including German
Doner Kebab and a
care service provider.
"To succeed in
franchising, you just
need to follow the
model and build
relationships," he says.

71
YOUR BUSINESS SUMMER 2018

Table of Contents for the Digital Edition of YOUR BUSINESS SUMMER 2018
