In the world of franchising, the trend of franchisees acquiring multiple territories within the same franchise has been on the rise. While we previously explored franchisors encouraging this growth model, this month we shift the focus to uncover the reasons behind franchisees’ preference for buying resale territories. We delve into the stories of franchisees Siva Kugathas, from ServiceMaster Clean, and Waqas Chughtai, from Rosemary Bookkeeping, as they share their secrets to remarkable success. From accelerated growth rates to leveraging existing client bases, these entrepreneurs shed light on the benefits and strategies that make resale territories an attractive option for ambitious franchisees.
Facts
Siva Kugathas is a ServiceMaster Clean franchisee. He bought his first territory, ServiceMaster Clean (Guildford), as a resale 6.5 years ago. When he bought the franchise it employed 17 people and had a turnover of just under £100,000 a year. Fast forward to 2023 and Siva now owns 14 ServiceMaster Clean territories, employs just over 900 people and has a £6 million a year turnover. What is the secret to his success?
“I have been in management for 33 years, from junior to senior positions and everything in between, so I am very experienced in dealing with problems and over this time, I’ve developed strong people skills, which is very important and definitely gives me an advantage over my competitors when bidding for resale territories.”
But why buy a franchise resale over a new virgin territory?
“Resales are a far better as far as I am concerned. The growth rate with a resale business is so much faster than organic growth with a new territory. You have a base model to start with; an existing income to base your calculations on.” Siva said.
He shared his successful method for turning businesses around: “When I buy a new business I analyse the problems in the business, eg: what is stunting its growth and then I come up with a plan to tackle it across three areas of the business, the people and operation, the marketing and sales and finally how I am going to finance it. For instance, my very first resale territory I bought in Guildford had been trading for 26 years and had 17 staff. When I bought it, I analysed the problem and came up with my three-point plan. In the last 6.5 years I have seen that business grow by 45%. Similarly, a year and a half ago I bought a territory in Yorkshire which had 40 staff when I bought it and now has 70.”
He continued: “You also need a good formula for winning new business. Across my group we sign 20-30 new contracts each month. It is important to keep generating new clients to feed the growth.”
Siva says playing fair is also important: “My fellow ServiceMaster Clean franchisees know they can come to me if they want to sell their businesses. I don’t cut them a ‘buyer’s’ or a ‘seller’s’ deal, I cut them a fair deal, where we are both happy. The last business I bought was in April 2023. I received a phone call on the Monday asking if I was interested and by the Thursday, I owned the business. If you are fair with people, they will trust you.”
Waqas Chughtai is the owner of Rosemary Bookkeeping (Reading), a resale territory he bought in November 2022. He is about to complete on his second resale purchase in Wolverhampton.
“My situation is quite unique; I already own and operate my own accountancy practice, so I wasn’t buying into Rosemary Bookkeeping as a start-up, but more of an ‘add on’.”
Waqas explains: “There are an abundance of accountants around and I needed to differentiate ourselves in a crowded marketplace. Many of my accountancy clients need bookkeeping services and vice versa. When you buy a resale franchise, it comes with an existing client base, meaning I can scale up my business portfolio much more quickly. Purchasing more resale territories is very much part of my future growth plan, although the business must be turning over at least £30-50k a year for it to justify the franchise fee.”
So, what will be your reason for buying a resale territory? Are you a great people person with the ability to turn a business around or would it help you scale up your business more quickly or bring added value to your current clients? Whichever it is, one thing is certain, the future is looking bright for these two entrepreneurs, and we should all watch this space.
