Franchise Q & A

 

Last week Workingmums.co.uk held its first Top Franchise Awards. The ceremony was followed by a Q & A with our judges and experts: Yasmina Siadatan, former winner of The Apprentice, Clive Rich, CEO of Lawbite, Chris Roberts director of Franchise Finance, Sean McKeown, franchise development manager of Kumon Educational UK, Louise Young, Brand and Communications Manager at Kumon Educational UK, Gillian Nissim, founder of Workingmums.co.uk and Mandy Garner, editor of Workingmums.co.uk. The questions covered everything from funding to staying motivated. The following is a selection of some of the questions and answers.

Q: Can you tell me what the advantage of franchising is over going it on my own?

Mandy Garner: The advantages of a franchise is that it is a tried and tested business model so it is less risky. Most franchisors will provide manuals, marketing support and other forms of support to franchisees, though you need to research well the types of franchises you are looking at and ensure they suit you. You will have to operate within a certain structure so you will not have the freedom you might have if you went it alone, but it is a less risky business model.

Chris Roberts: Some of the advantages of franchising are that you have a proven business model and the support of a franchisor to train you in the delivery and provision of the franchise business. You still enjoy the benefits of being your own boss, but you are not alone.

Q: I am thinking about buying a franchise, it will mean that I will be working from home. I have not done this before, what advice would you give me?

Gillian Nissim: Have a place where you work which is separate, where you can physically or psychologically shut the door at the end of the day or try to create some kind of difference between work and home. I wasn’t very good at doing that in the early days, but I’m much more disciplined now! Also don’t work from home without childcare when your children are little. It really is impossible to focus and you feel torn between work and children.  I think when you are at work your focus needs to be as much as possible 100% on work and when you are at home it should be as much as possible 100% on home. Working remotely means you also have to work harder to stay in touch with people. It’s important to pick up the phone. You may feel you are missing out on office banter, but there are ways to create that virtually – through things like instant messenger for example. It’s also important to get out of the house – whether that’s for business meetings, having a quick coffee with friends, or just to work in a different environment from time to time.

Q: I see lots of inspirational women making it in business and I really want to give it a go – what skills do you think you need to succeed? I am a very good sales and marketing person but working with numbers is not for me! Do you think that matters?

Sean McKeon: The skills required are diverse and ultimately the type of franchise business you take up will determine exactly what skills you will need to be most proficient in. Having a strong ability and appetite for sales & marketing will go a long way, but a head for numbers is also a huge asset for anyone who is going to run their own business. Whether your aversion to working with numbers is a deal breaker really depends on the type of franchise model and if you can delegate the number crunching to a business partner, for example.

Chris Roberts: May I also add something to Sean’s reply. At Franchise Finance we have a Business Training Academy which was created for people like you who need help with the ‘financials and numbers’ because this is a crucial part of running a business. Our ‘Understanding Business Finance and Accounts Course would help you.

Mandy Garner: All sorts of skills can be useful and, in fact, many of the women I speak to who have started a successful business have a background in sales and marketing. You definitely don’t have to be an all rounder, but it is a good idea to be open to learning about all aspects of the business and to have a good grasp of the finances. Once you begin to grow the business you can outsource aspects that you don’t feel are your forte. That will leave you with time to focus on the areas of the business you are strong in.

Q: I have created brand, however when I have mentioned a franchise some people have suggested a licence. Could you explain the differences please?

Clive Rich: That’s a good question. Generally a franchise agreement is used as the template because it is suitable for all the elements that need to be contained (a grant of rights in the brand, its goodwill and reputation, and the various obligations which both sides have to meet (eg (1) providing the manual, training, and marketing by the franchisor; (2) operating in accordance with the manual, making payments, and getting approvals by the franchisee).
Technically you could do all these things with a licence agreement but structurally it’s not such a convenient format to work with and draft for this purpose…

Q: If I wanted to be part of a franchise where do I start?

Workingmums.co.uk: This is a great article and will help you get started – http://www.workingmums.co.uk/advice-and-support/beginners-guide-to-franchises

Q: What are the advantages to franchising over starting your own business from scratch?

Sean McKeon: Some of the advantages of franchising are that you have a proven business model and the support of a franchisor to train you in the delivery and provision of the franchise business. You still enjoy the benefits of being your own boss, but you are not alone.

Chris Roberts: May I also add that the quality of training and support will vary between different franchise networks so do speak to a range of existing franchisees to get their views. Also when you come to sell a franchise business there is a ready ‘re-sales market’ for franchises and your franchisor may even be able to help you find a buyer.

Q: Is networking a good form of marketing and growing a business? Any tips on it? I am terrible at approaching people.

Louise Young: Networking can be very effective – if you want to have a voice in your local business community then research local groups open to you. Other local businesses will be able to share their success stories with you and suggest new ideas you may not have come across and of course will each share their network of contacts which can help build your own business. I would suggest a layered approach and use networking as just one means of extending your reach. It all depends on your business type.

Q: How do you rate social media as a form of advertising? What is the best to use?

Louise Young: Social media works very well for us both in terms of recruiting new students and recruiting new franchisees, but it’s essential if you use platforms like Facebook and Twitter that you monitor them constantly, reply swiftly and produce plenty of relevant content for your audience. If you use social media, then set aside some time on a Sunday to schedule all your Facebook posts and Twitter messages for the week. A platform like Hootsuite works well for this and can save you a considerable amount of time. Test a variety of content on your Facebook page and use Facebook analytics to assess the best time of day to post when you receive the highest levels of engagement. Try adding video content, links to your website, success stories – variety and relevance is key. Promote your posts and run paid for ads as well – you’ll start to reach a wider audience and can track the results. If you’re new to social media, attend a course locally to you or watch some the of Facebook tutorials online – they are clear and easy to follow. If you have a younger audience try Snapchat or Periscope – it really is entirely dependent on the audience you’re trying to reach. Essentially, though, you must reply swiftly to any engagement, comments or questions you receive. Respond calmly to any complaints and social media can have significant and positive impact on your results.

Q: What are the cheapest ways for a beginner to advertise their business’ service?

Louise Young: Get the basics right first and make full use of all the free resources available to you:
• Invest in a good website – use responsive design so that it works well on all screen sizes
• Make the most of free business listings sites – there are of plenty of them, they are free and will give your business more exposure through Google
• Set up your Google My Business page – again it’s free and gives greater prominence to your business online
• Ensure you have an email auto response to manage expectations on when you will respond to enquirers
• Set up a personalised voicemail message
• Research your audience – use Google analytics, local Facebook groups who match your likely audience profile
• Set up a business Facebook page and promote your posts, testing different times of day to assess the best posting times and to test different types of content to measure levels of engagement
• If you have a website, then review your web stats on Google Analytics to better understand your target audience, how they interact with you and where they are
• Chase your audience – where do other similar local businesses promote to your local community or your primary audience
• Regular, consistent content marketing will give you a better return and help you to build a loyal following rather than one more costly ad twice a year.

Q: Question for those who have started small businesses – how can you ensure you don’t let it take over home life? It is really difficult, I feel, to switch off!

Sean McKeon: I would recommend having a separate mobile phone for work. The vey presence of smartphones when you are trying to switch off can be massively counterintuitive. May cost you a bit more in phone subscriptions but when you are not at work, but the work phone in a drawer….and leave it there until ready to return.

Gillian Nissim: This is definitely a common issue and everyone has different ways of trying to tackle it! There are a few things I find helpful: for example it helps me to have a separate space I can work in that is separate to the rooms we spend most family time. That way it creates more of a physical divide between work and family time. When possible I try not to have in depth conversations about work after 8pm at night otherwise I find I’m dreaming about it and mulling things over all night. Sometimes it can be good to have your phone in a separate room if it’s “family time” so you’re not tempted to check emails every five minutes – that in itself can help you switch off. I’m also a firm believer in physical activity to help clear your mind – swimming, the gym, walking the dog …. something that gets you out and about. I joined a mums netball team a year ago and that was a brilliant way to switch off. Inevitably there are going to be times where work does take over for a while, just as there are times when family life takes precedence but with a bit of discipline and a few “strategies” in place you can get things back on an even keel quite quickly . To be honest, switching off is definitely something I’ve got better at with practice!

Q: If you franchise your business as a way of expanding, and a franchisee performs really badly (giving the brand a bad name) then what can you do to protect yourself?

Sean McKeon: You need to have a clearly defined franchise agreement that allows you to address concerns and protect your brand. I would recommend speaking to a specialist franchise lawyer to assist you with your franchise agreement so these concerns are addressed.

Chris Roberts: You need to have a clearly defined franchise agreement that allows you to address concerns and protect your brand. I would recommend speaking to a specialist franchise lawyer to assist you with your franchise agreement so these concerns are addressed. Maintaining brand reputation is one of the key jobs of both the franchisor and the franchisees. So you need to have a continuous stream of good stories/testimonials out there which would hopefully outweigh the problems of one particular bad case. You need to be alive to any situation that might develop and be able to help the franchisee to hopefully put matters right quickly and publicly. get further promotional material out there a.s.a.p. to show how good the brand actually is etc.

Clive Rich: The main thing to do is to give yourself rights to terminate in the franchise agreement itself.

Termination rights are often included if:
– the franchisee is in breach and doesn’t cure that breach within a specific period of time;
– the franchisee fails to hit performance targets;
– the franchisee fails to get approvals as required;
– the franchisee doesn’t comply with the operations manual;
– the franchisee doesn’t address repeated complaints by customers;
– the franchisee doesn’t make payments on time or at all;
– the franchisee acts dishonestly;
– the franchisee experiences financial difficulties (eg goes into administration or can’t pay its debts on time).

Q: I have been running a small local business and am thinking of taking the next step into franchising and wondered what advice you would give me?

Chris Roberts: First of all, I would strongly advise you to obtain the help of a British Franchise Association accredited professional consultant and lawyer to help you because they are most likely to have the up to date knowledge of what you will need and need to do and also banks are more likely to lend to your new franchisees when they know that qualified people have helped you to create your franchise.

Clive Rich: There is no substitute for careful due diligence – is there really a market in the area you are interested in? How strong are the finances and reputation of the franchisor you are thinking of dealing with? Once you have selected your area of operations and a franchise I would say it’s important to get a lawyer to check out the franchise agreement for you – it’s much easier to deal with any potential problems before you start than pick up the pieces later when faced with unfavourable wording in the contract…

Q: If I want to franchise my business then how can I best raise funds to market it to potential franchisees? Via the bank or are there other avenues?

Chris Roberts: The ‘Franchise banks’ i.e. the ones who are members of the British franchise Association will possibly lend you up to 50% of the total amount you need to create and initially establish your franchise. This will include the amount you will need to set aside for your recruitment costs.

Yasmina Siadatan: Personally, I do not see anything wrong with not being able to switch off! Most mothers I know take their work with them everywhere! I’ve heard of dropping mobiles down the loo while trying to wipe bottoms and answers urgent emails! My big piece of advice is don’t get too worried about it, relax into the dual existence, embrace your enthusiasm and you will be happier and naturally want to put the phone down and have a little play, instead of servicing that next order.

Q: Do you think it is advisable to see a consultant first or to try and arrange funding before hand?

Chris Roberts: You will need to get the basics together (hopefully with the help of the consultant) before a lender is likely to lend. We at Franchise Finance can help you with all of this so do feel free to email us after the event at [email protected].

Clive Rich: Yes, definitely worth doing as much preparation as possible before you see a lender – you will only get one shot at it with them so you must make the most convincing case possible.

Q: I am thinking of going into franchising and am hopefully buying a property next year – does this impact on my mortgage prospects?

Chris Roberts: The impact will depend on to what extent you have taken on any personal liabilities relating to your new franchise business. Example of a possible adverse impact would be if your new franchise business was a ‘sole trader business’ and you had ‘business borrowings’ or if it was a limited company and you had given personal guarantees.

Clive Rich: Generally speaking, it’s a bit harder to get a mortgage if you are not an employee, the reason being that mortgagors like to see evidence of steady income and so they like to see salary slips. If you are a limited company operating a franchise you generally have to show 2-3 years of accounts with appropriate levels of dividends, which may not be easy. Its probably more difficult if you are operating a franchise as a sole trader as lenders tend to be sceptical about your figures and your ability to sustain them. As Chris says, if you have entered into personal guarantees that makes it harder too as the lender will feel that increases their risk.

Yasmina Siadatan: Setting up a business whether a franchise or otherwise will have an impact on your financial situation no doubt. Anyone that is self employed will experience more difficulty when obtaining a mortgage than a PAYE employee as the contract of a regular income simply is not there. I must say that obtaining mortgages as a business owner is getting easier as more people choose enterprise as a career choice. The best bet is to pop down to your local IFA (independent adviser) and sounds him out. He’ll give you free time to talk through your concerns. Good luck!

Q: Could you give me some advice on how to stay motivated when running your own business, and perhaps things aren’t going so well?

Mandy Garner: That’s definitely a challenge, especially in those difficult periods where kids are sick, things are not going to plan, etc. Try to build a good network of support from family and friends; get in touch with other businesswomen facing similar challenges so you can swap stories and tips – there are lots of web platforms offering support if it is difficult to find time to get out, though getting out regularly is a good idea; and look at getting a mentor who understands the challenges you are facing and the direction you want your business to go in can help keep you going and support you in building your business.

Clive Rich: I find having other things in your life apart from work is a great help! I get a lot of support from family and enjoying time with them helps give perspective on any problems coming up at work, as well as the perseverance and energy to deal with them.

Gillian Nissim: I agree with all of the above. From a business advice perspective, when I’ve had challenges, I’ve found it incredibly helpful to have someone I can trust to talk to and “offload to” and who has helped me look at things objectively or from a different perspective. Equally, as Clive says, ensuring you have other things in your life and spending time with family and friends for example, definitely help you to keep things in perspective when times are more challenging.

*Workingmums.co.uk has some great articles on Workingmums.co.uk to help women get into business – view our Work for Yourself section here.

Q: Could you give me some advice on how to stay motivated when running your own business, and perhaps things aren’t going so well?

Mandy Garner: That’s definitely a challenge, especially in those difficult periods where kids are sick, things are not going to plan, etc. Try to build a good network of support from family and friends; get in touch with other businesswomen facing similar challenges so you can swap stories and tips – there are lots of web platforms offering support if it is difficult to find time to get out, though getting out regularly is a good idea; and look at getting a mentor who understands the challenges you are facing and the direction you want your business to go in can help keep you going and support you in building your business.





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