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The phenomenal growth of franchising, where a small firm benefits from national marketing support to sell a product or service, offers exciting opportunities in haulage.
IIIIWhat do big operators like ANC and Interlink have in common with your local Macdonalds or Little Chef — or with mobile maintenance firms like Home Tune or Tune-Up, or with brake and exhaust centres like SMC and Kwik-fit Euro? The answer is that they're all franchise operations: the name is a national one, but the fleets of vehicles and the dozens of operating centres all belong to independent hauliers or businesses, operating under a common banner.
Franchising is one of the UK's fastestgrowing areas of business operations, accounting for nearly 8% of all retail trade, and its market share is rapidly increasing.
In the US franchising already accounts for 40% of retail trade. By the end of the century, it is predicted that franchise-type operations will outstrip all others.
Usually, an initial investment of a capital sum together with a management service fee are paid to the franchisor, In return the franchisee gains the security of a well-known name and receives the continuing support of an existing and often well-established business method.
The cost of a franchise varies enormously. It can be as little as £5,000 and as high as 2400,000 or more depending on the type of business operation. Many of the high street banks now have franchise departments which will offer loans of up to 70% on a good franchise opportunity.
PARCEL DELIVERY
In haulage, the main franchising opportunities are connected with the growing numbers of parcel delivery companies. Well-known names that run operations based on franchising are ANC Holdings, CityLink and Interlink Express Parcels.
Franchising obviously benefits both parties. Haulage operators in this field, even very small operators, look set for a good future given the buoyancy of the parcels market. Should the Post Office monopoly be ended, the potential for growth would be enormous.
The main advantage which franchise operations have over independent businesses is marketing. By promoting what are a large number of separate businesses from a central source, franchising operations can afford national TV and press advertising, something impossible for a small independent haulier.
While the world of franchising is not all milk and honey, as some of its more ardent supporters claim, there is little doubt that it offers substantial opportunities for continuing success which cannot be found elsewhere. More and more existing businesses are beginning to look at the advantages and disadvantages of franchising.
It is not necessary to completely convert an existing haulage business to franchising. It can often be done in part, with the franchising operation forming, in effect, a business within a business.
Although there are many advantages in franchise deals, there are drawbacks too. The franchisee has to pay the franchisor for support and for the cost of the blueprint without necessarily being able to assess the returns.
When it comes to selling a business, the franchisor usually insists on the right to.approve the incoming franchisee. The franchising agreement will usually favour the franchising company which has drawn up the contract.
In the event of the failure of the franchising company the whole of the franchise network could be put at risk of collapse too, especially if there is a high degree of inter-dependence.
Latest figures show that there are more than 150,000 people employed in the industry. Turnover is more than 22 billion and a threefold growth in this turnover is expected during the next 15 years. Nearly 20,000 businesses are now involved in running franchise operations. One of the most useful sources for advice is The British Franchise Association, Franchise Chambers, 75a Bell Street, Henley-on-Thames, Oxfordshire RG9 2B0, phone (0491) 578049, which was founded in 1977 to promote franchising. The parcel delivery companies mentioned are all members.
INFORMATION PACK
The Franchise Association will act as an adviser to potential franchisees and companies seeking to expand their businesses through franchising. Detailed information for anyone thinking about a franchising operation is contained in a fanchisees' information pack, available from the association for 28 (including postage arid packing). The book provides advice on the legal and financial aspects of taking on a franchise, as well as a checklist of questions to ask before signing any contract.
A companion book to this pack, called The Franchisor Workbook, is also available from the association for 215.
Ultimately, whether or not to become involved in franchising operation is an individual business decision. A franchise can offer many advantages to those who feel they would like the support of a larger organisation.
Others would feel constrained by this sort of operation and the limitations it can sometimes place on business decisions and choices.
El by John McQueen