RESIDENTIALlettings
casualties. I am delighted to say that we are growing rapidly once again and anticipate very few issues this year.” Ian Wilson is equally frank saying that
they experience a churn of about five per cent, which sounds small but with 170 branches that is eight or nine a year, although he says, changes in personal circumstances and retirement are the usual reasons. Andrew Townend at Aspire says
franchisees should not have unrealistic expectations of profit in any year, “Franchises touting 40 per cent profit margins should return to Planet Earth. It goes without saying that they should not expect poor support from the franchisor – although sadly this is often a common complaint by franchisees from across the spectrum. Aspire works hard to deliver consistent support to its members and is focused on success based on longevity, not on generating one-time licence fees.”
MaNagiNg coNtrol It must be very tempting for franchisors to worry about their franchisees to the point where they are looking over shoulders and monitoring bank accounts; after all, the franchise is the franchisee’s business. Roy Gover acknowledges this, “Some
elements – brand, IT, financial services, property management auditing – are prescriptive so there is an annual review, but Reeds Rains does try to allow some elbow room.” Winkworth also appreciate the
sensitivities of the entrepreneur. “We don’t follow the model of corporate agency where we ask for viewing figures and phone calls made every few minutes.
NatWest/BFa FraNchise survey:
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The UK franchise industry is now estimated to be worth around £11.8 billion
The overall number of franchise systems in the UK is 842
There are an estimated 465,000 people employed in franchising in the UK
Property Services remains the largest sector
One in five franchisees operates multiple units.
84 per cent of franchisees who took part in the survey report that they are satisfied with their relationship with their franchisor.
18 MARCH 2011 PROPERTYdrum Cheers and smiles all round as a Reeds Rains franchise opens in Derby
“We very much need our franchisees to show an entrepreneurial spirit and drive, we have to remember that our franchisees are independent businesses and should be treated as such. We do have a number of controls in place, relating to things like branding, compliance and territory. We also reserve the right to have a look at accounts if necessary.” Your Move conducts regular audits and
requires the regular submission of accounts. Alan Johnson says, “We offer ongoing advice and guidance including training to ensure the franchisee is operating according to regulatory requirements and is able to offer Your Move services correctly to the customer.”
‘Opening an estate agency franchise isn’t like opening a McDonalds or
Domino’s Pizza where new customers simply walk in through the door.’ KEViN HolliNraKE HuNtErs
casE study
HomeXperts Northwich First time franchisee, Claire Ash worked in IT and was already involved in property as a landlord. She made an initial enquiry in June last year; before leaving full time employment to join HomeXperts as a Personal Agent in August 2010 in Northwich, Cheshire. Claire attended a three-week training academy and followed the business set up and marketing plan for her agency. Within a few months of trading Claire
is already invoicing an average of £3,000 per month and is currently ahead of her original franchisee business plan.
Claire says, “As a first-time franchisee I came out of a well paid job to start my own business, HomeXperts supported me through the transition. The set up of the business went really smoothly and the whole system is excellent. My branch is listed on the HomeXperts website and I have my own website. I have been really impressed by the
quality of the training and ongoing support.
“Within less than six months I have
my own estate and letting agency business and I am achieving my goals, I now want to develop my business and take on some extra support.”
Hunters appear to be more easy going.
“Maintaining our brand reputation is vital so there we certainly ensure that all our franchisees conform to our service standards and brand guidelines,” says Kevin. “We always respect the fact that it is our franchisees’ own business, however, and allow franchisees to set their own fee policies and develop their own commercial relationships. We raise all the invoices and carry out debt collection but leave their business accounts to them.” The models vary among the franchisors
but the essence is the same, it is indeed the franchisee’s business, but it has to be operated within the rules and guidelines to protect the brand. This illustrates both the upside and the downside of a franchise; it is yours… but not totally. If the franchise route appeals, the
prospective franchisee has some major financial questions to ask. The importance of getting the sums right cannot be over- emphasised; it isn’t just the initial investment, it is the length of time it takes to make enough to take a salary, let alone a profit, which, when you are working flat out, can be stressful.
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