Michelle Rodger: A pizza the action with less of the risk

IT'S THE eureka moment in business, the point at which a huge gap or lucrative wee niche in the market is spied. Few experience it, but then most people do not have to have their own unique business idea to get started. It is just as effective, and significantly less risky, for them to take a tried and tested model and make it their own.

Franchising is becoming increasingly popular in Scotland. The Scottish market has been recognised as one of the most vibrant in the UK, making a substantial and growing contribution to the economy. There are now 2,430 franchise units north of the Border employing 34,500 people and turning over 800 million annually.

According to the British Franchise Association, 90 per cent of all franchisees, including the newest start-ups, are in profit, suggesting that franchising can be significantly more successful than many other business start-ups.

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Lisa Tobias is one such franchisee. At 23, she opened her first Domino's Pizza franchise in Kilmarnock, and has opened another every year until now, at just 27, she and her husband own four Domino's franchises and intend to open a fifth in the next few months.

With a turnover of more than 2.5m and 130 staff, Tobias admits she couldn't have achieved such phenomenal growth starting up her own pizza business.

There are significant advantages, such as advertising at a national level, a high degree of brand awareness, and the benefits of sourcing quality ingredients at the kind of prices that only come with economies of scale. In addition, says Tobias, the support from Domino's head office in every aspect of the business, from technology to marketing, has been invaluable.

"I don't think I would have been able to grow as quickly, and I would probably have spent more learning from my mistakes," she says. "But it's important to remember that a franchise is still your own business, it's not as if you are working for anyone else, you are just benefiting from following a tried and tested formula."

In the UK as a whole, the franchise industry is said to be worth 11.4 billion. As a result of the recession, estimated start-up costs have declined and new entrants can expect to pay up to 50,400 in fees and other associated charges. But with the average turnover being 326,000, it's not long before a successful franchisee recoups their outgoings.

Sharon Symon runs a Stagecoach Performing Arts franchise in East Kilbride. She opened her doors in September 2008 to the resounding crash of the financial system. It was a nerve-wracking time but, a year down the line, the business is well established with a healthy turnover and a great team. With a shrewd eye on her future pension, Symon recognised the potential of franchising and is now considering expansion. Her business survived the financial storm in part as a result of the shelter and experience of the large organisation behind her. Stagecoach has weathered two recessions in its 20-year history and come out of both stronger, says Symon.

She also knew she could trust the product to work. "The format is tried and tested, and what I had to do was ensure the quality of what we were offering was really good and people knew about it. Again, there was the network's experience to draw on and a good supply of marketing materials."

While franchising is much less risky than a traditional business start-up, there is no less commitment required to make it work; franchisees can't just rely on the parent company for success. It's vital franchisees research their own market for the product or service they intend to provide.

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Fiona Robertson knows from experience that it's important to do your homework before starting out. Robertson spent years working on franchises for brewer Scottish & Newcastle. So when she launched her own franchise, Shoes Glorious Shoes, a couple of months ago, she did so having researched her potential customers and after producing detailed plans.

Now into her second month of trading, Robertson has met her targets and is confident that the business will grow from strength to strength. Just because it works elsewhere, she warns, doesn't mean success is guaranteed in the would-be franchisee's chosen area.

Robertson also advises wannabe franchisees to work closely with their parent company. "To get the most out of the relationship, you should consider it a partnership. You aren't an employee but a business person in your own right, so you should ensure you have detailed and well-researched strategies for both growth and exit, further down the line."

While some of the growth in the franchise market is recession-driven, there are those who believe increased awareness and expansion will continue for the foreseeable future.

Johnny Sellyn has been actively involved in franchising for more than 20 years and, as managing director of whichfranchise.com, he sees on a daily basis the opportunities franchising can bring.

He is keen to raise awareness of the growth opportunities in franchising, and insists it will be key to the future strength of the economy. With traditional business start-ups failing at such a rate, says Sellyn, the safer approach is clearly through franchising.