So who has anything positive about franchising ?

[Greg PW Shearman]

I have just done a search on this forum and there is very little positivity.

Do it yourself rather than emptying money into the franchisors bank account is a common theme...

I get that franchises are not for everyone but some people need real support and a structured idea at the beginning and throughout their journey.

Who has something good to say about franchising ?

 

[Mark T Jones]

I have a number of clients in franchises - and in the right circumstances they can be great.

IMO, the biggest challenges are the way they are bought and the way they are sold.

A good franchise should offer a solid process, a good brand and ongoing support - I'll admit that a lot that I see on the market fall a long way short on either or both

 

[Greg PW Shearman]

I have a number of clients in franchises - and in the right circumstances they can be great.

IMO, the biggest challenges are the way they are bought and the way they are sold.

A good franchise should offer a solid process, a good brand and ongoing support - I'll admit that a lot that I see on the market fall a long way short on either or both

Which franchise in your opinion offers good process , brand and support apart from saying the blue chip ££££££ ones ? I am intrigued whether its possible that a smaller lower cost franchise can still offer this.

 

[KM-Tiger]

Who has something good to say about franchising ?

I was a franchisee for almost 10 years and it worked very well indeed. I would not have got to where I got to without the franchisor, and at all times I enjoyed immense help and support.

But somewhat unusual, as the franchisor was not in the business of selling franchises (which many are), it just suited us both to adopt the franchise model.

I think there are two key things with franchises:

Don't choose a franchise, choose a business you want to be in and then see if franchising could be a way of doing it.

Does the franchise give you a competitive advantage that you cannot obtain any other way? If, and only if, the answer is a resounding yes will it be worth the franchise fee.

 

[Mark T Jones]

Which franchise in your opinion offers good process , brand and support apart from saying the blue chip ££££££ ones ? I am intrigued whether its possible that a smaller lower cost franchise can still offer this.

By definition the ones that I see are premise based, so there tends to reasonable cost in both the franchise and the fit out costs.

They range from chancers with no real proof of concept to neat, efficient operations.

At this level, franchisees are mostly buying themselves a job, which is fine if they understand that fact.

 

[Greg PW Shearman]

great replies both - if you do not enjoy the job that a small franchise - eg oven cleaning / gardening why would you ?

I would add in what constitutes a job ? need for you to work in the franchise full time with earnings under 100k or do you have another definition ?

 

[Mark T Jones]

great replies both - if you do not enjoy the job that a small franchise - eg oven cleaning / gardening why would you ?

I would add in what constitutes a job ? need for you to work in the franchise full time with earnings under 100k or do you have another definition ?

In this context, it revolves around whether the business relues on you turning up and doing hands on tasks on a day to day basis

 

[Financial-Modeller]

...Who has something good to say about franchising ?

Franchisors!

 

[Talay]

I'd buy a McDonalds for my daughter as they sell proven franchises and I don't see any issues in future growth for a lazier than ever population. I wouldn't buy a Subway franchise.

However, for the small stuff, remember this simplified maths. If you work on a 20% return and you give 10% of sales to a franchisor, then you lose half your return which falls to 10%.

If you work on 40%, then you lose 1/4 of your return.

You need to fully understand just how huge any percentage of sales deduction hurts your bottom line.

 

[Greg PW Shearman]

I'd buy a McDonalds for my daughter as they sell proven franchises and I don't see any issues in future growth for a lazier than ever population. I wouldn't buy a Subway franchise.

However, for the small stuff, remember this simplified maths. If you work on a 20% return and you give 10% of sales to a franchisor, then you lose half your return which falls to 10%.

If you work on 40%, then you lose 1/4 of your return.

You need to fully understand just how huge any percentage of sales deduction hurts your bottom line.

So how about a more simpler format with only paying for what you buy from franchisor ? Is that deemed as a low value low profit franchise ?
The big names the fees are eye watering !

 

[Talay]

So how about a more simpler format with only paying for what you buy from franchisor ? Is that deemed as a low value low profit franchise ?
The big names the fees are eye watering !

The idea of a franchise is homogeneity not partial adherence to a corporate theme.

Can you imagine if a franchisee could add all kinds of crapola from anywhere to dilute the brand marketing and potentially find alternatives to the franchised goods ?

What value the franchise then ?

 

[JEREMY HAWKE]

I have a very dim view on such enterprises however this could be due to the experience in my industry where I have seen every franchise end in disaster . This is from the smallest courier company in a small unit right up to when Business Post pulled the plug on their franchises running very big depots and forcing their owners into bankruptcy !

 

[Ozzy]

I’m not a fan of franchising in general but equally I can see that if you get a good one it works well. A franchise is like getting your own(ish) business with a user manual and a lot of the tools in place already, but you have to pay for that…forever.
That suits some people who want to run a business but want to avoid the steep learning curve, or want to get something tried and test. Basically you want to manage a business.

There are very view franchises I would consider buying, but if I did it would be a well established and tested brand. Your Starbucks or McDonalds type, or Bewiched being a local one round here where I know the owner and know it’s good.

I’d always ask the question. If a franchise is going to cost you £20,000 plus 10% of your sales for life, could you achieve more if you spent that on a marketing strategy. If not, then it’s worth doing the franchise. I know it’s not quite as simple as that, but in principle.

 

[Talay]

I have a very dim view on such enterprises however this could be due to the experience in my industry where I have seen every franchise end in disaster . This is from the smallest courier company in a small unit right up to when Business Post pulled the plug on their franchises running very big depots and forcing their owners into bankruptcy !

I view the franchise as additional benefits to a business which could survive without the franchisor.

If you need national marketing or high cost TV stuff to generate business then you're done for but if McD pulled the plug I reckon the average burger bar could survive on its own merits and if it closely followed the remaining McD options I don't think it would fare too badly in the short to medium term and profitability could actually increase.

A courier business with a national name would disappear into nothing.

 

[Talay]

I’m not a fan of franchising in general but equally I can see that if you get a good one it works well. A franchise is like getting your own(ish) business with a user manual and a lot of the tools in place already, but you have to pay for that…forever.
That suits some people who want to run a business but want to avoid the steep learning curve, or want to get something tried and test. Basically you want to manage a business.

There are very view franchises I would consider buying, but if I did it would be a well established and tested brand. Your Starbucks or McDonalds type, or Bewiched being a local one round here where I know the owner and know it’s good.

I’d always ask the question. If a franchise is going to cost you £20,000 plus 10% of your sales for life, could you achieve more if you spent that on a marketing strategy. If not, then it’s worth doing the franchise. I know it’s not quite as simple as that, but in principle.

I think some of the low end cost franchises are almost a hand holding payment for a guide book on how to do one shop, one man band type businesses. Whilst I think that might be worth it, I am not certain the high ongoing payments are worth it.

For example, I started, built up and sold a house cleaning business some years ago. I looked at the brand leader, Molly Maids and some other regional and new starter franchise models and ignoring the problem of their (then) disguised PAYE / self employed workers, I didn't think someone looking to find a cleaner would necessarily search out a brand leader specifically over recommendation and local staff.

So I went independent and used the budget on direct mail and advertising through local magazines. Today it would be Google Ads search and Facebook push marketing most probably with anything in print being very limited.

I think you have to remember that most franchises are not about buying a business as opposed to buying a job. If your options are near minimum wage and long hours and you have the option to buy a small business or franchise which could increase your income into the £50-100k range then you'd be mad not to try.

I think sometimes a franchise helps some people make that transition, though were I ever to do it, it would be with a back out plan to continue in the same business without using the franchise name.

 

[bodgitt&scarperLTD]

limited.

I think you have to remember that most franchises are not about buying a business as opposed to buying a job. If your options are near minimum wage and long hours and you have the option to buy a small business or franchise which could increase your income into the £50-100k range then you'd be mad not to try.

But people in your hypothetical situation are not going to have the spare cash lying about to enter a franchise...

All they need to do is try, you are correct. And by 'try', I mean a few free posts on Facebook, sub £1k worth of gear to start off with, and if they give it a fair crack they wil be making more than employee wages within a couple of months of starting any one of the 'starter' trades that scumbags try to sucker people into franchising. Window cleaning, oven cleaning, gardening, pressure washing, take your pick. Get your first job, do 110% of what you said you would, ask the customer to recommend you to friends and flyer the street once you've finished. You'll need your first employee within a year.

The thing is, most people won't try. Plenty of people on here (myself included), rely upon people not trying, and being happy as employees.

 

[Talay]

But people in your hypothetical situation are not going to have the spare cash lying about to enter a franchise...

All they need to do is try, you are correct. And by 'try', I mean a few free posts on Facebook, sub £1k worth of gear to start off with, and if they give it a fair crack they wil be making more than employee wages within a couple of months of starting any one of the 'starter' trades that scumbags try to sucker people into franchising. Window cleaning, oven cleaning, gardening, pressure washing, take your pick. Get your first job, do 110% of what you said you would, ask the customer to recommend you to friends and flyer the street once you've finished. You'll need your first employee within a year.

The thing is, most people won't try. Plenty of people on here (myself included), rely upon people not trying, and being happy as employees.

Every time I have hived off a piece of a business or a bit of retail here and there the majority of prospective purchasers and indeed most outright purchasers have been people who never saved up the money but somehow came into the money, often from an inheritance or redundancy and were looking to change their lives.

You're right that most haven't got the money because they cannot save to save their lives and all manner of "essential" crap eats their monthly pay.

 

[Mark T Jones]

So how about a more simpler format with only paying for what you buy from franchisor ? Is that deemed as a low value low profit franchise ?
The big names the fees are eye watering !

That's what convenience retail does with symbol brands

It's a fundamentally different concept where the brand is incentivising the retailer to come on board.

 

[Directimport]

I would like to make it clear at the start that having been a franchisor for over 20 years I would never buy a franchise. The industry is riddled with cheap and nasty “buy a job” systems that could only appeal to people lacking any entrepreneurial ability. It also has a good share of businesses in which failures are likely, sometimes because they are deliberately structured to cause that so that the franchisor can resell the territory.

When I instructed a lawyer to set up the structure for my proposed franchise system he nearly fell off his chair when I told him I wanted to ensure that the terms should favour the franchisee rather than myself as the franchisor. ( I know, I'm a bit crazy.)

I grew my B2B importing and marketing franchise network rapidly by using commission sales agents to establish a customer base in the territories that I had defined. I paid 20% commission on sales resulting from my marketing, and 30% on sales resulting from the commission rep's own initiative. Three of the territories were bought by sales reps.

I sold the network (operating in 4 countries) in 2010 due to debilitating heart surgery, and after operating for 20 years, all the original franchisees are still thriving. No franchises have changed hands.

Yes, I may be writing from the perspective of a franchisor, but here is my overarching advice: SELL FRANCHISES, but DON'T BUY FRANCHISES.

I suggest that there are at least some ethical franchise systems being offered in addition to my own, so don't rubbish the entire industry.

P.S. I have been a member for 9 years, but can't work out how to display that.

 

[DazRave]

P.S. I have been a member for 9 years, but can't work out how to display that.

It's ok, your profile displays "joined Feb 24, 2013"

 

[Red Wood]

I used to live in Brondesbury Park in London, although a very wealthy area, we lived in a modest flat. Our local shell garage was ideally placed to pick up bread and milk when required and I often bumped into the same guy there always driving the latest premium suv, Ferrari, Lamborghini etc.

One day I started a conversation with him and asked what he did, he gave me his card and explained he owned franchises in KFC and a few other large brand names, may of been a MCD logo on there too, but was many years ago so cant rememeber.

He was obviously doing very well.

That's the only experience I have with francises .

 

[BubbaWY]

I had a Snap On Tools franchise 2010 - 2012.

Bloody painful to start with, as it is with any new business. Didnt feel to have much control with Snap On sending whatever stock out each week which they wanted to get rid of. Id get delivery on a Wednesday, and Id have to pay for it on a Friday. So cash flow was always a pain to manage i.e. if Id have a really good week, the following week theyd just send more stock out so it was difficult to build up any kind of bank balance.

Just as I ended, I was starting to see some light at the end of the tunnel. I only went into it because of the recession and went back to what I knew after two years when the economy had settled back down.

I had doubts whether it would pay. You are given an exclusive area where you visit the same customers each week and I had around 60 individuals in total who would regularly buy from me. But I built up from the previous franchisee's weekly sales of circa £2,200 to around £5k a week by the time that I finished.

Snap On are very difficult though. I would say you are a business owner with the franchise, but more of an agent for them where you take on a lot of risk/liability. But on the flip side they do offer a lot of support too.

 

[Marbman]

Back in the mid 2000's I was very keen to buy a franchise and attended various expos in London. I was very close to buying a bespoke mens barbers franchise for quite a bit of money.

I was also interested in a cheap vending machine franchise although I think that would have been a disaster for me.

But at the end of the day I could not help thinking I was just buying a job and a boss, so ultimately I decided to go it alone and use the money (nowhere as much as that barbers franchise) to invest in my own business.

 

[Directimport]

1. I think some of the low end cost franchises are almost a hand holding payment for a guide book on how to do one shop, one man band type businesses. Whilst I think that might be worth it, I am not certain the high ongoing payments are worth it.

For example, I started, built up and sold a house cleaning business some years ago. I looked at the brand leader, Molly Maids and some other regional and new starter franchise models and ignoring the problem of their (then) disguised PAYE / self employed workers, I didn't think someone looking to find a cleaner would necessarily search out a brand leader specifically over recommendation and local staff.

2. So I went independent and used the budget on direct mail and advertising through local magazines. Today it would be Google Ads search and Facebook push marketing most probably with anything in print being very limited.

3. I think you have to remember that most franchises are not about buying a business as opposed to buying a job. If your options are near minimum wage and long hours and you have the option to buy a small business or franchise which could increase your income into the £50-100k range then you'd be mad not to try.

I think sometimes a franchise helps some people make that transition, though were I ever to do it, it would be with a back out plan to continue in the same business without using the franchise name.

I have numbered 3 points that I would like to be the subjects of my reply, and I have numbered my answers.

1. Having attended a couple of franchise expos I felt like a fish out of water because I was offering the only franchise that had any substance to it. Most were "buy a job" offerings, many of which required the buyers to also buy equipment from the franchisor. In the service industry sector most were advertising that they provided a big customer list.

In reality the problem with that is that it is easy to build a customer list by quoting very low prices for the service. The lambs to the slaughter would later find that the customers were not genuine.

This is an example of what I posted previously that franchises are sometimes deliberately structured to fail so that the unscrupulous vendor can resell the territory. They can do it because "There's one born every day."

2. Good thinking! By using your initiative you could successfuly do for yourself what the founder of Molly Maids did originally.

3. Buying a franchise should be about buying a business if the franchisor has set it up as a ready to operate business, based on the real life success of the system.

Later I will post my criteria for a prospective franchisor to self assess whether the business should or should not be franchised.

 

[Directimport]

Here is the list of criteria that I promised.

How To Decide If A Business Is Suitable For Franchising.

There are a number of vital factors to consider:

• The business must have a proven track record, with a credible reputation and some kind of distinctive factor, (USP). It must have a sustainable competitive advantage. That credibility must be evident in the eyes of prospective franchisees.
• Credibility can be apparent in various ways such as length of time the business has successfully operated, its obvious prosperity, the number of regular customers if a food business, or repeat orders if it is B2B.
• Evidence of satisfaction with the brand, as demonstrated by provable testimonials can also be important. You can prepare for this by ensuring that good records of customer satisfaction are kept.
• Even a lawn mowing service or a pet care business can have a USP that makes it a desirable business. A business planning on becoming a franchise organization must be adequately differentiated from its competitors who might already be franchised. This can take the form of a specialized product or service, a unique and successful marketing strategy, or specialized target markets.
• The business must be profitable, and profitability must be provable. This might occasionally entail redacted disclosure of financial records for brief sighting, although I was never called upon to do that.
• There must be sufficient profit available to any franchisee to allow them to pay royalties without creating financial hardship or resentment. Unless a business can generate a healthy return on investment after deducting a royalty, which is usually between 5 and 12 percent, but occasionally higher, it will not keep franchisees happy. As a rule of thumb I suggest that most franchisees would expect an ROI of at least 15 -20%.
• The business system must be well documented, and this should not just be something of an afterthought, because it won't be easy to prepare such documentation retrospectively. There must be a well-organized system that can be replicated. It needs to be teachable. Could someone learn to operate the business in three months or less?

If your business meets these criteria, then it could well be suitable for franchising.

This is written for intending franchisors, but would-be franchise buyers would be well advised to judge by these criteria any franchise being considered.

 

[HFE Signs]

Franchises can be good for people with limited business experience who are prepared to work hard - they're not for everyone but I think there is a place for them. That's about as positive as I can be

 

[Greg PW Shearman]

Some really good and mixed reports and experiences.

Thankfully we are a smaller franchise business where we offer proper support.

Just buying a manual and some initial training is awful as is paying a % of sales plus % marketing !!!

We are so proud of what we have achieved and just sold our 11th franchise in Oxfordshire.

Yes our franchises are a mix of characters but the ones who follow the model are really happy and successful.

 

[Directimport]

Some really good and mixed reports and experiences.

Thankfully we are a smaller franchise business where we offer proper support.

Just buying a manual and some initial training is awful as is paying a % of sales plus % marketing !!!

We are so proud of what we have achieved and just sold our 11th franchise in Oxfordshire.

Yes our franchises are a mix of characters but the ones who follow the model are really happy and successful.

Its good to see that doing the right thing by your franchisees has paid off for you. I am considering selling my system to someone who wants to start a nationwide UK franchise network and although I will not have any control, I hope that whoever I find will be the kind of person who has the ethics that served me well as I expanded my network to 4 countries.

Best wishes for your continued success as you grow your network.