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FRANCHISING


are going into what will be a tenanted pub with their eyes wide open and understanding the busi- ness with the confidence of having traded it.” Already a number of the pubs benefiting from


the agreement have seen trade build quickly, with the licensees eager to take on more sub- stantive agreements, says Bailey. “Where it doesn’t build quickly, we work with


them to understand why, address it and tweak the operation so that hopefully we get to the point where we can transfer them on to a full agreement,” he adds. “It’s about supporting them through an introduction to the trade.”


GREENE KING: A DIFFERENT MODEL Along with Marston’s, the other major company offering an accredited franchise model is Greene King. Its Meet & Eat concept has also been a considerable success, as Simon Longbottom, managing director of Greene King Pub Partners, explains. “We’re seeing our Meet & Eat franchise pubs bucking the trend in terms of expected re- turns and annual income for the pubs,” he says. “Currently the return on investment is 45% on an expected investment of £100,000, allowing a franchisee to typically expect a projected annual income of £45,000 per year.” Franchisees need a minimum of £105,000 to


enter the agreement, which includes the cost of the Franchise Package Fee (£85,000) as well as £15,000 of working capital. Franchisees pay rent to Greene King, an ongoing franchise fee of 8% on turnover (which reduces as a pub’s audit scores improve) and a marketing support fee of 2% on turnover. There are other ongoing costs too. In return, Greene King fits out the pub so that


it’s ready to trade, provides each franchisee with two weeks of training and introduces fully support- ed marketing plans, a ready-made events package and food and drinks menus. Food and drink are supplied by Greene King distribution channels, tak- ing advantage of the brewer’s scale and buying power and providing attractive cost prices. Greene King also pays 50% of the ongoing cost for Sky, electronic music and gaming systems. While the franchisee’s costs are much greater


with the Meet & Eat model, a larger percentage of turnover is retained by Greene King’s fran- chisees compared to those signed up to Marston’s Retail Agreement. To help franchisees with start-up costs, Greene


King recently announced that NatWest had be- come the official funding partner for the Meet & Eat franchise business. Franchisees looking to take a Meet & Eat franchise can approach NatWest and receive preferential borrowing rates to support the franchise opportunity. So far, 23 franchisees have opened Meet &


Eats and there are more in the pipeline. Greene King is actively recruiting prospective licensees, with a focused campaign going on in the fran-


24 TWENTIETH FEBRUARY 2012 pub&bar


chise press and some national and regional pa- pers to raise awareness of the brand and help recruit high quality franchisees. Like Marston’s, Greene King hopes to attract entrepreneurs from outside the pub industry, as well as smart licen- sees from within. “We have bottled a winning formula that we


know will be successful in the local micro-mar- ket,” says Longbottom. “So for individuals who haven’t got a great deal of pub experience, we can provide that know-how and that assurance that the offer’s going to be strong.” What about more experienced pub operators,


though? Is the franchise formula too prescriptive? Does it remove too much of the freedom from running your own business? David Knott is the licensee at the Orange Tree in Braintree, the first Meet & Eat franchise to launch. Here’s his take on the Meet & Eat model: “It’s operating your own business within a certain framework,” he says. “That’s not restrictive – it gives you the support you need so the pub remains successful.” For many, the franchise model will provide


a golden opportunity to run their own business, without the risk of doing it all on their own. It’s a new way to run pubs in a new retail environment. It’s evidence that the pub industry doesn’t always stand still, that it has the will to react and adapt to new market conditions in order to survive. Ultimately, this third way – the franchise ap-


proach – aims to ensure that certain pubs remain viable businesses. What’s not to like about that?


KEY FEATURES OF THE AGREEMENTS:


MARSTON’S RETAIL AGREEMENT Five year agreement Franchisee earns around 20% of total revenue but is responsible for staff costs Franchisee puts up £5,000 returnable deposit Marston’s pays for everything else, including stock, utility bills, fixtures and fittings Marston’s invests around £50,000 into the pub to give it more con- sumer appeal The retail offer, including menus and entertainment, is developed by the same team responsible for Marston’s managed pubs Accredited by the British Franchise Association


GREENE KING’S MEET & EAT FRANCHISE 10 year agreement on a rolling basis Start-up costs for franchisees of £105,000 Funding available from NatWest Franchisees pay rent, an ongoing franchise fee of 8% on turno- ver and a marketing support fee of 2% on turnover Greene King fits out the pub so that it’s ready to trade Greene King provides fully supported marketing plans, a ready- made events package, and food and drinks menus Greene King pays 50% of the ongoing cost for Sky, electronic music and gaming systems Two weeks’ free training provided for franchisees A larger percentage of turnover is retained by franchisees Accredited by the British Franchise Association


DANIEL THWAITES’S WAYINN AGREEMENT A revenue-sharing deal with a guar- anteed weekly income for the licen- see of £200 or 15% of total sales Thwaites pays for the run- ning costs – the utility bills, Sky subscription, business rates and products Short-term agreement, usu- ally for six months: the idea is to transfer the licensee on to a longer-term tenancy once both parties are confi- dent that the pub is be- ing traded successfully


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