Waging war on wasteful procurement, Robert Allison has helped grow Expense Reduction Analysts UK from a simple licensing model in the US to a thriving franchise with expertise at its core
Having helped grow Expense Reduction Analysts UK into a thriving franchise saving British businesses money on a combined spend of £500m, Robert Allison, the company’s managing director, is no stranger to going the distance for financial reward. Born in the UK, his parents emigrated out to Perth in Western Australia when he was just four years old, eager to pursue opportunities they felt were beyond them in Britain. “When they emigrated 40 years ago, the economy and the opportunities here were more limited,” Allison says. “They were looking for new horizons and new opportunities.” In contrast, at the time Australia had a much more entrepreneurial culture, giving his parents the opportunity to start their own trophy factory, something that undoubtedly rubbed off on an impressionable young Allison. “I remember living and growing up in a household surrounded by self-employment,” he says. “That’s the nature of a growing country: there were a lot more people over there starting their own businesses.”
The nature of his parents work meant that the family moved around quite a lot: Allison ended up attending seven different schools during his 12 years of education. However, one thing remained consistent throughout. “If you were to go back and pick through most of my reports, they’d all probably tell you something similar,” Allison says. “‘Shows fantastic potential: if only he spent as much time on his work as he does on entertaining the class.’” Fortunately, there was one area in which he did apply himself: thanks to the example his parents had set, Allison wasn’t afraid of rolling up his sleeves and taking on part-time jobs, including working his summer holidays when he was 14 in the local brake-bonding factory. And he wasn’t averse to the odd entrepreneurial money spinner: he recalls a plan he and a friend came up with to make a little moolah one Valentine’s Day. “We went down to the local fresh flower market and bought flowers early in the morning and set up a roadside stall selling them,” he says. “That was the trading entrepreneurship coming through at a young age.”
But even with this tenacity, Allison’s first full-time role actually came about by accident. Having secured a place at the University of Western Australia to study business accounting, he decided to defer for a year to go travelling around the country until, ironically, a slight budgetary miscalculation saw the trip grind to a halt. “That resulted in me at 17 being stuck on the far side of Australia where I’d run out of money,” says Allison. Fortunately, the father of a friend of his owned a small print factory nearby; when the business’s minority shareholder and head of day-to-day operations left suddenly, Allison was offered his job. “He basically upped sticks and left the operation, leaving the real owner high-and-dry so I stepped into the void,” says Allison. “At a fairly tender age that got me straight into working and earning good money, given the responsibilities I’d taken on and the work I was doing.”
Without this happy accident, Allison would have never found his way into the world of franchising. “The owner gave me the seed capital, if you like, to buy my first franchise, which was a pilot for an American dry-cleaning franchise called Pressed for Time that was trying to get into the Australian market,” he says. “I was 19 by the time I’d started that and that was my first foray into franchising.” Despite his tender years, Allison quickly took to the model and before long he had added a small stationery business and a franchise trying to modernise milk delivery to his portfolio. Without a doubt this has stood him in good stead: even now he feels that spending time as a franchisee taught him invaluable skills for when he eventually found himself sat on the other side of the desk. “It has helped me to understand the psyche of many of the franchisees I’ve worked with over the years,” he says. “While it was 20 years ago now, I have a degree of empathy and understanding for the view the franchisee holds of the franchisor.”
Having cut his teeth in franchising, Allison’s next move was into a consulting role at the Franchise Alliance, which at the time was one of Australia’s premier franchise consultancy groups. “I was still only about 20 or 21; I was only taken on really to be an office junior within that environment but they believed very strongly in just dropping you in at the deep end,” he says. “Very quickly I ended up actually managing a number of franchisor accounts, helping them to plan the growth of their network, their franchise sales within Western Australia and helping them to write systems.” Working both with home-grown brands like Brumby's Bakeries and major international players like Subway, for Allison the next four years were a masterclass, giving him insight into a wide array of franchise systems. “There were a range of different franchisors from a massive variety of sectors,” he says. “I was very hands on in half a dozen different franchise systems at any one time.”
And this is what brought Allison into contact with Expense Reduction Analysts (ERA). First created in America by a couple of entrepreneurs looking to help businesses save on their procurement costs, ERA was originally operated on a simple training and licensing model. “My father and a couple of partners got involved and loved the idea of what ERA represented,” Allison explains. “But the original model didn’t really work for the Australian market so it made sense to take this concept and structure it as a business format franchise.” But while Allison was helping his father convert the model on a consultancy basis, London-based accountant Frederick Marfleet also saw the potential and acquired the rights on a global scale. And when he caught wind of what the Allison family were doing with the brand down under, he was impressed with the new ideas and concepts they’d hit on for the business. “Very quickly a deal was struck for us to take on the UK brand rights while Marfleet took the concept to global success,” Allison says. “That really was the birth of ERA.”
This saw Allison return to the country of his birth for the first time, a land he didn’t even remember. But while he easily acclimatised to the new culture, there was more of a resistance about adapting the business to fit its new home. “We came into the British market here with a very arrogant assumption of ‘we made this work in Australia: it will naturally work here without any tweaks or changes’,” he says. However, on the advice of Brian Smart, then director general of the bfa, the ERA UK team began looking deeper at the market and found that, despite the fact its service was offered on a no-win, no-fee basis, British directors were much less eager to take a punt on it than their antipodean counterparts. “Whilst the language and broad concepts were the same, there’s no doubt that culturally there was a much more conservative approach,” Allison says. “So we did have to change our systems to suit the market: it took us a good year or so to find those and get them firing properly.”
Fortunately ERA was helped in this by its first crop of franchisees. Choosing to adopt an approach of conversion franchising – whereby it took on franchisees that were already working in the industry as procurement consultants and trained them in its model – meant that the franchise was able to make use of the expertise of those who were already au fait with the British market. “Even from day one our first seven pilot franchisees already had anything from one to six years of experience doing what we do in the UK marketplace,” says Allison. “So we were able to blend 80% of what we had as a system with 20% of their local nuance to create a model that worked.” And once the franchise was off the ground, new enquiries started coming in thick and fast, in part because in 1997 white-collar franchising was still something of a rarity. “Genuinely 95% of the conversations that we had were people going ‘crikey, I came here looking for either a hamburger stall or a white-van business: I never realised that professional service models could be franchised’,” Allison recalls.
It’s safe to say that ERA’s work is slightly more distinctive than flipping burgers or couriering packages around London. Targeting mostly businesses with turnovers between £5m and £250m, its service helps companies save money on the costs that often go unnoticed. “Most of their everyday procurement and general business overheads are very much forgotten,” Allison says. “They’re an area of the business that really isn’t given time, attention or proper resources.” Using its expertise, ERA bundles up all of a company’s costs, sources similar quality products and services and negotiates improved contracts with existing suppliers. While one might imagine the money saved would be small fry, ERA nets its clients on average 20% savings – and, thanks to the fact that it charges on a contingency basis, those that it is unable to save any money don’t have anything to pay. “We know what good value looks like because we database and share information on every job that we do and when bad value’s being received we review the procurement in all those areas,” says Allison. “When you combine all of those factors, it means we can be pretty confident on making a saving for the client.”
While this is something that the big four consultancy firms may be able to duplicate if they were of a mind to, Allison believes that ERA has a secret weapon up its sleeve. “We’ve been able to use franchising to assemble a team of category experts that even the highest level consultancy firms would give their left arm to accrue,” he says. “What we’ve done very deliberately is not recruit from procurement necessarily but instead take on those who are from industry with 20 or 30 years being on the supplier side of the table.” Rather than take on candidates based on territory, ERA’s big innovation has been taking on franchisees based on their extensive subject matter expertise: one example Allison gives is ERA franchisee Ken Rogers, who spent three decades running his own haulage firm and buying diesel. “What Ken doesn’t know about buying diesel fuel oil isn’t worth knowing,” he says. “So we have that degree of expertise that we can make available to our clients.”
No matter how much experience new franchisees have however, they still have to go through ERA’s comprehensive training programme. “It teaches them the core procurement model: how to win the clients, manage them effectively and follow a standard generic procurement process in half a dozen generic cost areas,” says Allison. “Then regardless of their background, we encourage them to do a little bit of all of it in their first three to six months.” From here, franchisees can go down one of two roads: either focusing on winning business or acting as a subject matter expert working with the clients others in the network have secured. Then while they build their businesses up over the next 18 months and until they hit key growth metrics, they remain in ERA’s academy to share best practice and complete digital training, as well as receive on the job coaching. “When they come to deliver projects, we assign mentors from the existing network to work in parallel alongside them to provide some oversight while still allowing them to build their business and earn some money,” Allison says.
Evidently this is a formula that is working wonders for ERA: the brand has been a finalist in the bfa HSBC Franchisor of the Year awards for many years running and has twice taken home the bronze award, with the most recent win being announced just last month. However Allison is keen to stress that picking up these gongs isn’t just an opportunity for ERA to pat itself on the back. “I don’t like to do these awards, pick them up and win the different things that we win for my own ego,” he says. “It is well and truly judging us on what we do against industry standards, benchmarks and best practice.” But while the awards are a useful way of gauging how well the franchise is performing compared to the rest of the industry, in Allison’s eyes the most import thing is how they recognise the hard work of the network as a whole. “It's ultimately about the franchise holders themselves having a brand that they can be proud of,” he says. “They all deserve the awards and the accolades that come from it.”
Certainly Allison is now sat at the head of a thriving franchise network. ERA UK now has approximately 140 franchisees in its network, something he reveals is unlikely to change significantly any time soon given the franchise has to take on around 12 new franchisees a year just to maintain its current size. “So all of our focus for growth centres not on the number of franchisees we’ve got but the success of those franchisees and the market size that we hold,” he says. And this is a tactic that is clearly paying off. “The total billings of all our franchisees added together grew by 10% last year and we’re forecasted to grow conservatively by another 13.5% this year,” he says. “And that’s actually with a couple fewer franchisees so the real-time growth of all the individual franchisees is even higher than that.”
But ERA’s aims for the future aren’t only focused on the financials. While boosting the profitability of the network is a significant aim, Allison is clear that he doesn’t just want it to be all work and no play. The franchise runs regular social activities for its franchisees from sailing trips to a cycle ride from Scotland to Southampton and allowing franchisees to unwind in this way will remain a major aim for the business. “ERA isn’t just about the corporate goal of growing to £25m in revenue: it’s about making sure our guys and girls have some fun along the way,” Allison says. “We want them to achieve, be successful, earn good money and delight their clients but we want them to do it with a smile on their faces.”