Franchising · 18 December 2015

The Apprentice: Business plan pitch episode highlights franchising issues

The 11th season of The Apprentice will see a fifth £250,000 investment made
The 11th season of The Apprentice will see a fifth £250,000 investment made

With two of the five final contestants on BBC’s The Apprentice pitching a franchise-based business opportunity to Alan Sugar, it begged the question: what makes a brand strong enough to franchise?

The Apprentice is reaching its conclusion, when one of the 18 budding entrepreneurs who started the process will be backed by Sugar to the tune of £250,000. Having shifted from offering an “apprenticeship” job with the business leader to an investment in 2011, the four companies backed all appear to still be in business.

When Vana Koutsomitis, Richard Woods, Gary Poulton, Charleine Wain and Joseph Valente all pitched their business plans to Sugar’s panel of “trusted advisors” in the penultimate episode, the interesting thing was the way in which Wain and Valente presented franchise-based ventures.

Valente wanted Sugar to back plans to franchise his plumbing business, while Wain was hoping for support for her own salon and training academy. Both believed, by virtue of putting it in their business plans, that creating a franchise model was the best bet to achieve fast growth.

While there was definitely some logic in this conclusion, both were shot down by Sugar’s advisors for not having a brand strong enough for possible franchisees to buy into.

Here at Business Advice we’ve heard from some very successful franchises, ones which have shown an ability to dominate a particular segment of the market and back franchisees accordingly.

Belvoir is one of the UK’s largest property sales and lettings chains, with highly visible, branded high street offices. It now has 193 franchisees turning over a combined £37m.

Another fantastic example is Home Instead Senior Care. With a stated mission of “changing the face of ageing”, it has 160 franchisees in the UK and 1,000 globally.

What is true of all our case studies is that each needed to build a solid and well-respected brand before franchising was even on the cards.

You may think your business is great, but for people to stump up the often quite large upfront cost to acquire a franchisee licence, and then pay a proportion of profits to you, they need some pretty weighty assurances.

Wain was “fired” by Sugar after her business plan presentation, and advised to stick to what she has been doing so far locally in Plymouth. Valente has been given a slot in the final, when he’ll go up against Koutsomitis and her gamificiation dating app, but has had to stripe out the franchise idea from his plan. All involved in the business plan vetting stage believed Valente and Wain did not have the experienced required to oversee a franchise empire.

There is no doubt franchising in the UK is on the rise, taking inspiration from big brands such as Subway, McDonalds, ShakeAway and Supercuts. However, instead of thinking they have a brand worthy of franchising, budding business builders will probably be better off tapping into an established name.

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ABOUT THE EXPERT

Hunter Ruthven was previously editor of Business Advice. He was also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs.

HR