Franchising model is a well-trodden path to success

Ritchie Laing has doubled expected sales in his first year as a Kitchen Depot franchisee. Picture: Contributed

With the physical demands of his job starting to take its toll, Dumbarton-based Laing began looking at franchising as a way to help him get quickly established running his own venture.

After meeting with the founders of Glasgow-based The Kitchen Depot, Laing invested £20,000 to set up a franchise. Although the kitchen firm’s franchise fee is normally £65,000 the founders were so impressed with his skills and enthusiasm that they agreed to lend him the balance.

Within his first year in business Laing doubled the £500,000 turnover target he had been set.

“The business has grown beyond my wildest expectations and my wife is giving up her job to join me. I could not have achieved this on my own without the support of the franchise behind me,” he says.

The organisers of this year’s Scottish Franchise Week, which gets underway today, will be hoping Laing’s example will help inspire others to look at franchising as a route to becoming an entrepreneur.

Latest figures show franchising is continuing to grow in Scotland with latest figures showing that the annual turnover of the sector had increased by 14 per cent to £800 million, driven by over 2,200 businesses employing more than 32,000 people.

Franchising is about replicating a proven business and coaching a third party to run it at arm’s length. In exchange for this the franchisee pay you an upfront fee and an on-going percentage of their turnover to cover continued support.

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Although the figures for franchising are increasing, Euan Fraser, a Scottish-based chartered accountant who specialises in franchising and has worked on models in 13 countries, says he is perplexed there isn’t more awareness of it.

He believes part of issue is lack of understanding about how the model works and the benefits.

“Franchising is about replicating a proven business and coaching a third party to run it at arm’s length. In exchange for this the franchisee pay you an upfront fee and an on-going percentage of their turnover to cover continued support.

“For the franchisee, it’s a way to avoid costly mistakes; for the franchisor, it’s about growing the brand using a franchisee’s capital.

“Franchising is a great business growth mechanism that is used successfully across the world and is taught in all the major business schools. It’s time we looked at it again in Scotland,” he believes.

Eddie Finnigan, who runs the Select Appointments recruitment franchise in Glasgow, argues a recent contract win for his firm highlighted one of the benefits of franchising.

His firm has recently landed a five-year contract with one of the UK’s largest aerospace and defence manufacturers to handle a diverse range of recruitment requirements from engineers to fighter pilots.

“Being part of a national organisation enables us to punch above our weight and tender for large national contracts such as this one,” he says.

Steve Lamb, who moved to Scotland in 2001 when he started working for Scottish & Newcastle, launched his own franchise business after being made redundant. Together with his wife Alison they now run the InXpress parcel delivery and courier franchise in Edinburgh.

“I decided to look at my redundancy as an opportunity to secure and control my future by working for myself. I considered a number of options but felt that the InXpress model and nature of the business best suited both my own and my wife existing skills and competencies,” says Lamb.

“Owning a business has given us a degree of control of our own destiny and it has also given us financial freedom and a more secure future for our family. My advice to anyone looking into franchising would be to ensure that you have a robust business plan in place and ensure that you get experts to look at and critique it. This will help you to set-up and run your business successfully in the future.

“I would also recommend that you are someone who has a good work ethic, a ‘can-do’ attitude and are self-sufficient. Although you are part of a franchise and, to some extent, the work is done for you, you still have to work hard to make your business successful.”

This year’s Scottish Franchise Week features a host of networking and educational events in Glasgow for those considering franchising as a way to get into business or to expand an existing one.

Josh Littlejohn, chief executive and co-founder of Social Bite will be keynote speaker at a business breakfast on Wednesday to increase awareness of franchising within Scotland and the opportunities that are available.

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