When it’s time to grow your business what do you do? Hire more staff? Move to bigger premises? Open shops or branches around the country?
What if you wanted to grow, but didn’t want the problems that come with staff, buildings and managing businesses in all four corners of the country? What if you wanted to keep a tight hold on your brand, making sure it was being run by people who would protect it and love it as you do?
Have you considered the franchising business model as a route to expansion?
What is franchising?
Business format franchising is the granting of a license by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade under the trademark/trade name of the franchisor and to make use of an entire package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis.
‘We decided to franchise our businesses’
Former professional dancer Anne-Marie Martin, founder of diddi dance and former professional musician Angie Coates founder of Monkey Music, both chose franchising as a route to expanding their children’s activity businesses, and both say it was the best thing they have ever done.
But why and was it an easy route to growth or does it come with its own inherent problems?
Monkey Music – No Funny Business
Angie Coates, a former concert oboist, who studied at the Guildhall School of Music and Drama launched children’s music classes, Monkey Music in Dulwich in 1993, before quickly spreading to Greenwich, Blackheath and Clapham. She franchised the business in 1998.
Angie said: “The ‘leap’ to franchise the business for me came when I identified it was perfect for sharing. I had instinctively created a business model that could be made available to other likeminded business owners to help grow the brand. And grow it we did! Franchising has given me the opportunity to scale up my business, with franchisees who live and breathe their businesses just like me, but crucially they can grow them close to where they live.”
Monkey Music currently has 45 franchisees with a collective turnover of nearly £4m a year.
diddi dance – not didi numbers
Anne-Marie, who founded diddi dance in 2003 and franchised in 2006 came to the realisation that franchising might be for her fairly quickly: “I’d been running classes myself for three years across London, employing teachers to help me run them; that’s when I discovered the concept was popular and when I decided I wanted to scale the business up across the UK. I’d heard of franchising as a way to ensure brand continuity and consistency, so that’s the avenue I decided to explore and I’m so glad I did.”
She continued: “I’ve been able to grow diddi dance at scale across the UK with a network of dedicated franchisees all working together and supporting each other. We’re all invested together, ensuring customers receive the same service in every territory, which for me is such a huge achievement for the brand I created 20 years ago.”
Diddi dance now has 40 franchisees running classes in 47 areas with an annual turnover of £700k.
How much does it cost to franchise a business and how does it work?
Franchising a business is by no means a ‘cheap’ option with franchisors regularly spending between £10,000 to many hundreds of thousands of pounds to franchise their businesses. They will generally need to retain a franchise specialist solicitor and a franchise consultant to help them draw up the necessary documentation and contracts.
Once the franchise is launched, a franchisee pays a franchisor an initial ‘Franchise Agreement Fee’ to retain exclusive use of a ‘territory’ for the term of the agreement; they then pay an ongoing monthly fee to the franchisor, generally a percentage of earnings.
A Monkey Music franchise currently costs £13,975 and a diddi dance franchise cost £4,995.
The benefits of franchising – ‘a problem shared is a problem solved’
Aside from the physical growth of the brand, Angie says that some of the key benefits of franchising her business have been the people she has met and worked with: “I have enjoyed meeting and working with, so many different people from all walks of life. Our franchisees range from accountants and film producers to lawyers and musicians, but they all bring something new to the franchise – their individuality. I am also a great believer that a problem shared is a problem solved. I have always enjoyed working out solutions by sharing a challenge with my head office support team, my franchisees and the wider franchising community. Finding the best outcome is generally achieved collaboratively.”
The BFA (British Franchise Association)
The British Franchise Association (BFA) is the voluntary self-regulating governing body for franchising. It was formed in 1977 by the major franchising organisations looking to accredit and promote those franchise systems that meet the strict ethical and business criteria of a good franchise. An ethos it continues until this day.
Today it has over 300 franchisor members who have had their business models checked and verified to ensure they are ethical and sustainable. Members are reaccredited every three years and must pledge to adhere to the association’s code of ethics which is aligned to the European Franchising Code of Conduct. Monkey Music and diddi dance are both members of the BFA.
The benefits of franchising – ‘shared passion’
For Anne-Marie it’s about working with people who share her love of the brand: “Finding people who are passionate about your brand and the values and ethos you hold is definitely a highlight. Seeing them grow their own business, giving value to their community and fitting it around their family lives is so rewarding.”
“For me the challenges have been juggling my workload and sharing the load. I thought as a franchisor I had to have all the answers, otherwise why would a franchisee have invested in the business, but I soon learned to take on head office staff who had skills I didn’t, to share the load and to listen to my franchisees ideas and creativity more, as actually I didn’t have to have all the answers and I realised that the franchising journey is a two-way street and we’re all growing together.” Said Anne-Marie.
For Angie it can be about working with different characters: “All our franchisees have different strengths and weaknesses, so offering the right support at the right time, in the right place, is always a challenge. However, by working as a team we can face most challenges.”
Angie continued: “Since Covid we have also embraced the use of online life, particularly online training, via our newly launched ‘Training Academy’. It’s a very helpful tool through which we can offer different training forums easily and efficiently. This ability to adapt, evolve, review and refresh what we do and how we do it is so important, and it truly fuels our longevity and enthusiasm for change.”
Words of advice for anyone thinking of franchising their business
As two successful businesswomen who have grown large, franchised businesses do Angie and Anne-Marie have any words of advice for entrepreneurs considering franchising their businesses?
Angie advises: “Pilot your franchise business model first in a number of different types of areas; knowing your target market and how a local market grows is key and most of all, be passionate about your brand.”
Anne-Marie adds: “I’d say work with franchising experts. Franchising can be a minefield and doing it alone can prove risky. Ensure all your legal documents are written by a franchising specialist so you are not only protecting your brand but your network too. Ensure you have the time and motivation to help others grow and lead by example. Listen to others and don’t be too hard on yourself.”