COMING ON LINE
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KP's 'Snack Line' franchisees will use liveried Mercedes 308D vans to sell KP products direct to pubs and corner shops, a potential nationwide market of 300,000 outlets.
• Leading snacks manufacturer KP has been recruiting van operators as franchisees to sell its products in a market it had previously almost ignored.
KP Snack Line is launching eight franchisees into business across the country this year, to sell to over 300,000 independent outlets such as tenant pubs, hotels, school tuck shops, working men's clubs, cafes and corner shops. Another 20 will follow in 1990: the company had been running a pilot scheme in Cumbria before deciding to go nationwide this summer.
HUGE GAP
"We identified a huge gap in the market," says franchise manager Ray Parker. "We cannot get to these outlets at present because our vehicles are loaded with contract business."
KP Snack Line's pilot franchisee is Geoff Birkett, based in Kendal and covering a territory stretching from the Lake District to Blackburn. Birkett is a former salesman for snacks rival Golden Wonder and has also run his own car accessories business.
The franchise package offered by KP Snack Line costs £5,000 and for that each franchisee gets the rights to a territory, a comprehensive training programme, a launch package, back-up administration and a liveried van.
Birkett has opted for a Ford Transit, but future franchisees will get Lutonbodied Mercedes 308Ds: Ray Parker reckons KP has negotiated a "super" contract hire package with Ryder: "The package includes road tax; MoTs and servicing; a vehicle when the van is off the road; a half-life repaint of body and livery; tyres; vehicle cleaning; 24-hour break
down cover; discounted fuel; credit for fuel and oil; and water and electrical checks every four weeks," Parker explains. The in-house training course lasts a week and covers selling skills, administration, book-keeping and product familiarisation. This is backed up with further field training.
KP's launch package involves a mailshot focussed on up to 800 independent outlets, all potential customers in the are; identified by the franchise manager and the franchisee. "We send out 100 launch letters a week over a five-to-eight-week period," says Parker, "and the franchisee follows these up with a personal visit."
The franchisee also makes a contribution on top of the £5,000: "I have to pay for a depot to store my stock, I pay for the van lease and I pay a management fe( which covers the cost of my stationery and the company's expert advice," says Birkett. "I also have to buy my stock from KP, although this is at an advantageous rate. But the benefits for KP are maximum distribution of their products plus an increased market share, for a comparatively small outlay."
BREAK EVEN
Birkett reckons it takes at least two year: for a franchise business to get off the ground. "You should not look for good results before then," he warns, "and you should not expect to break even for at least six months."
In an average five-day week Birkett drives about 800km and makes about 125 calls, including one or two new business calls each day. For Birkett being his own boss, with the solid back-up of a large company, is an extremely satisfying way of earning a living.
But he does not ignore possible pitfalls and warns prospective franchisees to go into any venture "with your eyes wide open, having done a thorough research jol on the company beforehand.
"Franchising is an opportunity, not a meal ticket," he stresses. "It is damned hard work, admittedly for a good reward, but first you have to get out there and make it work."
El by Barbara Millar