n e w s f o c u s
As Graeme Jones, Head of Franchising
Realistic, tested and reliable
would be advisable for them to have
for NatWest and Royal Bank of
There are many reasons why potential
a contingency reserve fund in case the
Scotland, summarises: “It is essential
franchisees should be interested in
franchise takes longer than expected to
that you know and research your
your franchise. As Richard explains:
get off the ground.”
market and have experience and skills
“Generally most well-established
that will stand you in good stead
franchise systems offer a tried and tested
Feel good factor
prior to making any decisions about a
“There is anecdotal evidence that
business model with initial training,
career in franchising.” Richard adds:
franchisors are feeling less confident
“Banks that have a franchise unit
with experienced sector specialists
are a valuable source of information
to assist potential franchisors and
prospective franchisees with their
research and planning.”
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The people you recruit are
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the ones who will see you through
Come rain, wind or shine…
the hard times and into the good
Although planning is key, predicting
the future of the economy is perhaps
impossible. The current economic
climate must be taken in to account
ongoing support, brand recognition
about their own businesses than they
when making any decisions. As Graeme
and the collective buying power
were a couple of years ago. However
explains: “The bottom line is that
benefits that a network of businesses
there is little reason for them to have
any new business venture should be
can bring. There is evidence that
concerns about the future of the
approached with caution, and market
franchised businesses tend to grow
franchise sector.
conditions, and the global economic
quicker and survive longer than new
outlook should always be considered
“Franchising has been established
start up independents.”
in the UK for decades – the British
when making any decisions about a
Franchise Association (bfa) was set up
future business proposition.”
Franchising can also be viewed as less
in 1977 as a self-regulatory body to
risky than starting an independent
oversee the development of ethical
However, in any economic situation,
business. As Graeme says: “There aren’t
franchising. The economic climate has
whether it is good, bad or ugly, as a
any worries about creating the brand,
altered many times over the years and
franchise, the people you recruit – your
finding suitable premises, dealing with
franchising still remains an attractive
franchisees – are the ones who will see
advertising (in some instances), product option for both new and existing
you through the hard times and into
sourcing, and training support.” franchisors,” says Richard.
the good.
Financial institutions understand the
Graeme adds: “There are now some
Planning and considering your
advantages of the sector, therefore
very well known brands involved in
franchisee recruitment is essential when
securing finance “is likely to be easier
franchising, which is a good barometer
looking to franchise your business.
than for a conventional start up, even
of the strength of the industry.”
Graeme advises: “In our experience, a
in current economic conditions,”
lot of franchisors are now looking for says Cathryn.
Cathryn is also optimistic: “Franchising
long-term growth, as opposed to short-
is not an ‘industry’ as such, it is a way of
term gain, and if the current rate of
doing business – the sector is not overly
By opting to franchise, the risks of
dependent on, say, retail or real estate.”
success and the sound business acumen growing in any market conditions are
of new entrants is maintained, there is reduced because you don’t tie up your
Graeme reminds us that “franchisors
no reason why the industry shouldn’t own capital or have to manage the
will benefit from entrepreneurs realising
continue to be a viable and attractive recruitment side.
the wealth potential in owning a
business opportunity, despite concerns
franchise, and while past performance
about the state of the global economy.” However, being financially prepared is
is not necessarily an indicator, the
still crucial, as Richard urges potential
NatWest/bfa survey demonstrates
Likewise, Richard says: “Franchisee franchisors must “ensure that they that the vast majority of franchisees
recruitment is a vital element of the ultimate have adequate capital and financial are profitable and this has got to be a
success of any newly franchised business.” resources before pressing ahead. It positive sign for the franchisors.”
* Figures quoted from NatWest/bfa survey 2007
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