Franchises, what do people think?

markymac

I'm seriously looking at a franchise at the moment. Like anything there is a risk involved but this particular franchise would I think give me a lot of freedom and variety on a daily basis.

I have 17 years experience in manufacturing & retail, so get on well with customers and so on.

I was wondering what people think of Franchise's, as they are supposed to be a very "safe" way of going into business.

My main concern is the financial commitment, if it all didn't work out. But I obviously would bbe doing my best to make the thing succeed.

Any thoughts appreciated.

Marky.

Heisenberg.

This post has been deleted.

stepbar

A "safe" way, yes but one that will cost a nice penny. Some franchises charge up to 6% of your yearly Turnover! Not profit, Turnover!!!
As your turnover increases, you may not be getting the best value for money. Perhaps you should create your own concept and franchise it instead of following a blueprint. That's what these guys done - Zumo. Coming up with the concept can be the tough part but it's more rewarding if you're the franchisor instead of the franchisee.

Culchie

stepbar wrote: »

A "safe" way, yes but one that will cost a nice penny. Some franchises charge up to 6% of your yearly Turnover! Not profit, Turnover!!!
As your turnover increases, you may not be getting the best value for money. Perhaps you should create your own concept and franchise it instead of following a blueprint. That's what these guys done - Zumo. Coming up with the concept can be the tough part but it's more rewarding if you're the franchisor instead of the franchisee.

Franchising your own business is incredibly tough, incredibly lengthy process and very expensive.

I am a franchisee and would recommend it as the quickest way to build up your business.

Yes you pay monthly turnover fee and marketing contribution, but (in my own experience) is definitely worth it.

There's also nothing 'safe' about any business, you have to accept the risks and work your balls off....but having instant brand recognition opens doors to businesses (if it's a B2B franchise) that 'Culchie Inc' or 'Culchie sandwiches' would never do, not without an enormous marketing and brand building exercise anyway.

Tony255

The Scientist wrote: »

What line of business are you getting into?
If its its the food industry then look no further than Subway, they're taking over the World!
About 5 new outlets have opened in Cork in the space of 12 months.
Its highly advisable IMO, best of luck with whatever you decide.

I would definately not look at subway, if i take your cork example there are 4 units in the city center alone, they do not seem to have any problem in letting franchisee's compete with each other which is not right in my opinion. You then end up with the mccarthy's subway competing with the o'connells subway which is like a return to the corner shop. I love the subway model but this is what turned me off them. If you were to find a location better than any of the others then yes it might be a good option but definately not another for cork city.

mike65

How easy/cheap is it to get out of a franchise deal if you want to walk away?

Mike.

Culchie

mike65 wrote: »

How easy/cheap is it to get out of a franchise deal if you want to walk away?

Mike.

I guess that's going to depend on the contract between you.

However, after that initial franchise fee has been paid, the franchisor only receives revenue from the franchisees turnover thereafter.
With that in mind, if it's not working out for the franchisee, then it could make sense for the franchisor and franchisee to agree to mutually terminate the contract.

Indeed any proper franchise agreement would state that certain figures (budgets) should at least be targeted.... the franchisee (with full support from franchisor) should be working together as a team to make sure these figures are attained and surpassed if possible.

One major difference between Ireland and the UK, which gives extra protection to franchisees is that 5 years is maximum term of franchise agreement (it's 10 years in UK).

Golden Rules of franchise (in my opinion)

1. Research the franchisor, their standing, their industry, their 'culture', their brand.
2. Research the market you think you want to operate in (SWOT analysis)
3. What track record does the franchisor have, and their franchisees success rate...how long are the franchisees in operation?
4. Visit the Franchisor HQ ...what support is there for you? (Technical, I.T, Accounts, HR, Marketing, Sales, Health & Safety etc....) Meet the people supplying this support, you will be paying for it on a monthly basis.....are they competent, are they credible.....does the HQ measure up to what you expect a HQ should provide for you.
5. Critically important ..... talk to and visit other franchisees. The (good)franchisor shouldn't have any problem giving you contact details of other franchisees.....you should know where they are anyway (from your research). Visit them, introduce yourself, make your self familair with their working environment....are they happy, are they proud to be a franchisee/business owner with this 'brand'?
6. Analyse the projected figures ...do they 'add up'? ....can you make a living from it?
7. Can you do business with your franchisor .... do you trust them?


As you can see you need to do some legwork yourself ....you have to be happy to enter the franchise agreement.
If you're not prepared to do this legwork and ask the right questions, do the research, do the sums .....then you're not prepared to run your own business anyway.

djk1000

Marky,

I have a franchise too, pm me if you want to chat further about my experiences. My tip is to read the franchise agreement very very closely and phone every existing franchisee that you can and speak off the record with them if needs be.

dewsbury

A note of caution.

A friend of mine bought a franchise (high profile - fast food).

It must be said that he & his wife were not particularly astute in terms of business ideas. Bottom line is that they invested a lot of money and lost it all. Perhaps 300 grand or more.

Subsequently, I knew of another investor who was thinking of investing in the same franchise but a different county. This investor asked the franchisor for the names of ALL previous franchisees. This list was provided BUT the franchisee in the previous paragraph was never mentioned.

I.e. the failures are buried under the carpet sometimes...

markymac

Thanks for the comments. The one i'm interested in is not on the 300k scale, nearer 50k all in. Can I form a company and so limit the liability of any new venture? Presume the banks would still look for personal guarantees anyway.

Jessica84

markymac wrote: »

Thanks for the comments. The one i'm interested in is not on the 300k scale, nearer 50k all in. Can I form a company and so limit the liability of any new venture? Presume the banks would still look for personal guarantees anyway.

right! I think no matter how large is the scale, the banks will still ask for personal guarantees and new ventures exist always.

Bandara

Word of warning, but very careful with Subway, they are a quite dodgy outfit to deal with, they base most of the sites in a circle of existing customers they have working with them. In order to contact them and get them to speak with you have to have somewhere already picked out to open. By telling them that information you can be sure that they will inform their bestest buddy in the vicinity and you might just find your bid for the property is beaten at the last minute, yet the subway still opens (this is all allegedly of course )

Also the whole way Subway require to be on the lease of the property you select sits very uneasily with me and most others. You pick the property, you pay the leasehold key money etc, but Subway insist on them being named on the leasehold as the tenant. They have ideas above their station in this country. The current market data does not have them held in regard as a quailty product with consumers, more a mass market sandwich merchant with low quality ingredients.

I was 2 weeks away from going with them for a site off Grafton st in Dublin about a year back, thanking my stars I pulled out and did other things with the site.

markymac

Hammertime wrote: »

Word of warning, but very careful with Subway, they are a quite dodgy outfit to deal with, they base most of the sites in a circle of existing customers they have working with them. In order to contact them and get them to speak with you have to have somewhere already picked out to open. By telling them that information you can be sure that they will inform their bestest buddy in the vicinity and you might just find your bid for the property is beaten at the last minute, yet the subway still opens (this is all allegedly of course )

Also the whole way Subway require to be on the lease of the property you select sits very uneasily with me and most others. You pick the property, you pay the leasehold key money etc, but Subway insist on them being named on the leasehold as the tenant. They have ideas above their station in this country. The current market data does not have them held in regard as a quailty product with consumers, more a mass market sandwich merchant with low quality ingredients.

I was 2 weeks away from going with them for a site off Grafton st in Dublin about a year back, thanking my stars I pulled out and did other things with the site.

Thanks but not looking at Subway, other posters mentioned it, not me.

Bandara

ok, what franchise are you looking at?

You'll find several people with experience in most of the different sectors here.

Hamster007

Another interesting topic. Good to read all of the replies and experiences. Anyone have any information about O'Brien's as a Franchise? It would appear they seem to be in a lot of trouble, just wondering if anyone has any insight to this brand?

Thanks

I personally think franchises have more weight in America as opposed to Ireland in the eyes of the consumer. If a sandwich bar opened up in Dun Laoghaire and sold the same style of sandwiches just like the Subway there does, but did it better and for cheaper (as Subway is a rip off for **** unhealthy food) I would really expect it to outperform Subway or at least match it. This of course is assuming it was promoted properly and marketed.

Bandara

Deleted User wrote: »

I personally think franchises have more weight in America as opposed to Ireland in the eyes of the consumer. If a sandwich bar opened up in Dun Laoghaire and sold the same style of sandwiches just like the Subway there does, but did it better and for cheaper (as Subway is a rip off for **** unhealthy food) I would really expect it to outperform Subway or at least match it. This of course is assuming it was promoted properly and marketed.

I have to strongly disagree, Subway would bury it. And Subway are sh1te.

shoutman

I agree with hammertime, take Wexford St for example, there is a subway right across the road from quiznos. Essentially they sell the exact same thing (I would argue that Quiznos is a nicer product) but none the less there are ques out the door of subway and quiet enough at Quiznos. It is not due to footfall or anything like that imo.

Bandara

And while were at it Quiznos (agreed shoutman -far superior product) would also bury the No-Name sandwich shop, as would pretty much all the franchises out there

Go to the bank and try get a loan for a sandwich bar unit, then try get the same loan for a Subway, OBriens, Insomnia etc.

You have not got a snowballs chance of getting one for the no brand unit. (And landlords won't exactly be falling over themselves to let to you)

elgransenor

Interesting and instructive discussion.
I would be very interested in posters rating their top 3/5 franchises from the point of view of their invest ability.
Would be particularly interested in posters personal experience and/or well sourced information eg from speaking to a friend who is a franchisee.
We all know that the promotional material produced by the franchisors is slick, impressive etc. but would like to see a 'Rough Planet' guide to the most impressive ones.

Well the reason why I think it would work and would try it is solely down to what I have seen The News Cafe in Blackrock do, quality place with quality food and I would say it DEFINITELY outperforms the O'Briens in Blackrock judging by how busy each venture is in Blackrock when I am down there.

http://www.menupages.ie/locations/south_dublin/restaurants/the_news_cafe.aspx

Deleted User

Deleted User wrote: »

I personally think franchises have more weight in America as opposed to Ireland in the eyes of the consumer. If a sandwich bar opened up in Dun Laoghaire and sold the same style of sandwiches just like the Subway there does, but did it better and for cheaper (as Subway is a rip off for **** unhealthy food) I would really expect it to outperform Subway or at least match it. This of course is assuming it was promoted properly and marketed.

Also, this is how I operate. If I knew there was a substitute for Subway in Dun Laoghaire that sold healthier better food, I'd be there ANY time! Maybe I'm an unusual consumer?

jimmmy

Be very careful. I know about a dozen people who each invested a five figure sum in a business which was exhibited at the Franchise exhibition in the RDS , Dublin, several years ago, and NONE of these 12 people who invested their money and 6 to 18 months of each of their time anywhere in the country made a successful full time business out of it. The exhibitor from the UK just misled and were the only ones to make the money out of it.

N.B. it was not subway or any of the names mentioned in this thread, it was not food related in fact

delllat

shoutman wrote: »

I agree with hammertime, take Wexford St for example, there is a subway right across the road from quiznos. Essentially they sell the exact same thing (I would argue that Quiznos is a nicer product) but none the less there are ques out the door of subway and quiet enough at Quiznos. It is not due to footfall or anything like that imo.

I would say quiznos problem is that that they are really tight with their ingredients
a quiznos is tasty,(il give them that) but they do give really small sandwiches for the equivalent price compared to rivals
I work on a site beside a quiznos and none of us ever eat there
at least if you order subways 12" sandwich you get a good feed out of it,

similarly a baguette from spar is much cheaper and more filling than a quiznos sambo
id say theyre losing a heap of business they could be cashing in on

usually the peoplle in quiznos are middleaged women out shopping or office staff grabbing lunnch,both groups who probbaly order a 6" sandwich and a coffee,not exactly big spenders

shoutman

he US fast-food chain Subway says it plans to create 1,300 new jobs as part of a major expansion in Ireland over the next two years.

The company currently has 181 stores around the country and plans to open 119 new ones by 2010.

It currently employs around 2,000 people in Ireland.

http://breakingnews.ie/ireland/mhidgbaucwau/

I wonder where all these new stores are going to be placed... I would not be liking this if I was an existing franchisee, surely they are going to have subways competing with each other...

Bandara

shoutman wrote: »

http://breakingnews.ie/ireland/mhidgbaucwau/

I wonder where all these new stores are going to be placed... I would not be liking this if I was an existing franchisee, surely they are going to have subways competing with each other...

they agree a region around your store that cannot have another Subway open within it. Its not however set in stone. So your 100% protected from close by Subway competitors.

(Once they decide not to change the agreement that is).

:rolleyes:

DubTony

The US fast-food chain Subway says it plans to create 1,300 new jobs as part of a major expansion in Ireland over the next two years.

The company currently has 181 stores around the country and plans to open 119 new ones by 2010.

It currently employs around 2,000 people in Ireland.

Shouldn't this read " The US fast-food chain Subway says it plans to sell franchises which will eventually create 1,300 new jobs as part of a major expansion in Ireland over the next two years.

The company currently franchises 181 stores around the country and plans to sell another 119 franchises by 2010.

It currently employs very few people in Ireland however the people who invested lots of money in their franchises currently employ about 2000 people.

It just gets up my nose. Musgrave, ADM and a bunch of others use the same hyperbole to promote their name while in reality investing very little.

/Rant

Bandara

DubTony wrote: »

Shouldn't this read " The US fast-food chain Subway says it plans to sell franchises which will eventually create 1,300 new jobs as part of a major expansion in Ireland over the next two years.

Agreed Tony, what winds me up as well is the fact that they are not creating jobs at all. The 1300 'new jobs' are just going to come from the hundreds and hundreds of staff who lose their jobs as the small independant sandwich bars, coffee shops etc they work in are shut down by the increased competition that all these new various fanchises will create.

jackass 1

hi guys.

maybe somone can give me some advice, i have been operating in business for the last 15 years as a sole trader, in the past 2 years my business has being gradually failing due to a number of different reasons to the point that it looks like i am going to have to fold up, i have been looking at a number of different franchises as i want to increase my chances of being successfull in whatever i choose to start up but my problem is that because of business problems my credit rating is not now what it should be.

how can i get over this problem when i go looking for finance, van leasing etc etc. maybe i am snookered and will just have to go and work for somebody else but would rather not.
i have being told that if i set up a limited company that i will get over these problems but i dont know.
is there any grants available for people trying to start a new business.
any advise would be greatly appreciated.

dianawalsh

Buying franchise would save you lots of time doing reasearch and branding your company. I recently found a great web resource that provides good articles and advices to people interested in irish franchises - <snip> Good luck!

BnA

You just found that website now did you. And ressurected this old thread to tell us....

Well doesn't that just bate banagher

Woodgate

dianawalsh wrote: »

Buying franchise would save you lots of time doing reasearch and branding your company. I recently found a great web resource that provides good articles and advices to people interested in irish franchises - franchiseoptions.ie Good luck!

trolling???

radharc

stepbar wrote: »

A "safe" way, yes but one that will cost a nice penny. Some franchises charge up to 6% of your yearly Turnover! Not profit, Turnover!!!
As your turnover increases, you may not be getting the best value for money. Perhaps you should create your own concept and franchise it instead of following a blueprint. That's what these guys done - Zumo. Coming up with the concept can be the tough part but it's more rewarding if you're the franchisor instead of the franchisee.

Very conservative estimate there Stepbar eg a McDonald's franchise you will end up paying between 16 and 23% of turnover to McDonald's Ireland.