After a long career in franchising, there’s not much Nick Williams hasn’t seen. He talks to Business Advice about the current health of the sector, describing a “climate of self-employment” and how it encourages people to take the leap from employee to franchisee.
As a consultant for many years, Nick’s been helping businesses expand through franchising in good times and bad, and says he’s witnessed plenty of changes in the way the sector operates compared to a decade ago.
He gives his thoughts on franchising at a time when self-employment is booming and how the evolution of the sector offers significant opportunities for a wider spectrum of people than ever before.
What’s your experience in franchising?
I’m an experienced national and international franchise development consultant, with considerable knowledge across the majority of business sectors and sizes – from pre-start up to plc – and am a longstanding advocate of ethical franchising practices.
I lead the team at Ashtons Franchise Consulting, where we offer our skills, expertise and knowledge to effectively guide business people on their franchise journey towards achieving nationwide coverage.
What’s your take on the general health and feel of the franchise sector at the moment?
The established franchise sector continues to enjoy excellent health and prospects. This all-embracing comment should be tempered by an understanding that within franchising there are some excellent businesses operated by first-class people with the best interests of their franchise network at heart. Yet there are also those who are less robust, with perhaps more of a desire to ’sell’ franchises than to award them to appropriately qualified franchisees.
Fortunately, the good work undertaken by the British Franchise Association (BFA) and banks in promoting ethical franchising and being willing to support only those which can demonstrate good practice means that there are far fewer ‘disreputable’ franchise systems in the market than was the case many years ago.
The strong evidence of ongoing success in people who invest in becoming franchisees has become self-perpetuating and can account for the feeling of wellbeing that exists across many franchise operations and with franchisees across the UK.
People are now more capable of taking control of their destiny, as banks have been able to resume lending. Growth in the sector is now far quicker than was the case ten years ago.
Another development in recent times has been the move towards food and beverage franchising that was, previously, the province of only the very well-known food concepts. Much work has been done with landlords of shopping centres and on the high street to diversify their portfolio and to offer greater choice to customers. The food sector has responded with an increasingly diverse portfolio of niche concepts serving every taste. This combination has led to some strong players offering franchises, seeking where possible to acquire franchisees who have the ability to own and operate a number of locations as ‘development franchisees’.
Do you feel Brexit will have a major impact on the sector?
It would naïve to say that Brexit would not have an impact on the franchise sector because it has already impacted on the whole economy. The question is whether it will have a longer lasting impact. Given that there will always be people wishing to go into business for themselves then I think that Brexit could have a positive impact simply because the economic climate will be more challenging – meaning that becoming the franchisee of an established, proven and successful brand with all the support and ongoing development that is entailed should mean that people would be better advised to invest in becoming a franchisee than in a complete virgin startup, particularly if they have no specific knowledge of the sector that they propose to go into business within.
What’s your favourite thing about working in franchising?
Absolutely the most enjoyable aspect is the sheer diversity of it. The camaraderie that exists within the franchise sector, too, is quite unique in the way in which people working within the sector are prepared to share experience and support people who are coming in freshly and without prior knowledge. There are so many good business people offering franchise systems and wanting to franchise their business that it is a privilege to be able to meet and talk with them.
How suitable is franchising to people who haven’t previously run a business?
Franchising is not just suitable to people who haven’t previously run a business, but actually aimed at such individuals! The key attributes to being successful as a franchisee are common sense, determination and dependability. A strong will to win is advantageous. Note that none of these attributes can be taught to a person – they are largely inherent. Everything else you need to know about business can be learned.
A good franchisor will provide the blueprint, the initial training, the ongoing support and continued research and development around the concept, meaning that the new franchisee is left to concentrate on building their business and focusing on delivering continued quality to their customers.
What are the pros and cons for starting a new franchise versus buying a resale (going concern)?
A resale is usually an established operating unit of a franchise network, usually with assets, staff and customer’s being offered to the incoming franchisee. This enables a faster start; also the newcomer injects new life thus moving it on to the next level.
On the other hand, if the new franchisee is completely inexperienced in business then investing in a fully trading unit may be the equivalent of giving a newly qualified driver a Formula One vehicle to use – a crash waiting to happen.
A startup in a greenfield site will take time to develop, meaning that the potential franchisee must be sure to have adequate working capital to support them while they develop the business and compete with local operators. This approach may well suit those who are new to business and want to be able to pick everything up from the very start. Less money is invested in acquiring the franchise and to an extent the franchisee builds value in the business with the sweat of their brow in getting it up and running. This provides an incredible sense of job satisfaction and achievement.
Resales are not always available in the area in which the potential franchisee lives. A person who wishes to become a franchisee of a particular brand may accept a house move or a lengthy commute to achieve their goal, yet the franchisor might be unwilling to appoint a franchisee without local knowledge from the outset.
Read our interview with the visionary behind Second Cup coffee’s European franchising model, Jon Cullen.
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