by Real Business - Thursday, 30th August 2007

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Istarted Cash Generator in 1994. It’s a store that buys and sells secondhand goods, cashes cheques, does pawn broking and issues loans. I’d seen a similar business in the US, and wondered if the concept would work over here. It did. And the first store was instantly profitable. By 1997 I had five stores, but having invested i how did it

The Lewis franchise formula “The key to franchising is to get your recruitment right. We turn down half the people who apply to us.” £600,000 of my own money already, I saw that franchising was the way ahead. Just over ten years on and Cash Generator now has 82 stores, and only four have ever closed.

The key to making a franchise work is to get your recruitment right. At Cash Generator we turn down half the people who apply to us. Either they aren’t emotionally suited to our business, or they don’t possess the right commercial skills. And only one in ten of the people who apply actually make it as far as the first meeting, as they leave on their own initiative after reading our material. We believe in being absolutely honest about what running a franchise is like. There are no illusions, and this works out best for everyone in the end.

The first thing we do with our applicant is invite them on an open day, one at a time. We talk, long and hard, about what running a business will be like. They undergo a “reality check” questionnaire and a psychometric test. These help us build a picture of the candidate’s aptitude. They also provoke questions in the candidate’s mind. We look closely at their family situation. You need to find out if your spouse really does want to work on a Saturday. And it’s no good if they moan when you work late.

We encourage applicants to talk to existing franchisees. Running a shop means taking on complete responsibility for your future. I’ve had guys apply who’ve had high-flying jobs in finance. They’ve made decisions over millions of pounds. But it wasn’t their money. When they have full responsibility over their family’s future, it’s a different matter. They need 24/7 commitment. We then insist all candidates spend time working in one of our stores. I don’t care how much experience you’ve got, this is compulsory. You see what running a store is really like.

For those who get approved, we give them close support as they get started. They are assigned a member of senior management who looks after them. We help them find a property agent, and work on their business plan with them. We will go with them to the bank manger if they need more money. The training is rigorous. They go on an eight-week NVQ training course. Through every step we are there for our franchisees: there’s a Store Opening Manager to help when the shop is being fitted, and a regional manager for guidance after the shop opens.

Our support is ongoing, making sure even the most successful franchisees get better at what they do. We run over 50 courses for franchisees and their staff, such as buying procedures, doing accounts, cheque cashing, and leadership training. We hold regional seminars, and all our franchisees share information with each other. New members are supported by existing members. We run a think-tank, where senior management and franchisees explore ways of maximising the company’s performance.

I recommend anyone thinking of getting into franchising joins the British Franchising Association. I am the chairman, and I find the organisation’s work awe-inspiring. Knowledge, that often took hundreds of thousand of pounds to produce, is passed around for nothing. Everyone in franchising will tell you the same thing.

If you know how to run a successful franchise business the results can be tremendous. Our turnover is £60m. As franchiser, I take 5.5 per cent of retail sales net of VAT. The business does exactly what it says on the tin for me: it generates cash!

My goal is to open 300 UK stores by 2010, and expand across the continent. There’s no limit to what franchising can achieve. The way I see it, we’ve got the whole world opening up before us.

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