by Charles Orton-Jones - Tuesday, 11th March 2008 -

Quick growth, committed workers, help with cash flow – franchising offers entrepreneurs all the benefits with none of the downsides.

Gill Thomas’s musical playgroup, Jo Jingles, is a network of franchisees that holds music and dance classes for preschool children. Although the classes are held in hired rooms in community centres, village halls or schools, the organisation and paperwork is completed at the franchisees’ own homes.

Thomas started out on her own, having left her job as a national sales manager for Clarks shoes in the early nineties when she had children. Eager to earn cash, she taught music to preschoolers in her hometown of Beaconsfield. In 1995, she decided to franchise Jo Jingles.

Her core task is to ensure her franchisees are capable of running a business. “They may be good at holding classes, but they need to grasp the importance of financial planning.” The secret to making the concept work, says Thomas, is training franchisees to be as strong with a balance sheet as they are in the classroom. “Our training starts with five days of instruction. We then insist on one-to-one training with a financial mentor who teaches them about profit and loss, cash flow and forecasting. They also have the opportunity to meet other franchisees to pick up tips. The training continues after they’ve got the franchise up and running, with regional training days.”

Thomas allows franchisees to organise their own home office. “Some use Excel to keep track of the money. But some don’t know how to use a computer. They use pen and paper. A third do it this way. We advise them to have a separate room in the house to keep all their work in.”

Thomas takes an initial 12.5 per cent of gross takings, falling to 7.5 per cent for franchisees who pull in more than £100,000 – which a handful manage. Not bad for a business with rock-bottom overheads.

This royalty fee is pretty typical. At Expense Reduction Analysts, franchisees pay a management service fee of 12.5 per cent. This isn’t easy money for John and Robert Allison, who founded the firm in 1992, as they invest considerably in their franchisees. Training takes five weeks, during which time they foot the bill.

“Only when our franchisees earn more than £60,000 do we see a return,” says director Chris Aston. With some franchisees earning more than £200,000 from the comfort of their own home, the model is advantageous for all parties.

Just about any business model can be franchised. HolidaysPlease.co.uk is a travel agent that uses a network of 20 self-employed homeworkers to research holidays for clients. Blue Monday Recruitment permits its seven franchisees to determine whether they wish to work from home or from a serviced office.

This is by no means unusual. Pattinson estate agents has 30 high street branches across North East England, complemented with a network of self-employed homeworkers, proving that homeworking is not an either/or option.

The co-financing arrangement of franchising should make it appeal to cash-poor firms. A Jo Jingles franchisee will pay £9,000 for the privilege, plus a further £1,000 a year on advertising. One absolute must for entrepreneurs thinking of going down this route: talk to the British Franchise Association.

As Expense Reduction Analysts’ Chris Aston says: “Membership of the BFA is crucial. Its reputation is strong, and you know that enquiries you get via the BFA are going to be serious. We do as much as we can with the BFA.”

For more on successful businesses run from home:

UK's 30 top businesses run from home: 1 to 5

UK's 30 top businesses run from home: 6 to 10
UK's 30 top businesses run from home: 16 to 20

• Jo Jingles
• Expense Reduction Analysts
• HolidaysPlease.co.uk
• Blue Monday Recruitment
• Pattinson

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