Buy into retail success

While the UK economy wades through the malaise of slowing growth plus inflation in what many economists are citing as a 'perfect storm', the best of the retail companies in the franchising sector are tightening their fiscal belts, and getting ready for the uphill climb that will take them over the recession summit.

Probably the best thing going for well established franchise networks is that, in difficult economic circumstances, it is usually the smaller, less well known traders with a narrower spread of resources that are the first to stumble. Larger franchises with a wider spread of resources, however, are almost certain to have weathered previous economic storms, and usually have contingency measures in place to provide shelter until the storm has passed.

Alex Waite, franchise recruitment manager at Dream Doors, the kitchen facelift franchise, sees the recession as providing opportunities for his company. "The retail sector is taking a bashing at the moment, but some of our franchisees have had record performances. It's all about perception and which end of the telescope you want to look through. Some see recession as intrinsically bad, while others see it as a chance to get their head down and press on towards greater rewards. We pride ourselves on being part of the latter camp."

He believes that the franchises that persist with their marketing, advertising and promotions, even intensifying output in these areas despite the pull on resources, will be the names future customers and industry insiders remember when the economy bounces back.

When there's a downturn, it's a case of adapt, survive - and possibly thrive - by being creative, innovative and determined. Any company that wants to enjoy future prosperity now needs to be aggressive in their marketing, consistent in their service delivery and insightful when it comes to identifying areas for growth or, at worst, consolidation. Moreover, there are niche markets within the retail and franchising sectors turning bad news on its head. Advice for potential franchisees, in that case, must be to carry out due diligence, and find out which franchised operations are most likely to profit from the downturn, or are at least robust enough to muscle their way out of it.

Some retail sectors may be more "recession-proof", to coin a cliché, than others. Hairdressing appears to fall in that category - but as John Murphy, franchise director at Rush Hair, explains, hard work is still required.

"People use words such as 'recession' and 'credit crunch' as an excuse not to do their job properly. If we're having a slow day at our salons, we get out there and work hard to entice the customers in.

"We are in an industry that, while not recession proof, is one in which customer loyalty is a big factor. I'd like to think that people, instead of trying not to spend money, will simply be more circumspect in the actual products they buy, because recession or not, quality is still quality and people spend their income on what is important to them. Looking good, and therefore feeling good, is always worth paying for."

That is proving a blueprint for success, even during these uncertain times. "As far as trading goes, we are posting record opening after record opening," he says. "Almost every Rush franchise that has opened recently has outdone its predecessor."

Experts say that prospective franchisees should look at what's on offer and seriously consider the viability of any franchised business in the context of tougher-than-normal market conditions. And especially in difficult economic conditions, passion and drive will be needed in abundance.
"As well as investigating the business they're buying, potential franchisees also need to carry out due diligence on themselves," argues Dream Doors' Waite.

"It's important to remember that they aren't supplementing an income with a job - they are running a business, and to do that they need to have good management skills. This involves wearing a number of different hats, particularly at the outset, then having the ability to recruit, motivate and delegate. The vision to drive a business forward through good and bad times is essential in any sector. But, in retail, where the investment is invariably higher, and the rewards potentially far greater, nerve, drive, passion and leadership are essential attributes at the heart of every success."

Thorntons

Purveyors of delectable chocolate since 1911, when it was just a single outlet in Sheffield, Thorntons today has more than 360 stores in the country, around 215 of which are franchised. It continues to source some of the finest ingredients from around the world, and has chocolate recipes devised by its own master chocolatier. A trusted household name, Thorntons offers potential franchisees a tried-and-tested business, an instantly recognisable brand name and a constantly evolving product range.

If they choose, franchisees can take advantage of a further offer, which consists of a card and gift shop, adding further revenue streams and augmenting customer footfall.

Franchisees also benefit from an excellent body of support, which covers every aspect of running a Thorntons outlet, from initial set-up, site location, store fit-out and point-of-sale promotions to stock control and back office work. In addition, help is at hand for franchisees with little or no retail experience, with ongoing support provided in the areas of product management, marketing, merchandising and accounting. A personal, field-based business manager is available to ensure the smooth running of all new outlets.

Thorntons says its franchisees ideally need to be people orientated, and adept at dealing with both staff and customers. Candidates also need to be highly motivated with the desire to grow their initial business quickly and effectively.

Blazes

Blazes specialises in living flame fireplaces and heating for the home, and boasts some 30 showrooms. With distinctive branding, a comprehensive range of fireplaces for franchisees to choose from, and a well-established name backed by full bfa membership, Blazes offers a comprehensive package to investors.

Blazes says that, as a showroom business, its franchisees need to be able to deal with customers and staff members effectively, and possess the drive to grow their business rapidly through living fireplace sales and installations. Central heating is a large part of its business, contributing about 30% of sales at present.

No prior experience in retail is required, nor is any technical knowledge. Full training is provided covering subjects that include product specification, gas safety awareness, flue recognition and more. However, while franchisees learn to recognise and understand various technicalities, Blazes says they are not expected to install fireplaces, something that can only be done by subcontractors registered with the Council for Registered Gas Installers (CORGI).

Franchisee training also covers marketing and promotions (both at the local and national levels), accounting, administration of the business, plus fit out and promotion of a new showroom and its products.

For those with capital investment and enthusiasm, but little experience in the sector, Blazes says it can also help to produce a solid business plan and help source financing from major high street banks.

Dream Doors

With the trophy for bfa Brand Builder of the Year 2008 already under its belt, one of its top performing franchisees in the running for bfa Franchisee of the Year 2008, and a short-listing in the National Training Awards, Dream Doors is currently riding the crest of a wave. In a few short years, the company has risen from relatively humble beginnings as a home-run franchise operation to become a sizeable retail network with 25 showrooms operating across the country.

In April 2008, the company's Lincoln-based franchisee broke the network record, turning over more than £135,000 in a single month. The company's current success is partly attributable to the nature of the business, which in a quiet housing market benefits from people opting to improve their homes rather than move out of them.

Typically, franchisees offer their customers a large number of made-to-measure door designs and handles as well as being able to supply new worktops, tiles and appliances. Customers benefit from getting a kitchen that looks as good as a replacement at a fraction of the cost. And with a job taking as little as two days, there's also very little downtime.

Franchisees receive a two-week intensive induction, followed by unlimited in-territory support. They also benefit from quarterly business coaching courses covering areas such as sales, marketing, finance, human resources, and CAD planning. All franchisees are expected to open their own showroom, and head office provides support and guidance when it comes to finding the right premises. Franchisees also get a comprehensive franchise package, which includes kitchen-design software, brochures, clothing, leaflets and sample doors, among other things.

Rush

With 34 salons across the south east and seven British Hairdressing Awards, in terms of the execution of its growth plans, Rush is living up to its name. The company has taken its 14 years of experience and channelled it into the development of a new franchise network, which launched in July 2007 and has already signed 11 new franchisees.

Rush is now offering potential franchise opportunities to those with the right balance of drive and experience. The company says that its franchisees need to possess a good head for business and/or a flair for hair. Once on board, they benefit from ongoing support and advice, which covers everything from site selection to recruitment, training and support. Rush head office will also support franchisees when it comes to sourcing and dealing with the various professionals required to launch a new outlet, namely bank managers, accountants, lawyers and landlords. In addition, assistance with promoting the business ensures that franchisees get off to the best possible start.

Prior to opening the doors of their salon to commence trading, Rush franchisees undergo comprehensive training at the company's three-floor academy in Croydon. Rush founders Andrew Phouli and Stellos Andrew attend the training to ensure the new franchisees are ready to take their business and customers on at ground level. The founders also play a hands-on role on the training side as well as with the running of any new franchises in their first few weeks of operation.

Costa Coffee

With around 750 high street stores open across the country, and concessions in outlets ranging from large shopping precincts to bite-sized delicatessens, Costa Coffee's ubiquity makes it something of a performing star on the retail stage.

Set up by brothers Sergio and Bruno Costa in 1978, the company is a part of UK leisure group Whitbread, and boasts more than 1,000 coffee outlets in 18 countries. Today, the network is growing at a rate of around five new stores a week, with roughly half of its existing outlets based in the UK.

With its focus on busy UK market towns, Costa sees franchising as the best way to bolster its network of company-owned stores, and seeks well-organised, highly motivated individuals - ones with excellent management skills - to buy into the business. Importantly, the company believes that new franchisees with the right level of investment should be expected to work towards running a cluster of at least five stores to make the partnership worthwhile.

Once on board, franchisees are assisted through every stage of business setup. This includes help with property acquisition and the fit-out of the first store plus ongoing support with the regional rollout of further stores. Franchisees also benefit from training, which covers retailing, product knowledge and the Barista service.
Investing in Costa Coffee is not for business novices. The company expects its franchise partners to be commercially tuned, and new recruits will need around £250,000 liquid capital, plus the ability to source a further £500,000 without the need to borrow against any of their new Costa Coffee outlets.

Once up and running, Costa Coffee has its own preferred project managers to oversee the shop fit-outs, leaving franchisees free to focus on running the business and training their staff.