Franchise Focus Business News…

By Anthony Round, Business Development Manager, Papa John’s

When purchasing a franchise, to some degree you are buying into the power of a well-known and established brand. So what elements are important and go to make up a successful brand?

The logo could be described as the face of the brand. It needs to be instantly recognisable and stand out. Companies use bright colours and bold fonts or imagery to achieve this. Yet, the logo is only an illustration and the important elements of a brand are contained in its ‘brand values’ which are only summed up visually by the logo. These are the types of qualities that are outlined clearly in a company vision or mission statement.

For example, Papa John’s the pizza company whose brand is now marketed successfully across 33 countries has the following mission statement for its customers: “Papa John’s will create superior brand loyalty through (a) authentic, superior-quality products, (b) legendary customer service and (c) exceptional community service.”

The company mission statement is supported by its core values. For example, one of Papa John’s core values is: constant improvement: “We never stop trying to surpass our previous best. We constantly ‘raise the bar’. No matter how good we are, we will always get better.” There are other core values but the point is that they are written down, describing the company’s ethics, style and approach to business.

Adherence to such mission statements, backed up by core values creates a company personality which can then easily be reflected by staff and products alike. Those values can be emphasised within communications to customers, targets and any other relevant audience. They are echoed within the copy of marketing literature, on the company website, in adverts and even in the way the telephone is answered.

It is the cascade of such values and the continuity expressed across different geographical regions that ensures ‘customers know what to expect’ and a strong brand is created.

However, a strong and highly promoted brand is not always a guarantee of success. If the product or service does not live up to expectations then, because in any market there is competition, customers will go elsewhere. The company that can consistently satisfy its customers will win and maintain the market share.

Generally, brands compete on the four main differentiators of quality, cost, customer service and/or innovation. To be successful, the brand must be strong in at least one of those areas, if not more.

One reason why Papa John’s has been so successful across the world is its emphasis on quality. For example, Papa John’s concept of only using the highest quality ingredients and 100% fresh dough to create a top quality pizza with a better natural flavour is particularly popular. Yet there is also a focus on quality relating to the premises and overall customer service and experience.

There are other, ‘cheaper’ operators out there, who have chosen to compete on price but when it comes to the food industry the trend is for consumers to demand excellent quality and so as a consequence, Papa John’s has experienced rapid growth across the globe.

If you are evaluating the purchase of a franchise then do consider the strength of the brand you are buying into. How well known and popular the brand is will either help or hinder the smooth running of your franchise. Consider which aspect of the positioning the brand competes on (quality, cost, customer service and/or innovation) and assess if that is clear and appropriate for the particular industry. Also assess the competition: are they promoting different values or the same? If the offering is too similar then your franchise must have strong, unique selling points to set it apart and win customers.

An Ageing Population

Our Office for National Statistics tells us that while the UK has a relatively high fertility rate in comparison to the other 26 members of the EU, its population is still ageing. In 1985, the percentage of the UK aged 65 and over stood at 15%. By 2010 it had increased to 17%, and by 2035 it is projected to become 23%. Major reasons for this include a decrease in mortality rate and a longer life expectancy.

Such statistics have led to panic – a House of Lords report printed in March of this year concluded that the Government and our society are “woefully underprepared” for the increasing need for health and social care – but for the franchise world they may be beneficial.

Money

The ageing is already having an impact on companies such as Always Best Care Senior Services, Blue Ribbon Community Care and Home Instead Senior Care: franchises providing care for older people within their own homes. The fact that the UK population is ageing, but still has financial independence, means that this is one expanding, multi-million pound industry.

Fiona Harrall, a finalist for EWIF’s (Encouraging Women into Franchising) Woman Franchisee of the Year Award for 2013, became a franchisee in 2010 with Home Instead Senior Care, covering St Albans (Hertfordshire). Since then the branch’s turnover has increased by more than 550%, its huge growth had led to her husband quitting his job and joining the company, and it is hoping to recruit over 100 employees this year.

Empathy

But the rewards of the caring industry are not just financial. It is also a chance to make a difference to people’s lives, to help them. This was one reason why Fiona joined. “We had been touched by relatives who needed care services due to dementia. At that time my husband’s aunt and uncle would have loved to stay at home with support, but they were only offered residential care and sadly ended up in separate care homes. As no other options for care were then available in my area, I wanted to change things. I wanted to make sure that I could give back to my community and provide fantastic care as it should be, allowing older people with help to remain in their own homes.”

No Experience Required

Happily, if you are considering entering this industry, you don’t usually need any nursing skills or even experience in the caring sector, as the training is provided. As a franchisee you will have the role of team leader, rather than be a hands-on carer. You will, however, need to give the impression that you are reliable and compassionate, and then see it through, as you will be meeting with people who are worried about the kind of care that their nearest and dearest are going to get.

Check out the growing caring franchises industry today.

Retailing, cleaning, B2B…an insurance scheme is compulsory for every category of business. It must be made to measure, and there are many factors exclusive to the franchising industry to consider when you are setting up franchise insurance. Two particularly important elements are discussed below.

1. Franchisor versus Franchisee

Don’t assume that your franchisor already has insurance to cover you. They may choose to go either route – organise the insurance for you as part of the package, or leave it up to you to cover yourself. Both methods have their benefits and disadvantages. Setting up insurance can be quite daunting for a new franchisee, who to date may only be aware of the UK’s two compulsory insurance types: motor and employer’s liability. The franchisor is more likely to know the insurance needed to operate the business, particularly in industries such as childcare or food franchising that need specialist policies. Machinery or equipment breakdown cover, such as in the manufacturing or agricultural industries, may also be a necessity. Franchisors know how to implement the best practices when it comes to managing risks.

However, there are undeniable advantages when the franchisee controls the insurance. They are likely to be more familiar with the local area in which they are going to trade, and they know the local authorities (city or county or otherwise) with whom they should be checking when it comes to permits. Furthermore, franchisors may not have the time needed to put the correct insurance together for every single franchisee – especially when there are thousands and thousands of them.

Either way, it is essential for franchisees and franchisors to keep well communicated on this topic, anticipating and preparing for drawbacks before they occur.

2. Specialist Insurance Brokers
As franchising is an ever-expanding industry, many insurance brokers – including Hiscox and Moreland recently – are now specialising and providing franchise business insurance programmes. The idea is that they understand you have specific factors to consider, such as: if you are no longer able to work, what will happen to the commitments of the contract with your franchisor that you have left behind? Will it be acceptable to your franchisor if a relative takes over the business?

While you obviously need to research covers yourself, insurance brokers who specialise in franchising are an asset. They will ask questions to gather the information that an insurance underwriter will need to evaluate your system correctly. They should also be able to predict any objections that the same underwriters may make.

Conclusion

While in many cases it is perfectly acceptable to research, buy and claim your franchise insurance in complete isolation, there is no harm in asking for assistance, whether from a franchisor or a specialist insurance broker.

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.