FRANCHISING presentation to Galway Chamber Seminar, 10 May 2006

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FRANCHISING presentation to Galway Chamber
Seminar, 10 May 2006

• IRISH FRANCHISE ASSOCIATION
• www.irishfranchiseassociation.com
• 30 Tolka Valley Business Park, D11
• John Green, Chairman.
• Bill Holohan, Deputy Chairman.
• Michael Bradley, CEO.
• michaelbradley_at_irishfranchiseassociation.com

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What is Franchising?

• Business Format Franchising provides a proven
  system for starting a business as a franchisee,
  or a blueprint for the expansion of an existing
  business as a franchisor

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What is Franchising?

• A Franchise is a business arrangement where the
  owner of a product, service or a recognised trade
  name agrees, for a fee, to allow a person/company
  to trade using the same product, service or trade
  name, and passes the benefit of its know-how to
  that person/company

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Franchising

• The FRANCHISOR is the original developer of the
  business
• The FRANCHISEE is the investor who purchases the
  right to trade using the Franchisors concept

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Franchising

• Main Sectors
• Business Format e.g. McDonalds, Action
  International, The Wine Buff
• Food/Forecourt Retailing e.g. Supervalu, Spar,
  Statoil
• Conversion Franchising Sherry Fitzgerald,
  Property Partners

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Business Format Franchising

• The Franchisor charges an INITIAL FRANCHISEE FEE
  and an ongoing MANAGEMENT SERVICES FEE as a
  percentage of franchisees turnover

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Business Format Franchising

• THE ELEMENTS OF SUCCESS -
• Legal contract
• Franchisee training
• Operations Manual
• Ongoing support from Franchisor

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Business Format Franchise

• Franchisor allows franchisees to use
• A proven concept
• Trade name / marks
• Logos / get up / livery
• Intellectual property
• Permission to use the know how
• Permission to use the
• business system, style format
• Set-up assistance, and ongoing support

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FRANCHISE SECTOR STATISTICS Ireland/UK

• Growth 12 per annum average/UK 2
• Annual turnover 1.4bn(excl retail symbol
  groups)/UK9.65bn
• Direct employment 20,000/UK 333,000
• 240 systems/UK 700
• 2,400 outlets franchisees/UK 35,000

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Franchisor

• ADVANTAGES
• Lower capital investment
• Franchisees investment
• Rapid expansion
• Franchisees input
• DISADVANTAGES
• Loss of Control
• Reduced Profits per unit

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Potential Franchisor Business Characteristics

• A profitable track record
• Name protection
• A clear identity
• A transferable operation
• Management depth

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Franchisors Obligations

• Production / service training,
• Operational training,
• start up help,
• selection of premises,
• operating manuals,
• financial systems,
• ongoing assistance / troubleshooting,
• marketing advertising.

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FRANCHISEE

• ADVANTAGES
• Success rate, Proven System, Established
  Brand/Reputation, Training, Shared Advertising
  etc
• DISADVANTAGES
• Regulation Controls, Reliance on Franchisor,
  One Bad Apple, Restrictions on Sale of Business

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Franchisees Obligations

• adherence to methods formula,
• secrecy re processes / formula,
• performance standards,
• use of the business system,
• use of advertising displays /materials,
• condition of premises,
• sourcing of inputs,
• payments to be made.

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Choosing a Franchise

• Self-assessment
• Multiply ready cash x 2
• Consult listings/directories/exhibitions
• Ask for franchise information packs
• Talk to franchisees
• Consult financial adviser/business plan
• Consult legal adviser/contract

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Business Plan!!

• Market size
• Growth rates
• Running costs
• Capacity
• Finance

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Useful Websites

• WWW.IRISHFRANCHISE
• ASSOCIATION.COM
• WWW.FRANCHISEDIRECT.COM
• WWW.FRANINFO.CO.UK
• WWW.FRANCHISE.ORG
• WWW.BOI.IE
• WWW.AIB.IE
• WWW.ULSTERBANK.COM
• WWW.RBS.CO.UK/FRANCHISE

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The Irish Franchise Association

• REPRESENTS MAIN FRANCHISORS
• ALL IRELAND
• AIMS ARE TO RAISE THE PROFILE OF FRANCHISING
• 1) as a model for expanding an existing business
  
• 2) for starting a business as a franchisee
• 3) to assist the development of the franchise
  sector in Ireland
• 4) maintain its ethical standards
• 5) networking with the franchise profession and
  meeting/lobbying influencers, including
  Government.

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IRISH FRANCHISE ASSOCIATION

• REGIONAL SEMINARS
• QUARTERLY NEWSLETTER
• IRISH FRANCHISE AWARDS 17 Nov
• IRISH FRANCHISE EXHIBITION 17/18 Nov
• PUBLICITY
• WEBSITE
• MEETINGS/UK/EUROPE

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Franchising.

• In business for yourself, not by yourself
• Questions
• Thank you for your attention