Inside Business: Franchise counsellors pull partners together
Sunday 01 February 1998
Franchising is not for everyone. Individualists may find it constraining, and loners can soon head for the franchise equivalent of the divorce courts. But the succession of people calling on the London Franchise Information Centre since it opened last September shows just how popular the concept is.
Around 30 people a week visit the centre in St Andrew Street, next to Holborn. Many arrange free hour-long counselling sessions, in which they are warned of the pitfalls as well as the benefits of franchising. Not only potential franchisees have been asking advice, but also the owners of successful businesses that want to become franchisors as a way of expanding.
"I am firmly in favour of franchises," says Mr Grossman, who has been 21 years in the business, recruiting franchisees firstly for Pronuptia & Youngs, the bridal wear and men's formal wear retailers, and then with Apollo Despatch. "You are in business for yourself, but not by yourself. You are working with the support of a large company.
"Franchisees can build up capital value in the business, which they can then sell if they want to. The NatWest survey of franchises found that 94 per cent of franchisees were profitable last year, and 92 per cent were happy with their relationship with their franchisor. Those are remarkable figures. They explain why clearing banks are happy to lend 70 per cent of necessary start-up capital, where they would normally only lend 50 per cent for a stand-alone start-up. All the banks have specialist sections."
Most visitors to the centre are considering buying a franchise and are advised of the financial and contractual implications as well as the vast choice. There are 541 franchisors operating in the UK, and 25 have stands in the London centre at the moment. Exhibitors include McDonald's, Red Star, KallKwik, Drinkmaster and Unigate.
Some exhibitors are not merely looking for franchises in Britain but want to sell master franchises in overseas markets, while others are foreign- based corporations, particularly from the USA, looking to dispose of UK master franchises.
A network of business advisers from around the country is now in contact with the franchise centre, involving not only Business Links offices, but also forces' resettlement advisers. Many people in the armed services have expressed interest in taking on franchises, using the lump sums they obtain from leaving the forces early.
Franchisees need to be energetic and committed, as well as having good business acumen, says Mr Grossman. Taking on a franchise is not a substitute for traditional commercial skills.
Not all visitors are immediately interested in setting up in business, though. Some are students and casual visitors simply wanting to know more about the franchise concept.
From this week, potential franchisees and franchisors can ask for the extra reassurance of a psychological profile, to help suggest whether they are likely to make a go of franchising.
The centre was set up by Fraser Russell, a firm of accountants, with the support of the British Franchise Association, and is sponsored by NatWest Bank. Visitors do not pay a fee, although franchisors are charged a monthly subscription for exhibitions.
A similar centre operates in Glasgow, and the success of the London unit has led to discussions on centres in Birmingham, Manchester and other major cities.
q The London Franchise Information Centre is at 22 St Andrew Street, London EC4. Counselling sessions can be booked on 0171-583 6955.
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