by Real Business - Thursday, 30th August 2007

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Huseyin Ozer had an unusual motive for opening his Turkish restaurant. "I was so embarrassed taking girlfriends out for a seductive evening in London in the seventies and finding there were only kebab shops. That is no way to a woman's heart."

Ozer raised £7,000 in five years and opened his first restaurant in 1981. Sofra International now operates ten budget-priced eateries, as well as the Ozer flagship restaurant in London's Regent St.

Ozer wants to increase the number of Sofras from the current ten outlets to more than 100 in just five years. How is he going to generate that kind of growth? By franchising.

"Franchising is the best option for my kind of expansion because a franchised restaurant is like a baby with a supportive mother and father. The child clearly belongs to the Sofra family, he looks and behaves like us, his parents advise and guide him, but he has a life of his own and it's in his interests to grow and develop, because he keeps most of the profits," says Ozer.

If you are considering franchising check your business meets these criteria:

• The product or service offered must have long-term market potential.
  
• The franchisor must have a clear identity and image. Franchisees look for a business that can generate sales through its brand and reputation.
  
• The company should have a sound history, financially and operationally.
  
• Be prepared to provide ongoing support to the franchisee, to help them develop their business.

Franchising arrangements fall apart, because the relationship between proprietor and franchisee breaks down, says Martin Mendelsohn author of The Guide to Franchising. Invest time and money selecting the right franchisees and train them well.

Ozer's franchisees put in £30,000 as an initial investment. They want to know they're buying into a proven formula. Ozer points out it was nine years before he opened his second branch, as he worked so long getting the first one right. Eight followed in the next ten years including branches in Ankara, Istanbul and Helsinki.

The Helsinki branch is the most recent and is already franchised - going against most professional advice about learning the pitfalls of franchising at home, before going abroad. Yet Ozer insists the project is going to plan.

"To open 100 Sofras myself could cost as much as £250,000 each," says Ozer. "Franchising is a relatively low-cost way of funding growth. In return, if you choose your franchisees well, and train, advise and support them properly, you get far more commitment and drive than you might with an employee."

Join a club
Geoff Peart, The Power Service.
www.the-power-service.com Tel: 01707 654600

Franchising seemed ideal when we needed quick expansion in 1994 to serve the market created by new safety regulations on rented premises that came into force that year. But it's not as easy as it seems.

Huseyin should join the British Franchising Association (BFA) from the beginning. Because we had no experience or advice, our franchisee selection process wasn't nearly rigorous enough, with the result that a few bad franchisees nearly brought the company down. We thought a franchisee would be self-motivated and self-disciplined; it came as a shock when they weren't.

In desperation we joined the BFA and suddenly we were with like-minded people who knew what they were doing, who had done what we were doing and who were willing to help and advise. It was the turning point. In three years we've opened 25 offices and we have that crucial understanding of what sort of person a franchisee is. We've toughened up the selection process - we now take on probably only two people for every 130 who apply.

Don't go abroad
Brian Duckett, Horwath Franchising.
www.Franchise-Executive.com Tel: 020 7917 9824

Huseyin needs to be aware that his business will no longer be about running restaurants, it will be about recruiting, training, monitoring and motivating people who want to run their own business. Those businesses will be about running restaurants. Sofra Franchising will be about showing them how to do it using a proven format, and ensuring they perform to a standard which maintains and increases the value of the Sofra brand. That requires quite a different mind-set.

He will also need to understand why franchisees become franchisees, what they expect when they do, how they are likely to behave, and how they have to be treated.

Huseyin should not consider going international yet - setting up a domestic franchise is enough of a challenge.

He must take a long-term view on the return on his investment. Development, legal and marketing costs will typically be between £30,000 and £50,000 - more than twice that if you include international. It takes most franchisors three to four years to recoup. Profits grow rapidly once the network becomes established.

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