Irish Franchise Blog

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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The winners of the Irish Franchise Awards 2008  were announced at a black-tie ceremony presented in Dublin by the inimitable Marty Whelan. The awards, sponsored by Ulster Bank, recognise excellence in franchising and top honours went to The Streat, Home Instead Senior Care, Abrakebabra Investments, Pristine.ie, O’Brien’s Sandwich bars, and David Zebedee. Michael Bradley, former CEO of the Irish Franchise Association, received a special award for his outstanding contribution to Irish franchising.

It was also a special occasion for the Irish Franchise Association as it celebrates its 25 th anniversary.  Continued membership growth underlines strength of the franchise sector in spite of uncertain economic times. According to Chairman John Green, the Association has maintained strong growth with a membership increase of almost 10% over the past 18 months.

[Read the rest of this entry...]

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Interested prospects can kill you in the franchise sales business. That’s why the salesman always needs to maintain an active pipeline. It is normal for people thinking about buying a franchise go through several layers of interest. This chart shows the levels of progression:

4. Commitment
3. Active interest
2. Passive interest
1. Curiosity

This chart is inverted because it is a ladder that the prospect must climb. They start out as curious, and as long as the franchise salesman is willing to feed them information about this wonderful, lucrative, not-to-be-missed, world-class opportunity they will be willing to take up his time. It’s up to you to move them up the ladder—or move on yourself! [Read the rest of this entry...]

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OK, we’re in a recession and prospects are not good. But are we downhearted? I don’t think so—not if attendance at last month’s Irish Franchise Exhibition in Dublin is anything to go by.

While the exhibitors were fewer than the previous year, the number of visitors was well up—a sign of the times. I was a speaker at an exhibition seminar. My subject was “Understanding the Franchise Contract.”

I said this wasn’t the most exciting document in the franchise process (it’s a legal document so by necessity it has to use words such as “whereas” and “wherefore” etc. and it can be double-dutch to anyone who hasn’t seen such a document before ) but is arguably the most important, since it sets down the responsibilities of both franchisor and franchisee. [Read the rest of this entry...]

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