I’ve already exhibited at something over 70 franchise exhibitions since the mid nineties. It’s not a record but it’s a lot more than most. 

I’ve made millions for lots of franchises, I’ve partied like it’s 1999, (in fact I partied well before 1999), and I’m one of the few franchise specialists who’s genuinely stayed the course for 30 years or more. I’ve watched dozens of consultants come and go, lots of employees come and go, and I’ve also watched hundreds of franchise exhibitors appear and disappear from the franchise sector.

So what can I tell all you franchise specialists out there about this coming International Franchise Expo at Excel in London? Off the top of my head, and in no order of importance then ….

For those who are visiting:

 

1. 1. Don’t rely on attendance being any form of credibility. This applies to every franchise exhibition regardless of the organiser. 

1. 1. The most flashy personalities / statements / brands are often the worse bets. I’ve seen and still see many individuals make sensational statements over the years about how brilliant they are – when in fact they aren’t.. So, just because someone is making a lot of noise online it doesn’t mean they know more than the rest.. There’s huge value in modestly presented business formats too. But plenty of people want to be influencers and if you believe everything you see or hear online then sorry but you’re an idiot. Find the ones’ who have walked the walk, not talked the talk.

1. 1. Everyone has competition except HMRC. Even if someone convinces you otherwise you’ll soon experience this unpalatable truth. It’s nothing to worry about, you’re either good enough or you aren’t, and I mean YOU not the franchise brand because ultimately it’s YOU who must make it work. 

1. 1. If you’d like free tickets then follow this link, and if you scroll down you’ll even see a picture of me on the page!

For exhibitors looking at the upcoming show: 

 

1. 1. Remember it’s a tyre kickers paradise, so despatch the dreamers through a ruthless follow-up. Are they coming to a meeting with you or aren’t they? Work with the little core of those you like and don’t waste time on the masses because they get in the way of the genuinely good ones.

1. 1. And with respect to all those potential suppliers who thought you were there on a purchasing exercise swiftly despatch them too or invite them to come and see you in person. That’s a great filter because most cant be bothered, they want your business without the relationship build. 

1. 1. How did your people do on the last expo stand you had? Who stood out, who didn’t? Think back now before you choose who might be with you this time around. Your company accountant for example generally shouldn’t be there. 

1. 1. You’ve paid a few thousand per day to be there so I hope you’ll get some basics right, e.g, not scoffing your sarnies on your stand! You should eat them on someone else’s stand or in the food areas. Certain things should also be routine, e.g. good quality prompt follow ups so everyone has a positive encounter with you during and after the event. The right personalities on your stand matter, but everyone is there to work – not have a wonder around like a visitor. Remind your staff of the cost per hour of being there.

 

Oh, theres so much more I could add, but that’s reserved for the 50+ brands we represent. If you’d like some sound advice on how to excel as a franchisor without the BS then please drop me a line here!

 

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After due consideration … here’s 6 key considerations … to consider … when considering franchising your business.

1. Be certain that a franchisee will have a solid commercial opportunity. Currently you can sell your stuff where ever and to whoever you want to. Without inviting potential chaos you’re likely gonna need some restrictions on your franchisees. So, ask yourself, could your business still be profitable if you confined your activities to a specific and new region? If that’s a Yes then it’s now time to consider how you profit from a typical franchise arrangement. You may be happy with a margin on product supplied to franchisees in which case you could have a royalty free model, if so then you need to consider how that affects the profitability of each franchisee when you don’t supply them at your current cost price? Otherwise you’ll probably need a royalty, what does that do to the franchisees bottom line? It is also normal that franchisees contribute to the overall brands marketing fund. So do a profit and loss allowing for these and now consider again if it’s a good franchise proposition.
2. Quantify your maximum liability and accept the risk – In both £’s and pence. Once you are clear on the downside you’re thinking in the same way as a franchise investor would. Get comfortable with the investment required to get your franchise defined and setup correctly. You can not do this for a few grand. It simply can not be done thoroughly unless you invest properly in the process – the same way as you expect your franchisees to invest! So, allocate the capital and resources needed and commit to it fully and without reservation because dipping your toe in the water won’t achieve anything. Like all ventures launching a franchise of your own carries the risk of failing despite what the franchise industry statistics might tell you!
3. Dont under estimate the time you’ll need to invest to teach the model to your new franchisees. Some businesses can be taught and picked up pretty quickly. But you, as a new franchisor you will need sufficient elasticity within your team to be able to give whatever time is needed to your new franchisees. They will need your time to learn the system and find their feet. This may strain a small company even if they have a great franchise system. So consider who has that time and expertise to give and be available to your franchisees.
4. Don’t sell a franchise to someone you wouldn’t want to work with. Many Franchisors have zero recruitment criteria and they can sell a lot of franchises. To a degree the money generated by that can solve all sorts of problems that arise from this policy. But, an unsuitable franchisee will likely always be unsuccessful. That then turns to resentment, and unsettling behaviour that can effect the rest of the network. Be patient, wait for those applicants that you’re happy with and say no to the rest. One great franchisee is far better than three drifters.
5. Can you create a partnership environment? You and your franchisees are on the same team. Or at least you should be. Sure, you’ve got different roles but are you both really that different? Every franchisee is an integral part of your organisation just as your employed staff are. The minute you spot a “them and us” environment you know you’re failing at fostering that team mentality that makes such a huge difference to any organisation. Everyone helping each other, trusting each other and caring for the brand just as you do. Because the brand and the franchise model you created should be able to look after everyone. If everyone at HQ genuinely aims to support everyone, regardless of whether they are franchisees or employed staff, you’re fostering a great environment that yields greater royalties and more successful franchises owners. It’s not easy and this is one job that is never finished.
6. It’s not all or nothing. Franchising does not have to shift your whole company direction. Many franchised brands grow organically in addition to issuing franchises. Some also enter into joint venture partnerships, distributorships, licensing, agency agreements, and wholesale arrangements alongside franchising. Get some free franchise advice from us today.  We’ll help you to consider all your routes to market and where franchising might fit. You always have the option to travel down every path at the same time and not just the franchise path.

There’s a lot more for you to consider, and we’ll help you to explore how franchising could work for your model.

Call us today on 01274 662001 or contact us here.

Andy Cheetham

Founder of Lime Licensing Group

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Money talks, and so potential franchise owners placing a franchise deposit is a key element in successful franchising. As a result of this commitment a number of things can happen. Firstly the franchisor has filtered out the tyre kickers from the serious entrepreneurs. Without that commitment everyone is just talking about it. Secondly the Franchisor can start committing funds to the eventual franchise launch. That might be acquiring stock, instructing web developers, printing business cards etc etc. A deposit gets the show on the road and crucially secures the rights for that franchisee in the given location.

Security

When a franchisee puts down a franchise deposit the Franchisor is going to take that location off the market and turn others away. This offers security to the new franchisee who can then work their way towards ownership. There is often a period of time required for this and so the deposit allows the franchisee to organise their funding, maybe serve a notice period with an employer, and generally get themselves ready.

How much should a franchise deposit be?

10% of the investment is normal. But from a Franchisors perspective it’s really about showing commitment. All Franchisors constantly deal with dreamers and wanna be’s who don’t commit. Here at Lime Licensing Group we advise 50+ franchisors at any time and because we handle their enquiries we often see the same name popping up for numerous franchises. They aren’t serious leads 95% of the time. Those who are going to separate themselves as a serious lead recognise the need to show commitment with a franchise deposit.

How long should a franchise deposit last for?

In non premises based, owner operator business formats around 3 months should be fine for everyone to raise funds, serve notice periods and generally get ready to attend training. However, when premises are involved it is a difficult decision for a franchisor to make. Furthermore no two franchisors are the same. Deposit periods vary widely between different business formats.

Site selection is often the slowest process in retail format franchise launches and if a Franchisee wants to have first dibs on Doncaster for example, then the deposit period ought to allow them the time to secure premises. It could be 6 months, some are 12 months. Some retail franchisors don’t accept any deposit at all, you just pay the franchise fee and that mobilises the franchisor and you to find premises and get open with a certain time period.

It’s important that the Franchisor isn’t turning someone away who might do it quicker so some activity reporting is necessary unless the franchisor is going to take an active role in helping to secure a location. Some do, some don’t.

What happens if the franchise deposit expires?

It doesn’t mean that the franchisee has lost the right to join. In some cases it can mean that they have just lost the exclusive right to open in that area. In such cases the Franchisor could accept a further deposit to extend the period. Otherwise the deposit expires and that investment has been lost.

Deposit Agreement

The terms of the deposit are set out in a deposit agreement. Less than one page in length it should clearly state what the deposit is fr and under what circumstances a refund, or not, is available. From the franchisors perspective there is usually a great deal to do when a franchisee wants to join and so depending on the level of the deposit many have no refund rights at all.

Is your franchise brand following best practice for franchise deposits?

Contact a Lime Licensing Group specialist for a deep dive into this important aspect of franchisor life!

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So, you’ve got a franchisee who wants a multi unit franchise deal.

Whether it’s for two franchises or more the question is what’s the deal here? You’re not sort of options when it comes to this but anything is better than just giving first refusal without any form of commitment. That’s not closing the deal is it? But there is a way that you can approach this as a franchisor that looks after your interests. Here. I’ll provide a few pointers and a framework that should suit most franchisors.

How many multi unit franchises is too many?

An enthusiastic franchisee might want to let you know of their grand plans. They might say that they eventually want to be running 10 locations for example. You’re excited. They’re excited. But what now? As a franchisor before you even contemplate the number of units in the deal you need to look at the franchisee. Are they up to it? Do they have the capital for it? Are you happy to be dealing with that owner who will have more clout in your network? If the answer to either of these is no then that’s hopefully when you’ll let them know they can join as a single unit owner and then prove themselves later on down the line. If they do well they can stake their claim to another franchise. But what if they want a more certain pathway to multi unit ownership? Well then my friend, we’re talking about a development schedule.

Development Agreements in Franchising.

A verbal agreement isn’t worth the paper it’s written on. We’ve all been let down by promises and so in franchising at least let’s get something signed. If a franchisee wants to run several locations then they can, with some rules. A few decisions need making on how long someone can take to open the multiple units. So let’s take a pretend example of a franchisee buying a Rainbow Care Group franchise and they want to own three franchises. The total investment is £27,500 plus vat and £15,000 of that is the franchise fee. The franchisor would like the second and third franchise to be launched at 9 months and 15 months respectively. Now to hold the exclusive option on these the franchisee makes a part payment of the second and third franchise of 33% of the franchise fee, so £5,000+vat x2. Territory #1 is launched and the franchisee cracks on. It can be more than 33%, or less – you decide.

When a development schedule is broken.

Let’s say our entrepreneurial franchisee gets to month 8 and isn’t ready. What now Mr Franchisor? That wasn’t supposed to happen. Well here at Lime Licensing Group we have a simple outcome. The Franchisee simply loses their right to the additional franchises. They aren’t in any legal spat with anyone, the rights simply end and their deposit is lost. They carry o as a single unit owner and the Franchisor can now entertain other investors.

Deposits in multi unit franchising

It is the act of putting money down that jolts some realism into the franchise purchase. With that simple act comes a sharper focus, a more determined effort and a commitment that words can’t deliver on their own.

Putting your money where your mouth is makes the deal real. Otherwise everyone’s just talking about multi unit franchising. We all know that action trumps intent and deposits that can be lost sorts out the talkers from the action takers.

Contact Andy Cheetham for any franchising queries.

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Meet the UK’s youngest franchise consultant…

Ilkley, West Yorkshire: National franchise consultancy firm, Lime Licensing Group has appointed Carys Fisher to their advisory team. At only 18 years old Carys is the UK’s youngest franchise consultant.

She and her father Richard are franchise owners for Lime Licensing Group covering Yorkshire and the North East and are currently consulting with a diverse range of existing and new franchise brands including; domestic cleaning, car brokers, executive support, property services and even an award winning funerals director! Richard’s view is “We’re imagining how exciting it would be if some of Carys’s personal passions could also become future franchise brands, so we’re looking for companies in fitness, beauty, wellness, stage and dance.”

Carys said “I’m so excited to have joined Lime Licensing Group, franchising is a fascinating method of growing businesses and I’m really invested in seeing our clients succeed. If anything, I’d like to see more women succeed in business whether franchisor or franchisee.”

In addition to her recent A level success, Carys has also completed the accreditation process to become a Certified Franchising Professional (CFP). Like the other consultants within the company she has access to all the resources and assets that Lime Licensing Group has to help any business that is interested in becoming a franchisor.

Andy Cheetham CEO of Lime Licensing Group said, “Carys has demonstrated a rigorous analytical approach to understanding the numerous unique challenges of franchised businesses and has worked tirelessly to identify the right franchise solutions for the clients she is engaged with. We’re delighted to have her on our team and we all benefit from her youthful input!”

For any further enquires please contact:

Andy Cheetham

Lime Licensing Group

07782 115993

andy@limelicensinggroup.co.uk

Also see this page about franchise consultancy services in Yorkshire and the North East of England.

The post Meet the UK’s youngest franchise consultant. appeared first on Lime Licensing Group.

By Andy Cheetham, Founder, Lime Licensing Group

Soon enough it’s that time of the month again when franchisees need to report their monthly revenues. Some see this as a great opportunity to get their accounts up to date. Some see this as a bit of a chore. Some even forget what franchising is all about and choose to report inaccurate revenues, others are just late! As a result a regular topic amongst franchisors concerns bookkeeping and reporting. Should franchisees be on the same software? Well ideally Yes. However, there are a lot of franchise networks whose franchisees are all on different bookkeeping software. This comes about for a few different reasons.

Experienced business people sticking to what they know.

Many franchise owners have previous or existing business interests. This means that if they are used to one system with a previous company they are reluctant to adopt and learn any new bookkeeping software. However, this is somewhat misguided since the fundamentals of most accounts software packages share common elements. The difference between one bookkeeping software package and another lies in the efficiencies and user friendliness built in. Generally speaking, since most franchisees aren’t very good at accounts this user friendliness matters greatly.

So the best bookkeeping software for franchisees is the one that optimises the user experience, and therefore makes life easier for the franchisor and the franchisee. That software is Xero, and I’m not being paid any commission to say that!

Preference of their current accountants.

Many accountants want their clients to adopt the software they are used to using with their other clients. It makes their job easier. Maybe they get a commission too. As a result a lot of new franchise owners just go with that in the absence of any direction from the franchisor.

It always surprises me how much influence some franchise owners allow their accountants to have. All I will say is that a new franchisee should be listening to their franchisor and not their accountant. The accountant’s job is to organise the numbers but the franchisee and the franchisor are the entrepreneurs. They are the ones who are working together in the franchise system.

Harnessing the recommended suppliers.

Franchisors have mandatory and optional suppliers. The mandatory suppliers have been given this status for a good reason. These are the suppliers who are already on board, have proven themselves over time and add tremendous value to the system. Those suppliers together with the franchisor and franchisee are the ones who have the biggest influence on the success of the venture. So if you’re a franchisee then don’t just blindly accept what your accountant wants you to use! In the case of bookkeeping software companies like Xero have proven themselves to be perfect for SME’s in franchised environments.

Why you and your franchisor need to be using the same bookkeeping software.

Adopting the Franchisors mandatory accounting supplier means new franchisees get their system setup super quick adopting nominal codes that are already being used and all the various default settings that the make life easier for the new enterprise. So during your training period you wont have to work anything out, the Franchisor has already done that and you or your employees will be trained on how to raise invoices and reconcile the accounts. The Franchisor can train you on this, and help you going forward because they use the same system.

You are running a small business and part of that should be keeping your accounts up to date. At the end of every month all your expenses should be in, your bank should reconcile, your debtors and creditors up to date, and your end of month report to your franchisor issued. But, beyond this there is a story being told through your accounts. Trends can be analysed, and you and your franchisor studying those trends nearly always has a massive positive impact on your business. It’s no good if you are all on separate accountancy software. A unified accounting system means everyone is creating the same reports, in the same format – and that matters greatly in any business analysis across multiple franchised locations.

Franchisors In house bookkeeping

Your annual accounts cost is made up of two main elements. There’s your day to day bookkeeping and then your end of year accounts. Some Franchisors will offer a bookkeeping service and since most small business people don’t do this particularly well it makes life very simple when you’re all on the same bookkeeping software. So you might as well start out this way if that is an optional element in your franchise system.

At Lime Licensing Group this is an area of franchising that is often overlooked but now that you have read this you won’t overlook it now will you?

Want 50% off Xero for 6 months!

Head over to Xero by clicking this link and take advantage of this special offer.

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You might also find this interesting:

Setting up your first test franchise

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