FRANCHISING
regular feedback from a manager. Most franchisors provide a network to help franchisees feel part of a team, and deliver more tangible results. Mark Harrison says Xperience’s regular meetings allow franchisees “to share experiences and feel they are not alone.” At Winkworth, James Trimble says franchisees are encouraged to talk to each other. “You’re on your own but not alone - I know it’s dreadfully corny, but it is very relevant to the franchise network.” Meanwhile Kevin Hollinrake says, “They are never on their own. Keeping morale up is part of our job as franchisors.” Neil Morris believes this can be
particularly important in difficult times. A Your Move conference gave franchisees the chance to bounce ideas around on how to improve their income. “It does give you a bit more
confidence.Sometimes people have given up and if they’d got a bit more support, they’d still be there.” Denis Roodhardt says, “You don’t only
learn from head office;” neighbouring franchises form an important network for him, and he talks to them “if not weekly, it’s monthly.” He has learned a lot from Canterbury, which opened about a year before he did. “If we meet a situation, they’ve already been there.” Now, other, newer franchises are calling him. “We’ve grown aggressively and people are interested in us. We have benefited and now we’re giving back.” Andy Campbell also praises his franchise
network. “It’s saved me thousands of pounds,” he says, “when I’ve had a bright idea and people have said to me, ‘Don’t try that, it doesn’t work’.” He says Belvoir head office also develops new ideas, and – importantly – trials them to make sure they work before bringing them to the network as a whole. “Things we do, the sole traders are doing a few months later. But we get in there first,” he boasts.
WHO IS BUYING FRANCHISES? While until recently most franchises were ‘cold starts’, often with managers who hadn’t worked in agency before, there’s been increasing demand for franchises from those with a property background, and from existing offices looking to rebrand. That differs from network to network; James Trimble says 90 per cent of Winkworth franchisees are from an agency background, but that is exceptional. He says many agencies feel they’ve
reached the limit of what they can do on their own. “A lot of agencies ask how to get into the top end of the market, how to get
Andrew Cranshaw and Lettings Manager Amy McAnulty at Reeds Rains in Ashton.
£25,000 or more. Some franchises in the past (particularly in retail and blue-collar services) have been accused of making a profit by signing up new franchisees, only to let them go under. Neil Morris says, “Some franchisors that
I’ve spoken to, all they seem to want to do is to get their franchise fee out of you, and then the support dries up.” (He’s quick to add that these weren’t in the estate agency sector.) He warns potential franchisees to ask the hard question – “Are you really working for yourself or are you just a cheap way for them to open another branch?” Dorian Gonsalves believes “the initial
Paul Rogers (left) and Lawrie Stewart own and operate three Reeds Rains franchises.
past the £500,000 properties to the million pound ones?” Others are concerned to double or triple their inventories, and believe the Winkworth platform gives them what they need to compete. Mark Harrison says Xperience too is
seeing demand from small independents. “They’ve been running relatively successfully, but can’t take the next step - their websites are a bit dated, their marketing needs a refresh, they’ve looked at that and found it will cost £20-50k to do, and instead they can get a whole rebrand and redesign for very little with us, all ready to plug into and at discounted rates.” Every franchisor charges an up front
franchise fee, ranging from under £3,000 in the case of no-branch franchises such as Hunter’s Personal Agent programme, to
franchise fee shouldn’t be making a profit for the franchisor;” instead, he sees Belvoir’s new franchises as an investment, which will pay back through royalties on the franchise’s turnover in the longterm. There certainly is a longterm; Andy Campbell has been with the business for 15 years. James Trimble, similarly, says “Those offices we’ve brought in we hope we can have for 10 or 20 years.” Despite careful selection of franchisees and support, some businesses fail. At Hunters, Kevin Hollinrake says, about one third of franchisees “need to improve”; of these, about two thirds manage to right themselves. About ten per cent fall by the wayside. At Xperience, Mark Harrison sets the failure rate at around five per cent, saying “we don’t like a franchise to fail, of course, for reputational reasons.” Ongoing royalty charges vary. Xperience
charges 7.5 per cent of turnover; “that’s about the lowest in the industry,” says Mark Harrison, and notes that uniquely, Xperience doesn’t charge its new franchises any royalties for the first year. He expects most to achieve monthly
PROPERTYdrum SEPTEMBER 2011 27
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