Franchise Focus Business News…

When business owners are busy trying to keep customers happy and grow their sales, it can be difficult to keep their eyes open for the best deals in the market, and keep their costs low.
KPMG International commissioned the Economist Intelligence Unit (EIU) to write ‘Rethinking Cost Structures: Creating a sustainable cost advantage’ and found:

• Just eight percent of businesses reach or exceed their targets for cost-saving initiatives
• One of the single biggest barriers to achieving these targets is the lack of adequate processes to drive cost reduction
• Getting people to assume personal responsibility for cost management is always difficult

Cost management businesses make their profit off the savings they find for you, costing you nothing. With so many companies providing the services you need to make your business run, electricity, internet, telephone etc, it can be hard to constantly find the best deal.

If you’re interested in building a business for youself in this industry consider a franchise business, for the added support.

Auditel £36,000

Pink Connect £ 24,950

BCR Associates £29,950

Expense Reduction Analysts £39,900

Business Cost Management £24,950

Business Doctors £19,950

Ever since Isaac Singer wanted to spread his sewing empire through the US in the 1850s, the idea of franchising has been used as a means to transfer business knowledge and experience geographically.

A new type of franchising has developed in recent years; social franchising. Like commercial franchising, people work together to share ideas driven by a common social goal.

It’s just like a regular business franchise, without the monetary consideration.

Through the social franchising model, the health of women and infants throughout Africa has improved with Marie Stopes and Population Services International.

According to the European Social Franchising Network:

“To be a social franchise both the social franchisor and franchisees must be social enterprises (ie businesses that trade and have a social purpose) and there should be:

• An organisation that replicates a social enterprise business model – the social franchisor.
• At least one independent social franchisee that has been replicated by the social franchisor.
• A common brand under which the social franchisees operate.
• An interchange of knowledge between members.”

Providing sexual and reproductive health care, there are Marie Stopes franchises in Kenya, Ethiopia, Ghana, Malawi and Sierra Leone.

Population Services International may be the social franchise equivalent of McDonalds with clinics all over the world. Providing malaria, child survival, HIV and reproductive health services throughout India, Pakistan, Lesotho, Swaziland, Togo, Uganda and other areas in Asia and Africa.

The social entrepreneur is a creature which has become more prevalent in the developed world since the recession with the search for meaningful work. Borne from the idea of corporate responsibility, where businesses work to give back socially to the community, the social entrepreneur focuses mainly on social change, with profit making a secondary consideration.

Social Franchising demonstrates how successful the knowledge sharing element of franchising is. Starting off a new business can be so daunting but the knowledge available from franchisors is what will get you through the tough times, and make sure you’re in the know from your first morning in action.

We can’t offer you opportunities to treat malaria in Africa, but several of our franchises and business opportunities have socially responsible approaches to trading.

Snak Appeal: Supports 25 children’s hospices throughout the UK and Ireland. The franchise distributes and collects ‘honesty boxes’ of sweets, with a proportion of the profits going to charity.

DE Photo: Has donated more than £800,000 to grass roots sports, charitites and schools. You can become a photographer, even with no experience, within an organisation thatis responsible about social growth in the community.

Juice Community: This network of Fairtrade franchisees  distribute ethically-produced fruit juices. You can participate in a profit sharing scheme on all orders supplied directly to major retailers by the company.

Representatives from Recognition Express, ComputerXplorers and the ZipYard franchises led the British Franchise Association delegation to the Houses of Parliament this week.

The group met with MPs including Andrew Bridgen MP for North West Leicestershire who were interested to learn more about the benefits of franchising and how this business model could help regenerate the UK economy.

Nigel Toplis is the managing director of Coalville based Bardon Group. Within the group sit three of the country’s most successful franchises; Recognition Express, ComputerXplorers and the ZipYard.

Mr Toplis said: “Despite the fact that franchised businesses in the UK last year turned over £12.4 billion employing over half a million people, awareness of franchising as a business model is still very low. The meeting with MPs was set up so that BFA members could brief them in more detail about the concept of franchising and its continuing success.

“It’s a proven fact that success rate amongst people starting up their own business as a franchisee is far greater than those who set up without the backing of a proven business model and ongoing support from the franchisor.”

Key business and political  figures have shown interest in franchising and entrepreneurship as a means of boosting job creation and economic expansion.

According to Prof Roy Seaman, managing director of Norwich-based Franchise Development Services (FDS) “We are talking next year of creating 100,000 new jobs through franchises,” he said. “Franchises are a solid foundation with which companies can expand and new jobs can be created.”

With redundancies and unemployment at levels not seen since the early 80s, franchising is offering a solution to get Britain working.

That number represents a 33 percent jump in the number of international units operated by those franchisors in the past 10 years.

In addition to the United States, countries such as England, Australia and Canada have found a high level of success in spreading their franchise concepts domestically and around the world. And additional players like France, Spain, and Germany are getting into the international franchising game, and also experiencing marked success.

With the launch of our new franchise portal for Mexico last month (and another soon launching for South Africa), it’s obvious that a worldwide financial malaise hasn’t stopped the growth of franchising. But where are some places where franchising may boom next?

The U.S. Department of Commerce estimates that over 75 percent of the expected growth in the world’s trade over the next two decades will come from developing countries, specifically emerging markets.

Eighty percent of the world’s population lives in these emerging markets, but they currently only combine for an estimated 25 percent of the world’s gross domestic product.

When you hear the phrase “emerging markets” typically the first countries to come to mind are the larger ones such as the “BRIC” countries of Brazil, Russia, India and China, along with maybe a couple others. However, smaller countries have future growth potential that simply shouldn’t be ignored.

Many of the countries that warrant consideration are part of regions once unified, but have since dissolved into historically-new entities. Places such as the former Soviet Union, former Yugoslavia, and other countries in Eastern Europe fit into this description.

According to the East Europe Franchise Association, the region – that also includes some countries geographically located in central Europe as well – is a vast and emerging marketplace for franchising consisting of 30 countries with over 450 million people.

So where are the main growth areas within this vast and emerging marketplace? Kristin Houston, leader of the U.S. Commercial Service Global Franchise Team, points to the countries of Ukraine, Slovakia, Poland, Hungary, and the Czech Republic. These five countries have grown 67 percent in the last three years alone. The sectors of retail, automotive services, real estate, education/training, hotel and hospitality, and quick-service restaurants are currently the most in-demand franchise areas.

Here are some additional quick facts on the franchise landscape in these specific countries:

Ukraine

• Around 42 percent of the Ukrainian franchising market consists of non-Ukrainian franchising brands
• Fast food is the predominate franchise industry in the country
• Some areas Ukrainian franchising businesses have been successful in include office supply delivery, outsourcing services, staff and management training, copy and printing services, and translation services
• Other franchise sectors with a strong base in the country are in customer service such as cleaning and washing services, repair, tourism, ticket delivery, organization of entertainment, etc.
• Banking and financial-related systems are newer areas gaining traction
• Franchise relations are regulated by the Civil Code of Ukraine and the Commercial Code of Ukraine, with special chapters of these acts dedicated to franchising
• Hotel and hospitality is highly regarded as a future growth area

Slovakia

• There are over 100 franchising models present in the Slovak market, of which about two-thirds are within the retail trade sector and about one-third in services
• The Slovak Franchise Association has adopted the European Code of Ethics for Franchising
• There are currently no specific regulations in Slovakia in regards to franchise agreements

Poland

• Has some of the most developed franchise systems in Eastern Europe
• There are over 300 franchising brands in Poland and more than 13,500 franchising outlets
• Around 30 percent of the franchising systems in Poland come from foreign countries with most foreign-based franchise systems coming from Germany, France and the U.S.
• Popular franchise sectors include the following: textiles, retail food sales, professional development services, body care salons (hairdressers’ services and beauty salons), fuel stations, financial services and fast food
• The majority of regulations applicable to franchise agreements are found throughout the Polish Civil Code, the Commercial Companies Codes, the Act on Abatement of Unfair Competition and many other laws since Polish law does not specifically regulate franchising agreements

Hungary

• The Hungarian franchise market consists of approximately 300 brands, 50 percent of which are Hungarian owned
• The other 50 percent of the Hungarian franchise market are either subsidiaries of international companies or Hungarian master franchisees
• Some of the first franchises in Hungary included popular hotel chains and fast food franchises
• Several Hungarian franchise companies are active internationally
• Under Hungarian law, a franchise agreement is considered an atypical agreement, and neither any specific law nor the Hungarian Civil Code regulates these agreements

Czech Republic

• There are around 150 franchise brands are in the Czech Republic
• Like many other European countries, the Czech Republic lacks legal regulation specifically applicable to franchising
• About 62 percent of the franchising concepts are in the service sector, and 38 percent are in retail
• Almost 50 percent of franchise concepts operate in food and beverage, real estate or clothing/shoes sectors

To fully find success internationally, a franchisor will have to adjust and adapt their model to not only the regulations (including currency exchange and tax laws) of where they desire to operate, but also that area’s language, working hours, and culture.

In addition, the fact that there are few established franchise laws in many of these countries shouldn’t discourage franchisors from establishing outlets in these countries.

Organizations such as the International Franchise Association offer franchisors who seek to operate internationally many of the resources needed during the process.

Also, although they are becoming more financially-sound and developing a stronger middle class, these countries still haven’t been cultivated by a high number of franchisors. Consequently, hopeful entrepreneurs within these countries are generally eager to learn business principles through the methods and procedures franchisors have to offer.

Franchise businesses have quite a bit to offer emerging markets because they are designed to be replicated. Thus, they require less experienced entrepreneurs to begin, and provide business-learning opportunities within a support structure. All of this can help emerging market countries further develop their economies.

According to Kristin Houston, “95 percent of the world’s potential consumers are beyond U.S. borders.” Going International is a way for franchisors to sustain growth opportunities for their business for years to come, and it wouldn’t be surprising to hear of major franchise growth in the East Europe region in the not too distant future.

Sources:

Franchising World Magazine (March 2011), U.S. Commercial Service, East Europe Franchise Association,

International Franchise Association, Australian Trade Commission

We’ve encountered some interesting statistics from the UK franchise market which proves that it is starting to show legitimate signs of growth while creating a massive amount of jobs.

At a time of serious economic stagnation in Britain, a franchise organization called the Franchise Development Services claims that franchising can create over 500,000 job in the UK over the next 5 years.

Professor Ray Seaman, MD of FDS, is making a hard push to raise government attention to the economic power of franchising, especially in the area of East Anglia, where there are 110 franchise units in Norwich alone.

Seaman asked the following rhetorical question about the job-creating power of franchising:

“We are looking at about 2,000 new franchises over the next five years which means by 2016 it will mean an extra 70,000 new businesses. That means 500,000 new jobs and that’s being totally realistic. What would happen if we could increase that by 10pc?”

These are some of the statistics on UK franchising, according to Mark Scott, director of franchise development at Natwest bank, stats which show the possibility of serious profit in a highly-established market:

“There are 37,000 franchise locations across the UK and a total turnover of £12.4bn. The failure rate in any one year is less than 5pc and nine out of 10 are profitable. It really is a strong place to be.”