franchise sucess

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Petpals ® your best friends’ friend Franchisor & Franchise Partner Success Story Brendan Humphrey Co founder 1998 roll out 2001 “1 to 55 in 5 Years” s

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Page 1: Franchise Sucess

Petpals ® your best friends’ friendFranchisor & Franchise Partner Success Story

Brendan Humphrey Co founder 1998 roll out 2001 “1 to 55 in 5 Years”

s

Page 2: Franchise Sucess
Page 3: Franchise Sucess

Castrogiovanni & Justis (1998) define franchising as an agreement between two legal entities, the franchiser and the franchisee:

“The franchiser is a parent company that hasdeveloped some product or service for sale; the franchisee is a firm that is set up to market this product or service in a particular location.”

What does that really mean? “ A business marriage that has its highs and lows. ”

Definition of Franchising

Page 4: Franchise Sucess

Franchising – Pro’s & Con’s

Advantages Disadvantages

Finance provided by the franchisee

Loss of direct control

Faster growth possible Profits will be shared

Fewer staff need to be employed

Risk of poor franchisee selection

Unit operated by highly-motivated owners

Difficulty in effective communication

Enlarged network enables national customers to be serviced

Brand development entrusted to third parties

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Current Territories

Page 7: Franchise Sucess

Richard and Pauline Herd: Saffron WaldenOctober 2003 National Press Release

5 years ago the idea the idea was simple and the demand for the first two operations quickly proved that their new, strong and recognisable branding and unique quality service could make them market leaders in a very short time.

Launched at the British Franchise Exhibition at The NEC in 2000, Petpals is the first professional mobile pet care franchise service company in the UK. They operate a unique, exclusive Petpals Club for people who want to mix a love of pets and a proven business. The operators of Petpals first fourteen locations were attracted by the option of an alternative lifestyle, far from the normal 9 to 5 rat race and wanted to enjoy the benefits of a healthy life style investment with no hidden costs or extras.

Richard Herd was a member of a famous heavy metal band back in the sixties called Uriah Heep and wanted to give up the rat race to combine his passion for pets and his desire to work with his wife. Petpals were at The British Franchise Exhibition at Wembley earlier this year and had over 170 serious enquiries; they have had 6 successful launches as a direct result of their participation at the show, with a further 9 in the pipeline.

Here is the PR catalyst!

Page 8: Franchise Sucess

Understanding Franchisor Revenue

1 2 3 4 5 6 7 8 9 10 11

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Revenues ForecastTotal RevenueFranchise Sales RevenueRoyalties & Renewal Fees

Year

Rev

enu

es

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Understanding the risk – P&L

2004 2005 2006 2007

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Comparative Analysis 4 YearsIncome Statement

Sales Cost of Goods Sold Gross Profit (Margin) Total Operating Expenses Earnings Before Inc.Taxes Net Income After Taxes

Page 10: Franchise Sucess

Understanding the risk – Balance Sheet

2004 2005 2006 2007

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

Comparative Analysis 4 YearsBalance Sheet

Total Current Assets Total Fixed Assets Total Assets Total Current Liabilities Total Liabilities Total Liabilities and Equity

Page 11: Franchise Sucess

Keys to multiplying profits & efficiency with new & existing franchise partners

Review Understand

Health check

Assess

Update

Repeat process

ImplementTrain+Follow up

1 page plan

Visit

Analyse & Systemise

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Is franchising a good approach to expanding a business? What can make a franchise stand out?Franchising may be an excellent growth strategy and it doesn't suit everyone, or every business. A huge amount of work goes into establishing a solid franchise business and it means a considerable change in focus and role. Do your groundwork, take advice and be sure you understand what you are taking on. It's vital to establish significant and genuine points of difference for the franchise itself, and products or services you offer. Decide on the culture of your organisation and whether your brand reflects this.

What are key factors to consider before launching a franchise? Are there financial or legal issues? Establish, document, test and refine systems so they are bullet proof when you begin selling the franchise. Ensure there is a market and demand. You need to be convinced you are offering a franchise with real value, so you have the strength of convictions as you go to market. A potential franchisor will need time and money to: develop, document and refine systems; develop marketing to support and sell the franchise; establish the franchise agreement and disclosure documents; and train and support new franchisees.

Top Tips

Page 13: Franchise Sucess

What is the best approach to working with franchisees?Ensure you create a win-win relationship with your franchisees. Give more in "use" value than you take in cash value. Structure licence fees and royalties to be a reasonable return for the support, training and business structures provided to franchisees, while giving them the ability to yield a generous return on their capital.

Is it necessary to bring in expert advice during the process?Use the services of a qualified and experienced franchise consultant, business coach and/or lawyer. Get the best advice from the start - a sound investment that could save you a fortune in the long run.

Is financial disclosure required between franchisor and franchisee?Expect full disclosure from your franchisee - and offer the same to them. Share your cashflow figures, successes and failures. Don't inflate projections for the franchise. Be willing to disclose information and build a relationship based on honesty and trust.

When taking on a franchisee, what should be considered?Don't accept anybody purely because they can afford it, even if they are competent - not everybody will fit with your brand and culture. Are there any pitfalls to avoid, especially during the initial stages?

Don't aim to grow too big too fast. Manage teething problems, refine the systems and processes, and grow the franchise network in managed stages.

Tips 2

Page 14: Franchise Sucess

Don't let the opinions of the average man sway you. Dream, and he thinks you're crazy. Succeed, and he thinks you're lucky. Acquire wealth, and he thinks you're greedy. Pay no attention. He simply doesn't understand!

Pretend that every single person you meet has a sign around his or her neck that says, Make Me Feel Important. Not only will you succeed in sales, you will succeed in life.

“Thank you for your time and attention”

The Power of Now