Irish Franchise Blog

I spent most of June on the road, or should I say in the air. I was in Geneva, Paris, and Vienna to discuss franchising with two new clients–Ski Republic and Novum Publishing. Both companies are turning to franchising to expand their well-established businesses internationally.

Ski Republic is a new kind of ski equipment hire company which has done to skiiing what Ryanair did to air travel. It has revolutionised the business by offering personal service for much less than the traditional operators charge. Ski Republic has 27 shops in some of the most popular resorts across the Alps and their move into franchising comes as a result of more than 100 inquiries from potential franchisees. Already master licences are being optioned for Austria and Switzerland and the scope is enormous.

What makes this an exceptional franchise opportunity is the money people can earn for just six months work in the winter season. Profits can exceed €100,000. Earnings apart, franchisees get the bonus of working in some of the most beautiful places on earth!

Novum Publishing is also a very attractive franchise. It’s the No.1 co-publishing house in Austria, Switzerland, Hungary and Germany. Since 1997 they have helped hundreds of authors to get their books published. The company provides a complete editing, design and quality print service and promote their works at publishing events and international book fairs.

Recognising an increased demand in the co-publishing market Novum intends to grant franchises throughout Europe in the 12 months.

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I’m delighted to say that I’ve just been elected to the Executive Board of the Irish Franchise Association. It’s a privilege, and may I say a big “thank you” to members who supported my nomination. I’ve long been a enthusiastic supporter of the IFA’s aims and ideals, and have served on the IFA’s Membership Committee for the last two years.  Joining the Board will hopefully enable me to make a more significiant contribution to the affairs of the Association. Apart from endeavouring to boost membership by 30%, we’ve a lot to do this year to promote IFA activities.

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When I talk to would-be Franchisees about a franchise agreement I take them through the main points and always advise them to discuss the agreement with their solicitor. In fact, they’re obliged to that under the terms of the agreement, so that they fully understand what they’re getting into. I never gave much thought to the fee a solicitor might charge for this service– until recently, when a prospect called me to say that her solicitor wanted to charge €2,000 to read over the agreement, warning her that “if I have to do any additional work on it the fee might rise to €5,000.”

What! The quote was outrageously high. Naturally, I told her to find another solicitor. Since then I have been taking great care to advise prospects to shop around. My own research has shown a wide variation in what solicitors will charge to read an agreement–from €300 from a one man practitioner to €900 for a multi-partner Dublin firm. All cautioned that their fee might be higher if they needed to take advice from other sources, or communicate with the Franchisor. Fair enough, but I would seriously question whether this would ever be necessary.

A franchise agreement from a reputable, established, company will be based on a particular format and any solicitor who is familiar with franchising should take no more than 45 to 60 minutes to read it, especially if the agreement comes from a member of the Irish Franchise Association, which will have approved the agreement before admitting the franchise to its membership. In my experience of having sold more than 50 franchises for various clients (and shown the agreement to dozens of other prospects who didn’t proceed for whatever reason) I only ever had one letter from a solicitor. He listed 10 points, but he was simply looking for clarification; he was not challenging the legality of the agreement. But no matter who has issued the agreement, for his own comfort the prospect should have it checked before he signs it.

High prices charged by solicitors to read these agreements might persuade some prospects not to spend the money and this would be a worry.

What’s your experience? Comments please!

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Redundancy is increasingly becoming a fact of life these days. After years of growing employment there has been a sharp upturn in the number of people losing their jobs in Ireland. The Chartered Institute of Personnel and Development predict that redundancies will soar to about 2,270 a week in the period between New Year and Easter, the worst since the 1950s, sending unemployment above the 10% mark.

It’s a very challenging situation, and everyone will have sympathy for those who are going to be effected. Many of these people will have been made redundant once or twice before, and they’re not relishing the prospect of it happening again. Finding another job won’t be easy. The future, surely, for many of them, is in franchising.

Looking back to the early 1990s, when we had the same gloomy conditions, the franchise industry continued to expand and, interestingly, the ranks of the franchisees increased significantly with enterprising people viewing self employment/ business ownership being distinctly preferable to the uncertainties of being an employee. Banks at that time reported that while many “stand alone” new business start ups ended in failure, the great majority who went the franchise route had succeeded. I expect history to be repeated.

I’m not saying franchising offers any guarantees. It doesn’t. Running your own business is not easy and there are risks involved, especially if you’ve never been your own boss before. As with any business, you get out of it what you put in. But at least you’re not on your own. A Franchisee will have the support of the Franchisor who provides a proven business system, ready access to best practice procedures and the tools and collaterals to meet changing circumstances.

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Just back from spending the festive season in Dubai. A remarkable city, known as the Hong Kong of the Middle East, and one of the fastest growing and dynamic markets in the world.

If you’ve never been there I recommend a visit to see what man can build with endless money and a seemingly endless supply of cheap labour from Asia! Dubai has the world’s largest this, that, and the other and its hotels and shopping malls are to be seen to be believed, especially the newest hotel, the futuristic Atlantis, which cost $1.5 billion to build. The owners spent a staggering €20 million alone on the lavish opening ceremony in December.

I was hoping to find some successful indigenous businesses that might want to expand internationally through franchising but I saw nothing to get excited about. On the contrary, the Emirates are more interested in importing franchises than exporting them. The government of the seven emirates that make up the UAE positively encourage franchising and banks there are eager to help young entrepreneurs get into the industry.

About 80% of the population (of about 4 million) are foreigners, so its no wonder all the international big names are there. If you, as a Franchisor, are already international, add Dubai to your locations list. If you are considering international operations, do the same.

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Irish Franchise Skillnet, which is supported and endorsed by the Irish Franchise Association, is proposing to create a Certificate course in Franchising through a Dublin university next year.

The course will be scheduled for a minimum of five days over several months. Depending on its success, this may be followed by a Diploma course run over a longer period. The Certificate will be funded through the Skillnet and the overall cost of training for participants will be reduced by up to 50%. The proposal has been approved in principle by the Steering Committee of the Irish Franchising Skillnet.

The course content for the Certificate is currently being prepared by experienced trainers with specialist expertise in the franchise business in Ireland and the UK. In order to deliver content to meet their requirements, Irish Franchising Skillnet have asked Franchisors for their suggestions about the type of training they would like to see included in this programme.

Network Manager of the Irish Franchising Skillnet is Siobhan O’Callaghan.
Email: siobhan@paramounthr.ie or phone 01 2911963.

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Franchising your business is like setting up a new business. You’ll need a proper plan, proper management, and proper funding.

We’re assuming here that you have a business that’s suitable for franchising. Ask yourself these questions:

Have you run a successful business for at least one year? Have you proven your concept? Will it survive in the long term? Is it profitable? Can you produce audited accounts? Do you operate in a niche market or offer something different in an established field? Can your business be replicated and easily taught? Can you offer leadership, strong management, motivation and support?

And can you offer a franchise at a cost that is good value for money and can make a decent return on investment in the short to medium term and a good living for its owner?

If you can answer yes to most of these questions you may have a business that can be franchised. [Read the rest of this entry...]

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The Operations Manual is the ‘bible’ of the franchised business and forms a significant part of the franchise contract. It is the Franchisee’s primary source of information and guidance and should contain a detailed description of the Franchisor’s system and how to operate it on a daily basis.

Essentially, it will specific to the needs and requirements of the system such as regulating opening hours, product description, stock control stock ordering procedures, handling customer complaints, the payment of fees, and policies in regard to advertising, marketing and promotions.

It will cover set up procedures, including advice on researching the market, business and tax registration, insurance, opening bank accounts, cash security, site set up, and the preparation of a marketing plan.

But it will also refer to building brand awareness, human resources, health and safety matters and basic accounting procedures, such as VAT returns and the observance of other statutory obligations. [Read the rest of this entry...]

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Franchising is not for everybody and it is important that you know what the drawbacks are before making any sort of commitment.

It can be an inflexible method of doing business as each Franchisee is bound by the franchise contract to operate in the business in a certain way. The Franchisor has created a brand and developed a system and to protect it he needs the Franchisee to observe the rules he has set.

You’re an independent business owner operating under the Franchisor’s umbrella.

But you have to follow the rules. You’re part of a team now. You’ll sell exactly the same product or service, probably from shops of offices that look the same and, in some cases, wear the same uniforms as everyone else in the network. There’s little freedom to be creative.

You will also be restricted to a defined location—perhaps a town (or part of one) or a broader territory defined on a map. You will be able to operate there exclusively but not outside it, unless the neighbouring territory is available and you get agreement to work it until it is sold. [Read the rest of this entry...]

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The franchise contract (or agreement) is perhaps the most important document in the franchise process.   Once signed, both parties are bound by it, so it’s worth studying in detail.

The agreement outlines the responsibilities of both Franchisor and Franchisee and should be well balanced in terms of rights and obligations. It should also be exactly the same for every franchisee in the network.

The agreement should achieve three fundamental objectives:

First: in the absence of specific franchise legislation in Ireland it should contractually bind both parties and accurately reflect the terms agreed.

Second: It should seek to protect for the benefit of both the Franchisor and the Franchisee the Franchisor’s brand, reputation, and intellectual property.

Third: It should clearly set out the rules to be observed by the parties, such as: [Read the rest of this entry...]

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