Franchise Focus Business News…

Yesterday saw EWIF, the non-profit organisation Encouraging Women into Franchising, successfully host its fourth Awards Ceremony (sponsored by NatWest) at the RBS House in London. It was attended by 150 guests from all kinds of gender, ethnical background and franchise size, and was undoubtedly loyal to its theme of the day: ‘Inspirational Women’. Hostess Louise Harris said: “It has been a wonderful day for EWIF…although there may not be as many women in franchising as there should be, the ones we have are hugely talented and are tremendous role models for anyone thinking of joining our industry in 2013.”

Awards included titles such as Woman Franchisee of the Year, Woman Franchisor of the Year, and Woman Service Provider of the year, and our congratulations go out to the finalists and winners. Particular compliments to Pam Bader OBE FRSA, creator of Molly Maid and mentor of female franchisees, who received a special award for her ‘Outstanding Contribution’ to the industry.

The invaluable EWIF strives to help and offer free services to women who are considering becoming franchisees and women who want to franchise their own business. They also help current franchises attract more female franchisees to their network, and provide up-to-date information to members and to the public.

But is there really a need for such a pink organisation?

EWIF: Is It Necessary?

To be frank, yes. As Louise Bruce, Co-Chair of EWIF, puts it, the truth that women are underrepresented in franchising in the UK is “a well-documented fact”. What may not be so well known is just how severe that gender imbalance is – according to the latest NatWest bfa Franchise Survey, males still account for 72% of all franchisees (although Census 2011 informs us that they make up 49% of the UK population).

Carol Griffiths recently joined Ringtons, a mobile business delivering tea, coffee, pantry goods and flowery patterned mugs to over 260,000 houses across the UK. Such items would traditionally be associated with ladies and the household, and yet Carol was the first woman franchisee to join. While she emphasised her excitement to get on board, she too was struck by the fact: “I’m quite surprised that I’m the first female franchisee…but I’m sure there’ll be more of us before long!”

She makes a good point. The number of female franchisees in the UK is slowly growing, especially in the new recruits area – in 2006, 16% of all new franchisees were female, and by 2011 this had more than doubled. The EWIF must be able to take some credit for this.

Why isn’t there a male equivalent?

While few of the other minorities in the franchising industry (such as youths or non-nationals) have any large organisations representing them, it is disturbing to think that men don’t either. One argument for this could be of course that the associations already out there, such as the bfa, are currently male dominated. But this is slowly changing. Another reason why Pam Bader was chosen for the ‘Outstanding Contribution’ Award was because she was the first woman to ever have been elected onto the board of the bfa.

So how long will it be before the EMIF is created? Perhaps a while, but in the meantime, men are always welcome in the EWIF. According to the association’s website: “We also have men, lots and lots of men! This is not a ‘women only’ club.”

This month, the leading franchise Subway announced that it plans to open up 69 outlets in the forecourts of Euro Garages across the UK by 2016. It operates 20 with Euro Garages already, having first launched one at Ashton Road in 2005. Trevor Haynes, Subway’s area development manager for the UK and Ireland, has said that the convenience and forecourt sector is a key area of growth for the Subway brand: “The simple operations that are involved in running a Subway franchise and the convenience offer make it a perfect fit for these style locations.” Other unusual Subway locations around the world include colleges, sports arenas and even a Baptist church in New York. The ability to run your business from a variety of non-high street locations must be extremely useful. But not every franchise is so flexible.

Variables to Consider

Some franchises don’t require any premises – your customer’s plumbing isn’t located in a high street shop – but most do, and their location will heavily influence their business activity. Whether you are looking for a large, multi-story commercial warehouse or just a two-desk office space, property hunting and negotiating can take several months and patience and you need to put aside time in your business plan accordingly. Things to consider include the common elements such as size of the premises, rent costs, the number of local competitors and so on, but also the factors more significant to franchises:

•    Territorial rights – some franchisors set exclusive trading territories and prime marketing areas as part of the franchise agreement. It is necessary to use a map and clarify this exactly, to prevent franchisees seeking new business and performing in each other’s geographical areas.
•    Your sort of trade – it may take some time to get the premises ready for business, and the building must have planning permission for your type of trade. Catering franchises in particular require premises with certain fittings and fixtures.
•    How flexible you are geographically – some companies, particularly high-street retailers, need to be in a prime location with a worthy level of passing trade, such as in a shopping centre. On the other hand, franchises that are van-based are much more flexible and it’s easier to travel that little bit further to get to a customer.

The Location Types

Below is the result of the bfa/Natwest Franchise Survey 2012, showing the locations where franchises in the UK currently operate:

The winner, by ten per cent, is home working. While this can lead to a lack of human interaction, it is still an act that has proven beneficial when it comes to higher productivity, a better work/life balance (ideal for stay-at-home parents) and of course the ability to be your own boss – one of the main appeals of franchising in the first place.

While online retailing has exploded over the last 15 years, there are still many franchise categories – especially catering – fitting into the second most popular location (shop/retail premises) that will not be able to operate from home offices for the foreseeable future. Even Subway hasn’t conquered it yet.

It is commonly agreed that the inception of the modern franchise industry in the US by Isaac Singer is the reason why US-based companies still dominate the List of Top 100 Global Franchises today. However, it seems that the number of companies in the ranking that are based outside of the US is increasing.

Franchise Direct’s annual Top 100 Global Franchises Report is an objective one, eagerly anticipated. Months are spent compiling and verifying information on over 5,000 active franchises, using data taken from reliable sources such as Franchise Disclosure Documents, self-reported company statistics and Securities and Exchange Commission filings. Criteria for ranking include system size (number of units), sales revenue, growth and franchise support and training. Franchises are judged regardless of their country of origin.

Europe

This is the fifth report, and as franchising has been increasing in popularity around the world, the overall percentage of companies not based in the US has risen from 14% in 2009 to 18% this year. The main increase is in Europe (4% to 9%), particularly in France, a country which saw no companies in the Top 100 ranks in 2009 or 2010 but now has four (Europcar, Yves Rocher, 5àSec and Carrefour); the highest of any European country. The expansion to note is Carrefour, which last year was not in the Top 100 and this year ranks at #13. Now the second-largest retailer in the world and the largest in Europe, the group operates four main grocery store formats: supermarkets, cash & carry, hypermarkets and convenience stores.

Non-US-based companies:

The Top Ten

Most of such movements in the ranking are not at the very top, with only one non-US company in the Top 10. The UK-based InterContinental Hotels Group just peeks in at #10 behind the usual US fast food and convenience franchises such as McDonald’s, Burger King, KFC, Pizza Hut, 7-Eleven and Subway, all of which were in the Top 10 last year and the last of which has been the top franchise on the list since 2011.

These companies are ideal role models for early-stage franchises looking to expand their business. They all share successful elements such as clear business plans, strong training and support and the ability to adapt to ever-changing social and economic conditions – Subway, for example, has been using advanced technology to interact with potential franchisees and experimenting with recruiting the next generation of franchise owners through an online ‘business simulation’ game. However, it is possible that all the US places where food is sold are shortly going to be facing challenges. 2012 was the warmest US year on record and the consequential drought will have effects on the availability and price of essential commodities such as corn, soybeans and cheese.

Where Next?

International franchises are constantly searching for the next possible location where their concept will thrive. So what of developing nations such as India and China where the middle class economies are growing? In these countries US exports are becoming increasingly welcome and this will help US franchises to expand further. Edwards Global Services has ranked the franchising potential of a number of countries around the globe, taking into account several factors important for the health of a franchise venture:

Ranked near the top of the list are two countries within a region that is seemingly one of the next big areas in franchising development – Latin America, an area that businesspeople of all industries have been keeping an eye on for some time now and that inspired the Latin American Trade Mission last year.

Conclusion

There is no doubt that at 82%, the US-based companies still dominate global franchising and will continue to do so for many years. Such beautifully constructed systems have the ability to be culturally sensitive, to dismantle trade barriers and to grow in promising foreign markets in Asia and Latin America. But if companies from other countries continue to take ladder space at this rate of 4% per 5 years, well then…50 years or so should do it.

While the global economy remains turgid, the green shoots of sustained recovery are still lucid. In the UK, this has manifested in the form of increased business activity – particularly in the services sector, which accounts for over 60% of British GDP – and the number of failed businesses has fallen significantly since the onset of the New Year.

All of this has amounted to a noted increase in the amount of business activity in the country, which has revived a greater demand for B2B services across Britain. Economic recovery hinges upon the ability to facilitate British businesses with the services they need to grow once again, and a diverse range of franchises are ideally suited to help in this regard whilst earning a tidy profit as a result.

The ways in which franchises can assist in optimal business operation are multitudinous. For instance, maintaining a clean office is the cornerstone of an efficient working environment, and the UK has a variety of franchises specialising in this area, including Ecocleen, Total Clean and Clean My Office who have all found their services in heavy demand, entailing a reliable revenue stream for their franchisees.

In these tight times, it’s not only physical waste that can be costly; ineffectual use of money or poor allocation of resources can be even more fatal. Businesses, like the rest of us, occasionally need a degree of guidance to help steer them in the right direction, and there are a range of franchising options that provide counselling services to assist companies in overcoming operational woes and start to thrive. Examples of such enterprises include Expense Reduction Analysts and BCM (both helping businesses cut unnecessary spending), Auditel (the UK’s leading cost, purchase and supplier management franchise), MatchPoint and System4Results (business consulting franchises), WIN Sales & Support (sales and marketing advice) and TaxAssist Accountants (tax services for small businesses). Many of these franchises allow their franchisees to work at hours tailored to their specific circumstances and all enable you to earn a lucrative living by deploying your professional skills and experience to the benefit of businesses across the nation.

Expense Reduction Analysts is an example of a B2B franchise thriving at the moment. It trains franchisees to become procurement specialists who can then help boardrooms in assessing their costs and making savings.

“In the last five years we’ve had a 48% increase in turnover from our franchise network…from a £7.5million turnover to an £11.3million turnover” Matt O’Neill, Head of Recruitment at ERA tells Franchise Direct, demonstrating how in-demand the company’s services have become as the downturn continues to bite.

As important as cutting caste and streamlining the enterprise is having the right personnel on board to make the business a success – people are the most important resource any company can have at its disposal. Recruitment is now a major B2B industry in the UK, and franchises have made inroads into this area as well. Redline Recruitment, Additional Resources and Antal International are examples of franchises affording this vital service to businesses, ensuring that they have the people they need to become and remain successful into the future.

For a full range of B2B franchising opportunities available in the UK, click here.

With the behemoths of the UK business scene perpetually expanding in both scope and space, it may seem as if the little guy – be he a franchisee or independent retailer – is fighting a losing battle. The decline of the UK high street has received extensive coverage as of late, while giants such as Tesco continue to expand their presence across a catalogue of categories, eating into the markets of smaller retailer who cannot match the predatory pricing and economies of scale furnished by goliath competitors.

But the parable of the wren and the eagle rings true in this scenario, as despite the disparity in size and resources, smaller businesses (including most franchises) still have advantages that they can bring to bear, guaranteeing their stake in the market remains secure from corporate consumption.

Customer service is the cornerstone of any successful small enterprise and a strength that SME’s can level to their advantage. Doe to their more personal operation, small businesses can be far more responsive and open to their clientele’s needs than larger more cumbersome enterprises. This also makes small businesses more agile in the sense that they are better equipped to adapt rapidly to changes within the market, enabling them to capitalise on the latest trends.

Thus, treating every customer as special can help guarantee your business’ continued prosperity. Cultivating customer loyalty is pivotal, and so if a bulkier competitor arrives on the scene, offering loyalty options might be an avenue worth venturing down. Present an image of consummate professionalism; it doesn’t matter how small your operation is – if you take it seriously, others will too.

Niche marketing is the key to success for any small company and the ideal tonic to the rampant diversity of larger firms. In other words, while entities of the scope of Tesco aspire to be jacks of all trades, you should strive to be the master of just one, but by focussing your resources on that goal, you can guarantee that your business has an intimate knowledge of its market surpassing anything a generalist has to offer, and so when customers who really know what they’re after, and recognise quality and commitment when they see it, will come looking for you. In all probability, you will not be able to trump larger rivals on the price front. Instead, place a premium on the uniqueness of your offering, as this is often what entices customers to support a smaller business. Give them a good reason to buy from you, and they will!

In an increasingly competitive business landscape where inefficiencies can be fatal, making the most of every resource available is a fundamental ingredient in the formula for success, and one way to do this is to optimise your use of technology to maximise the efficacy of your operations. Various tools for keeping tabs of clients and inventory are now available at relatively low cost and really help your business stay on track. Furthermore, if your franchise lacks a web presence, this is something you may want to seriously consider, as it can offer you a whole new dimension for advertising and client acquisition and interaction.