Are You Ready for Franchising?
Franchising is a simple yet effective partnership for growth, provided the brand in question has sought expert advice and laid down the strong foundations needed to support a network of franchisees. If you have an already successful business, with a marketable product, attractive image and adequate capital, perhaps you should be considering franchising, suggests Rachel Spaul.
According to franchise consultants at Franchise Development Services Ltd (FDS), almost any business has franchise growth potential.
Take a stroll down the high street for instance and you may well be surprised by how many franchised businesses you pass, such as Belvoir Property Management, Formative Fun (children's education), Luigi Malones, MEXX (fashion/retail), O'Briens Irish Sandwich Bar, Prontaprint, Sliderobes (sliding wardrobe doors) and Wimpy.
Driving home from work you may see a liveried van for Chem-Dry, Countrywide Signs (property sign board erection), Snack-in-the-Box (snacks and drinks distribution), SuperSeal (puncture-prevention) or Swisher (washroom hygiene). Reading your local paper you could see advertisements for Card Connection, Dyno-Rod, Home Farm Foods (frozen meal delivery) and Signs Express (premises-based sign business).
Franchising is now a well-established business format in Ireland, with some well-known and successful brands extending their offerings overseas. Eddie Rockets Founder Niall Fortune, for example, launched the first Eddie Rockets franchised restaurant in 1993, having refined the concept in three company-owned stores and sought the advice and guidance of FDS.
'The success of the first diner had customers queuing around the block,' relates Group Operations Director Jonathan Parkhill. 'The brand then quickly expanded, with a team of contractors such as electricians, shop-fitters and upholsterers, reducing the time of out-fitting the diners to opening the doors.'
Eddie Rockets now has 17 units in Dublin, one soon to open in Bray, and one next summer in Cork. 'Eddie Rockets is positioned between McDonald's and TGI Fridays,' comments Jonathan, 'and is well-suited to Ireland where customers are more aware of their food safety rights. All our food is cooked fresh and to order.'
The success of Eddie Rockets in Ireland has led to further developments in Gran Canaria, where many Irish and English people holiday, and plans for UK mainland outlets in Liverpool and Birmingham.
O'Briens Irish Sandwich Bars is another Irish born and bred food concept, is achieving international success by franchising its concept. Since the brand was founded in 1988 by Brody Sweeney and franchised in 1994 it has grown to 265 outlets in Ireland, the UK, Singapore, the USA and Australia. Over the years, O'Briens has gathered awards including the Ulster Bank Irish Franchisor of the Year award (1999) and the British Sandwich Association Marketeer of the Year Award (2001). The company is aiming to expand the brand to 1,000 stores worldwide.
Food concepts appear to be particularly suited to Ireland and many brands have expanded from other countries into Ireland. Subway Restaurants in particular has enjoyed continued growth in Ireland through franchising. Subway was co-founded by Fred DeLuca and Dr. Peter Buck in Connecticut in 1965 and opened its first franchised restaurant in the USA in 1974.
The brand recently announced the opening of its 50th store for Ireland and 300th for the UK and Ireland, bringing the total number of stores worldwide to 21,000. Subway Restaurants currently employs around 500 people in Northern Ireland, while its franchisees spend around £5million per year with local bread, dairy and meat companies. The chain sells more than eight million sandwiches a year in Northern Ireland, and another four million in the Republic.
Could Your Business Be Franchised? FDS Managing Director Roy Seaman suggests that there are many as yet untapped franchise opportunities in Ireland waiting to be identified. 'There are many Irish businesses with themes that have franchise potential,' Roy confirms. 'Take themed pubs for instance. There are probably around 12 different Irish pub concepts established around the world, but none originate in Ireland. There is therefore an opening for a successful pub chain to consider packaging their knowledge and systems to offer the first genuine Irish pub business format franchise.'
Traditional food products are popular gifts people buy when they're on holiday, including clotted cream from Cornwall or Welsh teacakes from Wales. There is therefore a desire for gastronomic gift shops selling traditional Irish foods, such as honey, shortbread or fruitcake. Linen is another concept with the potential for franchising. According to the Irish Linen Guild, 'Ireland is a major linen producer, manufacturing 10% of the European Union's linen yarn, and producing an average 30 million metres of fabric per annum. Around 85% of total production is exported.'
Roy points out: 'It is not necessary for a brand to be franchised in its country of origin. Marks & Spencer and Mothercare for example are franchised worldwide, but not in the UK where the companies were first established.
'Any Irish manufacturer that already exports a range of products and has the potential to fill an in-store retail area, could be franchised.'
How Does Franchising Work? Franchising works very simply. Franchisors provide the business systems, brand, expertise and experience, and the franchisees invest money and effort in replicating that business in their area. The franchisor earns not just from upfront fees, but also from ongoing management service fees and higher product income - as well as enhanced goodwill generated by a more national brand profile.
'However, franchising only works where a company enters with the right levels of funding, management infrastructure and motivation,' Roy warns. 'Where that exists, good franchise practices always result. Many of those well-intentioned franchisors who fail will have taken short cuts to franchising trying to save money on the kind of professional consultancy which could have steered them away from miscalculations and injudicious moves.'
Franchising is ideal for businesses that want to expand from a platform of proven systems, healthy finances and efficient management infrastructure. The idea of franchising is to make an already strong business stronger and to expand the business nationwide, not to salvage a weak business. FDS Regional Director Gordon Patterson, who has helped many Irish companies franchise their businesses emphasises that 'your business must start off with a solid track record, a desirable product or service, adequate financial and management resources and finetuned operational system.'
He adds: 'Overall success in franchising is based on a combination of many criteria - applied at the right moment, in the right way and in the right place.' Among these, he cites professional presentation and behaviour, a strong brand profile, financial strength, a skilful and stable management infrastructure for training and support, long-term commitment to franchising, proven operating systems, an ability to adapt to changing markets and effective ongoing communication with franchisees.
If you think you have a business concept with the potential for franchising, your first step is to contact a professional franchise consultant, who will first conduct a feasibility study to identify whether your company is right and ready for franchising and how best to proceed. Is your business ready for nationwide growth?