Stepping up from franchisee to franchisor

While it may look a tall order on the surface, assuming the role of franchisor shouldn't be too taxing for those with prior experience of operating as a franchisee. Indeed, many franchisees have their eyes on the big job from the outset

Stepping up from franchisee to franchisor

It’s been well-documented why so many people with aspirations of business ownership buy into a franchise instead of starting their own enterprise from scratch. More than anything, it offers the best of both worlds: the chance to run a business but without the pressure of having to go it alone. “We work in a very brand-conscious world these days and unless you have a unique idea for a completely new business, you’ll struggle on your own to set up something that’s already being done by other brands,” says Simon Bartholomew, franchise director at Oscar Pet Foods and chairman of the British Franchise Association (bfa). “For instance, if you really wanted to be your own hamburger restaurant, you are always going to struggle unless you partner with one of the big brands.”

Of course, this isn’t to say that franchisees lack the ambition that typifies your everyday entrepreneur. Granted they may not be blessed with an ability to conjure up a product that revolutionises a market – few of us are – but franchisees still possess a high level of business acumen”and a capacity to manage anywhere between one and 50 restaurants, coffee shops or pet stores. Indeed, for a number of franchisees, buying that first franchise is simply the first step towards bigger things: becoming a serial franchisee, whether that’s across a number of different brands or a multi-unit franchisee for one established brand. However, some go one step further than this and assume the role of franchisor or a position in the franchise management team.

Thinking big

Bartholomew is one of those who have trodden this path. Yet his first foray into life as”a franchisee came following stints in management positions at both McDonald’s and KFC, overseeing franchise operations for both and assisting with the opening of the first McDonald’s franchise on these shores. His decision to become a franchisee for Blimpie – Subway’s biggest competitor in the States – had more to it than just the opportunity to run a business on behalf of an established brand. “I did some consultancy work for the guys who were trying to bring Blimpie over here, as well as being a franchisee in my own right for them,” he says. “I always wanted to be part of the development.”

Suffice to say, Bartholomew is not the sort”of person who was going to be happy earning his keep running one or two franchises. “I”was never going to be a one-restaurant franchisee,” he explains. “I was either going”to be part of a big franchise as a franchisee”or as a member of the franchisor team.”

In 2002, an opportunity arose for Bartholomew to join the franchise management team of Oscar Pet Foods, the family-owned UK pet-food franchise. “The founder of the business was retiring at the time but the two family members who were taking it on were putting a management team together and they wanted to bring somebody in with franchise experience,” says Bartholomew. Twelve years later, he is still enjoying his role as franchise director for Oscar, along with that of bfa chairman, which he assumed last December.

That’s not to say it doesn’t come with its challenges, which are markedly different to those a franchisee has to face. “As a franchisee, you are fully responsible for the profitability of your own business, although you are obviously dependent on how the brand is performing,” says Bartholomew.”“As a franchisor, you are responsible for how the brand performs but you are very dependent on how the franchisees perform. No matter how strong the Oscar brand is, if our franchisees aren’t growing then the business isn’t growing.”

Thankfully though, Bartholomew’s time as a franchisee – albeit for a different brand – helped stand him in good stead for his role at Oscar. “It’s a completely different discipline but having done it for yourself gives you credibility with your franchisees and it gives you a much clearer idea of what they’re going through,” he says. “Franchisees will always think that the franchisors perhaps don’t understand it quite from where they are, whereas I can because, although I have not been a franchisee for Oscar, I have been a franchisee. So I know where that feeling comes from.”

Succeeding in a senior management position in a franchise would certainly be a tall order without any prior experience of franchising. Another person who can vouch for this is Darren Taylor, managing director of StumpBusters, the tree-stump grinding and removal franchise. Taylor initially bought”into StumpBusters as a franchisee because”it presented the ideal means through which”to expand his wife’s garden maintenance business. He’d also become drawn to the”idea of being his own boss. “I liked the idea”of being self-employed and I was fairly confident in my ability to sell stuff,” he says.”“I was working as a senior sales rep for a medium-sized electronic security company, turning over about £3m a year, of which I was responsible for about a quarter.”

Taylor went on to snap up another two franchises and upon hearing that StumpBusters’ franchisors might be looking to sell in 2010, he decided to throw his name into the ring. “I heard that the current franchisor was interested in selling and began speaking with them about it, but for various reasons a deal never came to fruition at the time,” he says. Two year later, his luck was in. “At the end of 2012, I phoned one of the then-franchisors on another matter and asked on the off-chance if they were still interested in selling – and we started the process again,”this time with a successful conclusion.”

Now occupied with growing the StumpBusters brand across the UK, Taylor believes his initial stint as a franchisee geared him up well. “To take on a mature franchise without any experience in the franchising world would be very difficult,” he says. “Having been a franchisee for eight years”for the brand that I was buying put me in a unique position. An existing franchisor from another business could have come in but I don’t think the existing franchisees would have been so accepting of them.”

Life as a franchisee also helps build an understanding of the financials entailed in running a franchise. Niall Power and Gurmukh Randhawa, directors at Myhome, the residential cleaning franchise, reduced the business’s franchise fees soon after assuming the role of franchisors. “In the early days, franchisees do not feel the effects of paying royalty fees as they are still learning the systems, growing their businesses and reliant on the franchisor,” says Power. “As time lapses and the business becomes more independent and less reliant, to have to pay large amounts as royalty payments can become disheartening. We reduced the Myhome franchise fees to a level whereby there would be continued benefits to both parties.”

Much like Taylor at StumpBusters, Power and Randhawa have benefitted from the working relationship they had already established with other Myhome franchisees. “Not everybody is accommodating to change [but] luckily for us we had a good relationship with the network, hence it was easy to adapt,” says Power. “We have managed to secure some great savings for the network by way of supplies and this has proved to be very popular.”

Balancing act

Of course, the majority of franchisees who assume the role of franchisor still retain ownership of the franchises they’d been running up until that point. Being able to juggle these commitments is thus one of the principal challenges that face people who take the step up. “I’d advise not trying to continue running your franchise without staff to cover your duties when you are settling in to the role of franchisor,” says Taylor. “You will need learning time as well as time to carry out the day-to-day duties of franchisor.”

For Bartholomew, the key is not to lose sight of the dynamic of the franchisee-franchisor relationship. “You’ve got to remember what it’s like to be a franchisee, remember that franchisees have a valuable opinion and remember that franchising is a partnership between the franchisor and the franchisee,””he says. “Franchisors who care about their franchisees and remember that it’s a partnership are the ones who will succeed.””

Adam Pescod
Adam Pescod