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FRANCHISING


systems in place. This is the reason some other brewers and pubcos have decided not to get in- volved with a franchise-style model. Tom Davies, chief executive of Brakspear, which operates a tenanted and leased estate, looked carefully at some of the franchise agreements available with a view to introducing something similar to the Brakspear estate, but concluded that it wasn’t currently appropriate for his operation. A major reason was the predicted cost of introducing the management systems necessary to oversee and support the franchisees. Punch too has looked at it, trialling a fran-


chise-style model in three sites before withdraw- ing from the idea. It was run in a similar vein to the Retail Agreement, with the licensee receiving a percentage of the takings and Punch covering the costs of the pub with the exception of labour. “We learnt from the three sites we tried it in


and we’re currently looking at a further test in that area,” says Punch operations director David Wigham. “We see lots of our competitors trying these kind of semi- managed approaches. But if you look at the nature of the pubs be- ing run like this, they’re generally pubs with a very low profit base. Our core estate, on the whole, is a better qual- ity estate so we’re not looking for an agree- ment that will enable difficult pubs to survive. “If we thought that


by having an agree- ment like Marston’s it would bring a lot of new people to the table, people who were interest- ed in the agreement because they didn’t want


CASE STUDY: MARK CHURCHILL


Mark Churchill runs two Meet & Eat franchises, the Old Grindstone in Sheffield and the Queen’s Head in Worksop. He owns a freehold pub as well. He was the third franchisee to launch a Meet & Eat. “The main difference between running a franchise and a freehold pub


is the marketing. You get the benefit of what Greene King has learned in their managed house division. The level of quality of support is excellent. “The pricing structures also allow you to compete more easily than if


you were running the business as a normal tenant, because you’re basi- cally working with free-trade prices. That’s a huge benefit. “To a degree you have to follow what Greene King advises, but there’s


flexibility on promotions. I choose not to run certain things. So it’s not like a McDonald’s or KFC style of franchise where everything has to be the same. “The franchise model is especially beneficial for people who are com-


ing into the pub industry because of that support. We’ve all heard stories about pub companies having a difficult relationship with their tenants. This is all about getting away from that mentality of ‘If you can’t pay then we’ll get somebody else in’. “I’ve learned a lot from the model myself, from certain systems and the


“It encourages


entrepreneurialism amongst licensees, enabling them to


manage successful businesses with


the benefit of our support, economies of scale and


retailing expertise”


the risk of running the whole business, or they didn’t have any capital to introduce; if it opened up new pools of talent for us, that would be of interest.”


THWAITES AND THE WAYINN Daniel Thwaites no longer has a managed arm but it has still gone ahead and introduced


an innovative ‘semi-managed’ approach for new tenants. However, the WayInn agreement, as its name suggests, is more of a short-term introduc- tion to the business of pub retailing rather than a proper franchise model. Nevertheless, it has already helped begin to attract quality tenants to the business, particularly those new to the indus- try and those who may be risk-averse. Launched last summer, WayInn offers a low-


cost, low-risk entry to the pub market. The rev- enue-sharing deal provides a guaranteed weekly income for the licensee of £200 or 15% of total sales, while Thwaites pays for running costs – utility bills, Sky, business rates and products. There are currently fewer than 10 such agreements in place, with plans to reach around 20. This will be a roll- ing number, though. The idea is that where a business is successful the agree- ment will convert into a longer-term tenancy. “It’s about building confidence for us and for


our customer,” explains Thwaites’ chief executive Rick Bailey. “It’s about making sure the licensees


menus – it’s helped streamline my operation in my freehold pub as well. “As far as the concept goes, from the outside through to the interior,


there’s a real quality feel to it, the kind of thing you would expect from a managed house. As an independent operator, sometimes trying to keep up with those big national companies like Wetherspoon and Yates’s – trying to compete with their marketing and pricing – can be daunting. They’re forever coming up with something new and you’ve got to react to that. With the franchise model, it’s pretty much done for you.”


22


TWENTIETH FEBRUARY 2012


pub&bar


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