Wed, Jul

To franchise or not to franchise

Need some support and back-up? Garth Allison, UK managing director of Fastsigns, a visual communications franchise with over 530 centres worldwide, puts forward some compelling arguments for reviewing the franchise option.

If you want to grow your business but haven’t the means to do it alone and you’ve crossed off mergers and partnerships, should you be having another look at franchising? Fastsigns for instance, is trying to make the idea more attractive by offering cut-price deals to independent sign companies joining up. But it’s not all just about the money – is it? 

Garth Allison, UK managing director of Fastsigns, puts the franchise option into perspective:
“One of the biggest challenges facing large-format print business owners is keeping abreast of all the latest technology and being equipped to grab the opportunities and new markets opening up. Having to deal with all the day-to-day issues that running your business inevitably brings with it leaves little time for research an development - which is, perhaps, one of the strongest arguments in favour of joining a franchise operation.

“Obviously, a larger organisation is in a better position to form partnerships with the major technology manufacturers and suppliers to the sector. At Fastsigns we are often asked to test and assess new products before they are released to the marketplace. Our centre owners then have access to our own internal reports that detail the pros and cons of new technology, equipment or materials. This puts them in a hugely advantageous position, putting them right at the front of the queue in terms of their exposure to the latest technology. We do all the R&D and make our recommendations, so they don’t have to.

“In the same way, we invest time and resources into researching the types of media available to see what works best with what equipment, and we have strong relationships with all the major media manufacturers.

“If you decide to join a franchise you need to be sure that your package offers you access to this kind of expertise, resource and knowledge base because that is what is going to give your business the ‘edge’ that can be difficult to achieve when you’re an independent business.

“Franchising only works when the royalty fee that you pay for being part of the group makes a worthwhile difference to the growth of your business, and your bottom line. It is a reciprocal arrangement, and both parties need to invest to make the business more profitable, and both need to benefit from that increased profitability.
“Marketing expertise is another area where independent businesses can struggle, not through lack of ideas or creativity but the availability of time and expertise. I always advise business owners to ‘work on your business as well as in your business’ because this is where many fall down. It is easy to become so focused on getting the day job done that you lose sight of the bigger picture.

“This is an area where franchise organisations can offer support and resources. Fastsigns invests a huge amount of resource into training new centre owners how to market their businesses effectively, and also assists them on a practical level. For example, we take care of website development and provide each franchise owner with their own ecommerce website. With a learning centre that includes tutorials for customers and a sign needs analysis facility, this kind of website, requiring such a significant financial and time investment, is not viable for many independent businesses.

“Like technology, marketing is an area that is continually making advances and it can be difficult to stay ahead of the game. Social media and 2D coding are examples of recent developments that offer huge potential to the large-format print sector.

“Of course, it could be argued that a downside to joining a franchise is losing the identity of your business. You’ve spent years building up your business and reputation. It’s your baby. It can be hard to get to grips with becoming part of a big brand. However, if your priority is to realise the full potential of your business, to maximise its value for the future, and perhaps to sell it on, becoming part of a franchise could be a wise move. From a customer’s perspective, with so many independent businesses failing, they are often reassured by a strong brand, especially for larger or longer-term projects.

“One Fastsigns franchise owner, Dan Stutzman, saw sales increase 300% in the first five months after converting his business from an independently run operation. He says of the move: ‘We feel that we have hired the best sign consultants in the country, plus our public image is more respected, which gives our business more value when we are ready to move on. That is perhaps the most valuable of considerations for any independent owner.’
“Another area of concern for someone who has been running their own show for years is their reduced autonomy when becoming part of a franchise operation. Indeed, there are reporting processes and mechanisms, strict brand guidelines, and premises have to be of a certain standard. There is no escaping this aspect of franchising - you can only build a strong business and brand if standards are consistent.

“Training is another area where franchising can offer major advantages. Most franchises offer an initial training package and should offer some kind of ongoing training and professional development.

“Whether its adding new technology, finding out ways to improve sales from both new and existing customers, or learning how to manage staff, there are always improvements that can be made to further grow and develop your business. Before signing up to a franchise, find out what they offer in terms of training, not just at the outset but also during your whole time with the company.

“A ‘big business’ benefit from joining a franchise is strategic and financial planning, a rarity in the small business sector. For example, we provide training and support, to make sure that each and every centre owner has a business plan, which includes a sales and marketing plan. It’s important to know where you are, where you want to be, and how you’re going to get there.

“Supplier relationships are an important aspect of any business operation and being part of a bigger group can hold some significant advantages, as Stutzman found out when he switched to a franchise: “We thought we were getting rock-bottom pricing already but as soon as we joined Fastsigns, we immediately saw better prices, even from existing suppliers. Also, within a year we received a job from a national developer to work on 175 banks. As an independent, we would never have had that opportunity.”

“However, a word to the wise; some franchise operations receive income from suppliers and you are tied in to using them. Whilst it’s great to benefit from the negotiating power of a larger group and to have access to a list of preferred suppliers, you still need to be able to run your own business as you see fit!

“There are over 13 signage, printing and graphics franchises in the UK, and each one has a different proposition and approach. Franchising is only right for your business if you find the right ‘fit’ for you. You need to do your research, talk to each franchise and find out what you get for your money. Support is what you’re looking for, not just at the beginning but also throughout your time with the network. Find out in what form this support is available to you. For example, Fastsigns, like most franchise operations, offers online and telephone support, but we also have our own business consultants who are there to make face-to-face visits to help and advise our business owners. Also, make sure that large-format printing is an integral part of the package. Finally, make sure you talk to existing franchisees, not just the franchisor, so you get both sides of the story.

“The main ‘con’ of franchising is that you have to hand over a percentage of your income to another party, and there is an element of risk at the outset, which is why it’s so important that you do your homework. Ask about exit strategies and what would happen if you want to change back to being an independent trading company. At Fastsigns for instance, if after three years someone decides to change back to independent status, we will refund their franchise fee less any investments made (eg. in technology equipment, fixtures and fittings).

“The major ‘pro’ of franchising is that you’re in business for yourself but not by yourself, and if you join the right company, you have a wealth of support and resources to take your business to a level that would be difficult on your own.”

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