by Real Business - Thursday, 30th August 2007

Organic growth too slow? Why not strap on the booster rockets by franchising your business? Geoff Whittle (pictured right), founder of pest control business Prokill, decided to franchise his business last year, and has since found seven takers.

“Franchising is a business model that has worked brilliantly for us,” he says. “There are so many upsides – I wouldn’t hesitate to recommend it.” In addition to rapid growth, Whittle says franchising has inherent strengths. “You don’t get an employee, you get an owner. The autonomy they have ensures a strong level of enthusiasm way beyond what we’d get through a centralised system.”

Once you’ve got a methodology that works, rapid nationwide expansion is easily achievable.

To get started, the first port of call is the British Franchising Association (BFA), which helps its members to train staff, benchmark and recruit franchisees. Whittle says membership is essential.

“The BFA helped us establish good procedures, such as how to set objective measures of performance and standards. Membership also put us in good stead financially and legally. It gives reassurance to anyone who deals with you.”

Mark Crosby is the founder of Monkey Puzzle childcare nurseries, which has 12 franchisees. “We get a lot of approaches through the BFA’s website. We get credibility just by being members.”

Crosby says the BFA was very helpful in establishing vetting procedures for candidates.

“The vetting process is the key to successful franchising. You need to be rigorous in ensuring the relationship will be right for both parties.

“We start with an interview where we explain what’s involved and hear what the candidate expects from us. They then fi ll out an application form and sign a confidentiality agreement.

“If we decide to proceed, we always visit their homes and talk to their family to ensure they are who they say they are. And as we work with children, we arrange a police check.”

Franchising has a capital advantage over organic growth: franchisees are self-funding. Crosby advises candidates they’ll need £20,000 in cash to get started, plus a good line of finance. “Banks are sympathetic to franchisees,” he says. “They recognise the success of the model.” A Prokill franchisee needs £50,000 in funding.

There is a downside to franchising. “Our franchisees are the custodians of our good name,” says Crosby. “As a childcare business we are regulated by Ofsted.

“If one of our Monkey Puzzle franchisees failed to come up to scratch, that would affect the entire business.

We need to constantly monitor our franchisees to ensure standards are being met.”

Whittle agrees: “The biggest risk of the model is reputational. If one franchisee makes a mistake, it affects us all.

“But they are strongly motivated to be an attractive business. If they don’t pull in any revenue, they won’t make any money.”

This is a crucial point: both franchisee and franchisor are united in their desire to keep turnover rising. The remuneration agreement tends to be based on turnover, with the benchmark figure being ten per cent to the franchisor.

The appeal of franchising is increasingly apparent when the figures are analysed.

The sector has grown by 83 per cent in the past decade, and now there are 781 franchise systems in the UK, with 93 per cent of the 34,000 outlets making a profit.

Dan Archer of the BFA says: “The outstanding performance by the sector proves that franchising is something all entrepreneurs should be looking at.”

Tags: prokill, business advice, bfa, geoff whittle, monkey puzzle, success stories, growing a business, entrepreneurs, franchising, british franchising association,