franchising a business in the UK

Franchising A Business

Franchising A Business

franchising a business in the UK

So you’ve got a business that’s doing well and now you want to scale it up through launching your own franchise. It’s a huge topic but this primer highlights a few immediate things to consider before franchising a business in the UK. Speak with a Franchise Consultant like Lime Licensing Group or find a list of advisors at www.franchiselife.co.uk

Confidentiality

The first thing to bear in mind when before franchising a business is that you will be admired from afar but not for the reasons you might want. Many highly experienced franchisors, executives and entrepreneurs will be checking you out with a view to doing it better than you. It’s easier than you think because those with the knowledge to franchise a business can enter into a joint venture with your biggest competitor and launch the franchise you were thinking of. So, your first step is to be very careful who you share your franchise dream with. Plagiarism is rife in the industry. Adopt a confidentiality policy within your company, get people to sign NDA’s (including your bank manager / accountant etc) and start getting paranoid who you discuss it with.

Proven Model

Franchising a business should only really be done from a position of profit, this means that any business owner who is going to be taken seriously must have an already successful business before  launching a franchise based upon it. Those words “already successful” are paramount and means that business start ups and all those ideas and concepts, no matter how well thought out, are unsuited to franchising. Don’t even contemplate launching a franchise to raise funds or save a failing business it won’t work and you’ll hurt others in the process. It’s also true to say that in the same way that franchisees must be able to afford buying your own franchise, you’ll also need to be able to afford to launch your franchise model too. If your business is a bit strapped for cash then concentrate on laying some financial fat down in the company before franchising a business.

Brand Ownership

Franchising a business entails granting the rights to your brand to others to replicate the business model so it follows that you usually need to own the brand name to do that. So before franchising a business ensure that you own the intellectual property, or at least have the rights to it if someone else does. The base elements of your intellectual property as far as franchising is concerned are usually trademarks, but research and then grab domain names and social profiles too. Take advice from Lime Licensing Group as to the other elements that you may need or speak to a lawyer but get your IP in order at the outset. http://www.limelicensinggroup.co.uk/ip-protection/

Setting up a pilot franchise

Before franchising a business you need to prove that a satisfactory commercial environment exists for what you are doing and most businesses do that with a pilot franchise. A pilot franchise is a test based upon the current model using someone who will act and integrate with you in the same way as a new franchisee would. They can be employed or self employed because it is the results of their activity that you want to discover. It may be that the characteristics of your current business are suitable to be the pilot franchise but by running a pilot (or a test or template as they are also called) you’ll learn a lot yourself and carry the credibility that you need to demonstrate to new franchisees that the business is already successful in the hands of a new franchisee and that the relationship between franchise owner and franchisor has been well thought out in light of practical experience. A pilot should be run for a long enough period to experience the desired outcome, great franchisors can look a franchisee in the eye and tell them that if they do A,B or C, they’ll get X,Y or Z. and that if seasonal variations exist they are allowed for.

Restrictions 

Replicating what you do by franchising your existing business will only be successful if the model is successful in the hands of a pilot franchise owner and the restrictions they’ll have as a franchisee. This means that you need to factor in a few limitations and costs before deciding to franchise your business. The key considerations are that the business will still be profitable when a franchisee is restricted to a certain geographical region and that the franchisee will still be able to make a profit after they have paid you a royalty. That royalty is usually based upon what is termed “gross receivables” which is the franchisees turnover irrespective of whether or not that turnover has a proportion of bad debt. So before franchising a business, be sure it will work in a restricted region and with say 11% of turnover deducted as an additional cost. If there’s a good living to be had then there are franchisees out there for most businesses. Choosing the right mix of trading region and royalty is a big topic that franchise consultants spend a lot of time on, it is however perfectly possible that a franchise has no trading region and no royalty … that’s why you need to seek the opinions of a franchise consultant to guide your decision making process.

The right tools for the job

Alright, so with all of the above in place we’re getting somewhere now it’s time to nail down exactly what this franchise might cost and what it includes. Look closely at others in the franchise market place, not just direct competitors (if they exist) but also those franchises with similar characteristics. Note what the franchisor has provided to the franchisee, the training and inventory offered including human time to train and support the franchisee and then discuss with a franchise consultant on all of the other required elements so that you can get your calculator out to work out what it costs to launch the franchise location. With that in mind you can decide on a franchise fee including a margin for you to cover marketing expenses and potentially a franchise consultants fees to manage the recruitment process.

Legals

As you might expect your relationship with your franchisees will be governed by a Franchise Agreement and it’s essential that you have one ready for when you actually start franchising a business. Most lawyers have franchise experience but don’t be tempted to create this important document yourself or plagiarise an old one you find on the internet! Expect to pay anywhere between £2000 and £9000 depending on the firm you appoint and the complexity of the arrangement.

Marketing

You’ll then need to give some thought to your own franchise marketing and the process of actually recruiting franchisees, but that’s a topic for another day and one that Lime Licensing Group will happily assist you with!

How an Expert Franchise Consultancy Can Help You in Your Business

Today, regardless of which business you are in, competition in every industry is on the rise and this makes it important to get your branding and marketing strategies right. With this in view, it makes a lot of business sense to opt for the services of an expert and professionals like Lime Licensing Group. We have an experienced and highly skilled franchise consultancy management team. Over the last 20 years, we have been behind some of the most successful business-format franchises.

Customer-Centric Services

In addition to the fact that we have the skill, experience and expertise to provide sound advice to a number of licensing & franchising entrepreneurs, what makes us truly outstanding is the fact that we place you above all else and everything we do is customer-centric too. We provide excellent core advice and over the years, have appointed in excess of 1400 licenses in a number of diverse markets. Our professionals work very closely with established as well as new business format franchisors.

How to Grow Your Franchise Network

We teach them different elite strategies that help them manage & effectively grow their own licensed networks. Our practical assistance goes a long way in facilitating that. We have built a very strong reputation in the  consultancy space and have the ability to design and roll-out as well as maintain a sustainable licensing program which will help you expand your brand name into various new countries, sectors or categories. We are extremely passionate about what we do and all our business dealings are conducted in a very professional, ethical and transparent manner.

The Experienced Consultancy Professionals

The brand licensing and consultancy industry is always in evolve mode and we ensure that we are updated with every little detail that matters in this space. Our vast experience and in-depth knowledge is the differentiating factor between the success and failure of your business. We have assimilated this experience and expertise from working with businesses across different sectors and this has also helped create a very strong foundation to provide our clients outstanding services.

Compelling Programs

It’s difficult to find this kind of expertise in any employed staff member and when you opt for our services, you are assured that you will get the best advice when you need it. Over the decades, we have applied skills that oscillate between licensing, franchising, distributorship’s and agencies, as well as different types of brand expansion which are part and parcel of any business. We do all the hard work for you and create extremely compelling brand licensing programs with our very own unique blueprint.

We also provide potential franchise owners with free advice that can help avoid expensive errors. For more information about our franchise consultancy services, call Lime Licensing Group at 01274 662001. You can also use this online form to contact us. Tell us what your exact requirements are and we will carefully design a program that will work in tandem with the rest of your entrepreneurial efforts and lead you towards branding success.

New 1 Day Painting Franchise Launch

painting and decorating franchise

The UK is experiencing a national shortage of Painters and decorators (Oct 2015 Daily Mail)

UK 1 Day Painting Franchise

Done in a Day is a new UK 1 day painting franchise with brilliant franchisee marketing and fantastic franchisee training and support.

On the same day that Done in a Day launched their brilliant new 1 day painting franchise the Daily Mail ran an article confirming that the UK has a critical shortage of painters and decorators, it’s no wonder then that Done in a Day is experiencing such high levels of demand.

The Yorkshire based company has dragged the painting industry into the 21st century with modern technology, brilliant branding, professional customer service and a marketing campaign designed by professional marketers which is truly industry leading. All this means that for a franchisee the business is a turn key opportunity that gets you into cash flow quickly.

You can find out more about the business on www.doneinaday.co.uk  but if you’d like to jump right in and get the franchise prospectus delivered to you today then please drop us a line and we’ll sort that out for you pronto!

Franchisor Small Claims Court Case

We had a day in court recently helping a previous client in a case where the franchisee felt that the franchisor had misrepresented the commercial potential of the franchise. This is not an uncommon gripe amongst franchisors in our experience. The case was heard behind closed doors in the small claims court as the sum the franchisee wished to be refunded amounted to just over £12,000 (even though the limit is supposed to be £10,000)! Anyway, after a day of debate our client won and the franchisee went home empty handed to pay their legal costs, the judge made some interesting points in his summing up as follows.

Mediation: The judge felt the case should have been dealt with through arbitration or mediation rather than come to court and this didn’t help the franchisees case since they applied for the case in the first place.

Proof: The judge dismissed a large number of points made by the franchisee which couldn’t be proved and were simply one persons word against the other. The franchisor was better prepared and were able to satisfy the judge on may points due to supporting evidence and expert witness statements from Andy Cheetham and others of the commercial potential of that franchise format.

Marketing Materials: The judge felt that it was acceptable that marketing and verbal points made in meetings would naturally be more “enthusiastic” than the legal contract and he was happy that the court differentiated between the two.

Due Diligence: The judge felt that the franchisee hadn’t done enough due diligence before signing the agreement and had they done so they would have been better informed about the commercial potential. The judge told the franchisee that it should always be accepted that there is a commercial risk attached to starting a business which the franchisee should have accepted.

The hearing lasted all day and cost all parties money but once again it was the franchisee who lost due to a number of factors and the reality of a commercial risk.

Andy Cheetham, MD of Lime Licensing Group said, “The lesson here is that franchisors should do what they can to point out the commercial reality of their business and document that to the franchisee, and franchisees should carry out adequate research into the model and their personal suitability to replicate it.”

New Franchise Directory

UK Franchise Directory

Lime is delighted to be able to announce that we are exclusively managing what will be the UK’s largest franchise directory www.franchiselife.co.uk. The site will eventually list every franchise in every sector as well as service providers (like us), franchise websites, lawyers etc etc and goes live in September 2015. The site does not charge for inclusion unlike other franchise directories and is designed to run predominantly on a mobile device – so that’s something different!

Let them know you’re a franchise professional and get your details listed by clicking here.

10 reasons to sell your existing franchise

There comes a time in every franchisees life when it’s time to sell up and try something else, or maybe retire, either way the thought of selling their franchise starts creeping up again and again until eventually it’s an itch that must be scratched! Maybe that itch comes from:

1) The franchisee has run the business for a while and simply wants a change rather than commit to another 5, 7 or 10 year term – this is very common,
2) The franchisor and the franchisee don’t agree with the direction the brand is taking – this may or may not be an issue for a buyer.
3) The franchisee wishes to sell to release capital for something else
4) The franchise is profitable stable and doing well, and the owner thinks this is the right time to realise it’s full value
5) The franchise isn’t working for the franchisee – but it might do for someone else
6) The franchisees personal circumstances have changed, maybe through divorce, or a partner’s work situation, or the arrival of a young family etc etc and the business no longer fits with their situation.
7) The franchise is failing and the owner has lost the will to fix it – in which case a new owner is often the only fix required
8) Some franchisees have found their skill set isn’t ideal for the business and need to do something else
9) The Franchisee wishes to retire
10) The Franchisor owns the franchise and wishes to appoint a franchisee to run it

Either way, there’s a lot of demand for established franchises, or franchise resales as they are often called. It’s a big deal for the franchisee but all part of the cycle of life in franchise land. It’s actually a bigger issue for franchisors but thankfully with a bit of goodwill from all parties there is a real win win that can be achieved.

Selling an established franchise needs a bit of marketing spend for the key business transfer websites, a few hundred quid in most cases, some search engine time followed up by energetic prospecting to chase interested parties, and shameless social media and forum work, along with filtering out nosey parkers and tyre kickers. When that’s combined with a franchisors database and that of our own which now has 28,000 franchise buyers on it there’s a very good chance that enquiries will come in and a potential buyer will be found.

When we coordinate franchise resales we work closely with all parties so that the franchisor also has the opportunity to benefit from the leads coming in resulting in additional start ups being sold. This isn’t a contentious point with the outgoing franchisee because all enquiries will have to meet the franchisor at some point anyway so we may as well embrace that now and have reigns on it from the outset.

Here’s a little animation about Lime’s franchise resale service.

Franchise department KPI’s

Its surprising how many brands don’t know exactly what it costs them to recruit a franchisee, or how many meetings they need to appoint a suitable franchisee etc etc.  Let’s cut to the chase and list out the key KPI’s that we measure with our clients:

1) Average Cost Per Lead (ACPL) – this is the total marketing spend divided by the number of franchise enquiries. When you first start measuring this you’ll get some odd results as you input a new advertising expense that hasn’t generated leads yet, it skews the kpi’s but once a Franchisor is rolling with a regular pipeline then the figures settle down and become a key measure.  e.g £25/lead

2) Total & Average Leads In Month By Month: You need to keep the leads rolling in and when it drops it’s time to change things or commit more budget.

3) Average Leads To Meetings (ALTM) – This is the ratio of how many of those leads you need to generate to result in a meeting and it is an indication of how well received your franchise offering is and how well the leads are being pre qualified. e.g ALTM 1:25 means 1 meeting from 25 leads

4) Average Cost Per Placement: This is the total marketing cost divided by the number of appointments and this is important to be built into the franchise fee. Remember too that the cost of third parties who assist in the recruitment process should be incorporated into this figure. e.g ACPP £4000/franchisee

5)  Net Network Size (NNS) – Note the word net here! Mature franchisors shrink as well as grow and the net network size in a mature franchisor can show where the happiness factor is.  Over time the impact of franchise departures or terminations becomes sobering reading for a franchisor and so this is a key number to measure. However,  elite franchisors look carefully at the number of departures and aim to introduce strategies to minimise losses or even change the overall fee structure or support levels if there is a problem with franchisees leaving the network.

6) Number of Resales: We would think that if 10% of a network changes hands each year there’s nothing too worrying about that. But if 20% of the network is up for sale or changing hands then something is amiss. Analyse why this is because too many resales flags up non renewals down the line so it’s time to act if this % becomes too high – did you appoint franchises to people that you wish you hadn’t, is the model unprofitable for too many?

7) Leads & Placements Per Media: When you accurately track where your leads and sign ups truly come from it can steer your future marketing decisions in the right direction rather than assuming that you need to be at THAT show or in a certain magazine. e.g £x on Website A, £X on magazine B, £X on PR, £X on Expo 1 etc etc. Lime Licensing Groups multi brand / multi sector experience provides valuable insights for our clients as to where the elite franchisors are active/successful/unsuccessful etc etc and whether or not our clients should consider following suit.

If you’re still in the dark ages and aren’t using a CRM system then for goodness sake start doing that and set up keywords and catagories that make it easy and quick to log all of the above.

Lime Licensing Group provides it’s clients with extensive kip’s and expert interpretation of those kpi’s because remember that there are lies, damn lies and statistics! We then benchmark those against what the best in the industry are experiencing and can provide reassurance that you’re on the right track or suggest new activities and direction to move a brand back into a productive phase that helps both the Franchisor and also it’s franchisee network to prosper.

The Franchise for Rugby League Professionals

There is now a franchise specifically designed for Rugby league Professionals who are contemplating their next career move. Elite Rugby Academy has been set up by two former professionals and GB stars, Ryan Hudson and Danny Orr to coach children to play Rugby league, they are currently coaching 250 children each week and now need other Rugby League Pro’s to join them and start their own Academy in their local area.

To find out more call Andy Cheetham now on 0113 202 9193 or click here.

Pugs Might Fly

We’re now inviting enquiries about the UK’s newest brand licensing proposition, Pugs Might Fly. For a taster check out this video on Youtube and you’ll get the idea!

Franchise Templates and the dumbing down of franchise consultancy

Franchise Templates and other undesirable flat packs!

Avoid the hidden pitfalls of using franchise templates to franchise your business, unless of course you have a franchise specialist doing it for you, in which case you might as well hire a franchise specialist in the first place! Flat pack franchising (as I like to call it) has no advantages to a prospective franchisor and those that choose this route are illustrating to the masses that they don’t fully understand what makes a great franchise in the first place. Most that do it fail and amongst those that sell flat packs or franchise templates and other editable literature are convicted criminals, disqualified directors and amazingly (but true) not many previously successful franchisors!

Flatpack franchise templates are the murky waters of business advice peddled to star struck business owners keen to find a pot at the end of the franchise rainbow. Worse still, those franchisees who then invest their life savings with these new amateur franchisors end up, in many cases, as lambs to the slaughter losing their life savings along the way.

The availability of templates or other often plagiarised content heightens the risk of failure because as with many things in business, it’s not what you’ve got but what you do with what you’ve got that matters the most. It’s also when you do it, at what cost, who implements it, and where it’s all done. All the aforementioned are mission critical elements that skilled franchise consultants get consistently right. Implementation, judgement and experience is everything in business, particularly in a new area of business like franchising and anyone who thinks they can get that from a template is naive.

Having been in this industry for 24 years now I’ve made every mistake there is to make, sometimes I’ve made the same mistake twice before learning from it but every mistake has added to me being one of the most consistently successful franchise consultants there is in the UK. An experienced franchise consultant working as part of your management team is worth his (or her) weight in gold. By bringing that skill set in-house and applying it to every little and big decision that is attached to the franchise function the cumulative effect of that input adds up to success, and in franchising the consequences of a single bad decision can be catastrophic for the franchisor and each franchisee.

A successful franchise set up requires a lot of thinking time, and also time to learn a business model and how that model can be adapted to be a successful franchise brand. Good franchise consultants are intertwined with the best franchise launches and their time, accumulated knowledge and judgement goes into the creation of the new franchise at every level. You can’t get that with a flatpack, or even a flatpack with a so called helpline! Don’t kid yourself on this, because me and numerous other proper franchise consultants keep getting asked to rescue failed brands that thought they could do it with a franchise template.

Exponents of franchise templates just want your fee, and have no vested interest at all in whether or not you are successful. A franchise consultant like Andy Cheetham on the other hand links fees to the success of the franchise launch and so everyone wins! I am in daily contact with my clients and members of their franchise network, I live and breathe the brands I work with and fully understand everything that’s going on. We discuss every issue and know the kpi’s intimately. Consistently over the last few decades brands that have worked with me have outperformed the franchise industry by a significant margin. No franchise template will do that for any brand and anyone who tells you otherwise is having a laugh at your expense.

“But franchise templates allow me to launch for £5,000” I hear you cry. No they don’t because you haven’t registered your trademark in that cost and you haven’t even paid for a single franchise advert or exhibition yet. Without proper advice you’ll waste a lot more than £5,000 advertising your franchise I can tell you!!

Perhaps the most serious point of all is this; if you’re only prepared to invest £5k in your franchise launch and step into the unknown without the right advice then why on earth should a franchisee invest more than that with you? Worse still, if you’ve only got £5,000 to launch your franchise then how successful is your business anyway? A good business format franchise should be a clone of an already successful business and if you haven’t got a pile of cash by doing what you’re doing with all the experience you have then how on earth can a franchisee earn a profit? Remember that they’ll have a lower Gross Profit than you as a result of the royalty on turnover or higher product costs. And, please don’t give me that old chestnut that a franchisee will earn a profit because you now know what they need to do! If you aren’t making consistent profits already then refine your business until you are, then stress test it and then call me!

I’m tired of seeing unsuitable brands enter the franchise industry by cutting and pasting franchise templates and manuals and then failing and wondering where it all went wrong. If you knew what I knew you you wouldn’t touch a template in a space suit unless it comes with a franchise consultant like me who’ll spend the time ( a lot of time) getting to know your business before advising on anything to do with a franchise for you.

If you are a suitable potential franchisor then you’ll understand that one of the key benefits you offer is your guidance, training, experience and support so why don’t you secure the same for yourself with a franchise specialist who’ll help you to get it right first time. I now routinely turn down requests to save failed franchise brands, it’s not worth the aggro for me or any other bonafide franchise consultants that I know because my time is spent with successful brands only.

All of the available evidence is that templates don’t work, where as skilled franchise consultants do. So, if you’re planning a franchise launch my advice is to drive a deal with a franchise consultant who’ll work alongside you to create a compelling franchise program with you. The fee may be higher but the success usually follows. Ironically, by watching which brands launch badly consultants like me can hook up with their competitors and soon overtake them by doing it properly! This is way too important a project to solve by cutting and pasting from a scrapbook and then thinking you can succeed against your competitors who will hire the likes of me or other genuine franchise specialists. You’ll fail, so too will any unwary franchisees you find and my clients and those that hire other genuine franchise consultants to work with them will launch competing franchisees and eat you for breakfast.

 

My Dad always said to me, “if it’s worth doing, it’s worth doing well” and that advice has never been more true regarding the above!