 BUSINESS 4NETWORKING [Franchises? Would you?] |
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Posted on 08th Oct 2008 at 16:22
Looked at this for a while for YLT, maybe-maybe not, not sure yet.
Anyway, anyone here own/run a franchise?
Know anyone who has/is?
Whats your take on it and would you?
Is the current credit crunch stuff something that would make this sort of thing a definate NO-NO?
Be interested in your views.....
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Posted on 08th Oct 2008 at 16:27
If you're asking would I buy a franchise in a business, nope, I owned a Community Times license a year ago and it was hopeless. All I had done was bought myself a direct sales job, and rather than work for someone else and have a salary, paid £5000 to build someone else's brand. Wouldn't touch them with a bargepole any longer.
Question, what does the franchise or license offer that I couldn't do for myself? If they talk about brand, is it a recognisable brand (MacDonalds) or not. If not, where is the value.
If you're asking would I franchise a business I owned, only if I honestly believed I was giving the franchisees real value, so delivering to them a business that I was already running profitably with systems and marketing materials in place for them to use.
Too many franchises are set up before the actual business is proven. People are buying nothing except a nice folder.
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Posted on 08th Oct 2008 at 17:01
I agree with Stef there.
The proper franchise model represents what many consider to be the perfect business model.
Difficult to imagine Mcdonalds as the 'perfect' business, I know, and we all take the pee out of both the company, and it's employees. (Let's face it, the word 'Mcjob' has even found it's way into the dictionary, and it doesn't say; "see also rocket scientist")
BUT
Think about it. The powers that be who run Mcdonalds do not have to get their hands dirty, the business is run entirely by Mcemployees, who, in turn, provide an absolutely consistent service. You can go to a Mcdonalds anywhere in the country, and you know you can get a double sausage and egg Mcmuffin until 10.30am, you know you can have a chicken nuggets happy meal, with toy, how much it will cost, and exactly how it will taste, you know that, if you order more than one item you will end up in the 'large order' parking bay while the rest of your order goes cold.
It's that level of consistency that keeps people coming back. You always know what to expect at Mcdonalds because their financial, managerial and operational systems have been honed over many years of experience. Buying a Mcdonalds franchise is like buying a license to print money (at least it used to be, and, to be fair, still is, in spite of recent health questions etc).
This is the 'franchise dream', and it works very, very well, WHEN it works. As Stef quite rightly points out, without the branding, without the support and without the systems & tried and trusted procedures to follow, what are we actually buying?
Generally, my advice would be to look at what you are getting for your money. Even if you are getting the branding, web site / marketing support etc, are you really getting the full package? If not, you are no better off than anyone else selling a well known product, and I would steer well clear.
 
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Posted on 08th Oct 2008 at 17:48
Franchising sucks - Generally.
There are some sensible franchises out there, but you pay top top dollar. Chocholate fountain franchises - 7k, 3 days training, a 2.5k choc fountain and 3 days "training" isn't a franchise.
Watch out for the selling of certainty.. there's no such thing in business and certainly not in the present climate.
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Posted on 08th Oct 2008 at 17:49
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Posted on 08th Oct 2008 at 17:52
I think those that are successful are those with a massive brand behind them. If I were looking to set up a coffee shop, then I would look at Coffee Republic before trying to set up an independent.
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Posted on 08th Oct 2008 at 18:01
I used to be very anti franchising, and that is one of the reasons that 4N is deliberately not franchised, as I took the view that the franchisor was either selling its future profits at a discount (if the money making proposition was soooo good) OR, it was ripping people off.
But the missing bit in that way thinking is the power and motivation of someone running their own business.
For this to work there needs to be more than a brand and a website - as these are relatively simple to create yourself. In practise running your own business on your own is a tough gig because multiple skill sets are required and none of us have a complete tool kit. (Yes one of the beauties of 4N is the support community to offset that weakness).
So a franchise needs business systems and processes, support and training, tools, brand, and above all a proven track record, not just by the owners of the business, but by other 'normal' franchisees. - Sure there's a catch 22 here, but early franchisees should get in very cheap to prove the model and help improve it.
Also be absolutely clear who is generating the sales? The Franchisor - like McD or Rainbow, or the franchisee like most other outfits. Often in the later case the franchisee is under the impression that the franchisor will provide meaningful help and support, when the reality is that the help and support is merely nominal.
Tim Johnson
Director of Strategy
4Networking Ltd
O: 0845 123 4444
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Posted on 08th Oct 2008 at 18:04
I have recently started a franchise of Shoes Galore. About 50% of my fee was stock - I sell it, I make money on it instantly. The rest was a 2 year licence and training.
The pros? I couldn't possibly purchase the shoes myself and the risk is with the master franchisor - she selects the whole range, I only select the lines I want to carry. If she buys a duff range and no franchisees select it, then she bears that cost. The business is small enough scale to be manageable and not too high risk in the current climate. I can scale it up when I want to simply by buying in additional lines of shoes and accessories but I am under no obligation to do so.
The cons? I am at the mercy of head office! They are pretty good, but when you are used to being entirely your own boss, then it can be difficult to adapt back to having to rely on someone else. If head office are out of stock of a style, then I lose a sale. Having said that, that is no different to any otehr supplier relationship.
But chose something you believe in and that there is a market for (same as any other business venture). Make sure you fully understand all the costs you are liable for - they aren't always obvious. Make sure the franchise agreement is fair and not all in the master franchisor's favour. Do your research, check the legals, bla bla.
But I think franchises can be a great way to get a business going quickly and to access a marketplace that you would otherwise not have a hope of getting into.
Shoes Galore Letchworth
01462 481757
sgletchworth@ntlworld.com
www.shoes-galore.co.uk
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Posted on 08th Oct 2008 at 18:08
Quote:
Often in the later case the franchisee is under the impression that the franchisor will provide meaningful help and support, when the reality is that the help and support is merely nominal.
Bang on Tim. That was my experience. My £5000 + VAT bought me a lovely leather presentation folder and some online downloadable notes on how to run the magazine. The head office set up was understaffed so they had precious little time to deal with incoming calls, let alone provide the handholding they claimed to.
My experience probably wasn't that unusual. It looked good and I didn't do my due diligence, instead, I believed the very plausible 'Sales Director', who I never ever heard from again after I'd parted with my cash.
Where you putting that Coffee Republic in Witney Graham? And will you be doing frappucinos?
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Posted on 08th Oct 2008 at 18:14
But, if the model is right, the training and support is genuine, then it can be a really good solution. The catch is that all of that doesn't usually come cheap. And if you are paying a lot of money then a lot of due diligence should be done.
For example it amazes me how many people 'buy into' a pub licence when they've never worked as a publican - why not get paid as an employee to do the job as a manager first, before parting with thousands only to find out the reality was far away from your dreams.
Tim Johnson
Director of Strategy
4Networking Ltd
O: 0845 123 4444
smile meet chat join
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Posted on 08th Oct 2008 at 18:23
"Where you putting that Coffee Republic in Witney Graham? And will you be doing frappucinos?"
And set up a competitor to Hacketts? I don't think so. I do think they have agreat model for outlying towns e.g. SW peninsular or Scotland - it'll be a while before Starbuck and Costa get to those places, so a branded offering would do well IMO
Graham Smith Business Services
Helping To Make Your Accounts A Useful Tool For Business Success
Bookkeeping
Management Accounts
Project Accounts
Call us: 01993 771100
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Posted on 08th Oct 2008 at 18:25
Franchise Hackett's. It ticks the boxes.
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Posted on 08th Oct 2008 at 18:36
Kendlebell is a franchise as many of you will know. We did plenty of due dilligence before buying it. It's a recognised brand and therefore people trust it. However, if we hadn't earned the good reputation we now have then we wouldn't have survived, we were on our own as far as building our business goes. On the other hand, while other Kendlebells are our competitors they are also our allies, we can help each other out. But if one Kendlebell gives bad service we all get tarred with the same brush! Hindsight is a funny thing - successful as we now are I'd say don't buy into a franchise but back when we didn't have any experience of running our own business it was just what we needed.
Karen Thurley (RN)
Kendlebell Swindon and The World!
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Posted on 08th Oct 2008 at 20:51
Personally I have never seen the benefit of a franchise. Ok there are some big ones and at that point you are buying into a brand which clearly carries some advantages. However, my experience from being sent flyers from time to time trying to persuade me into one franchise or another has shown that generally you are not buying into a particularly well recognised brand and therefore just paying the wages of someone who was clever enough to make a business look more than it is. By doing so their aim is to persuade other people to buy into something which then has to be largely created from scratch anyway!
I'm intrigued by Lisa's comment above "The pros? I couldn't possibly purchase the shoes myself" (sorry I dont know how you quote other peoples comments)... Why can't you buy the shoes yourself? Is there any such thing as can't? I've sold all sorts of weird and wonderful things to complement our various business activities and simply present myself to the manufacturer of said product and buy direct on a distribution basis. Ok sometimes its harder than others, but I have yet to find a situation where I haven't been able to achieve the aim and offer a competitively priced solution to my clients.
I think Karen's point above is very worth thinking about (I never knew you were a franchise Karen!) as you are at the mercy of the other franchisee's (is that the right word) - if they mess up then potentially your reputation is down the pan. That alone is a good enough reason in my book to never go near a franchise with a bargepole (I will have to borrow Stefan's bargepole for that!).
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Posted on 08th Oct 2008 at 20:57
For me personally, I don't think I could be doing with all the legalties and rules and hassle. That said, I never say never! People say The Passionate PA is a great brand and concept, so who knows, maybe I will change my mind.
My biggest concern about it would be Karen's point. Another franchisee does a bad job and you business gets tarred with the same brush and there's nowt you can do about it!
Sarah Howells
sarah@thepassionatepa.co.uk
www.thepassionatepa.co.uk
01202 802863 / 07835 749835
The Passionate PA...making things happen. Getting your 'to-do' list done.
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