A Personal Experience as a Franchisee.
By Peter Speller, former Pirtek Licensee.
History.
1992, a little capital to invest and I was looking for a business
to buy. You don't buy much of a business for £50,000 but as
a qualified accountant and a good track record as Finance Director
in small and medium sized engineering businesses I believed
that if I found the right opportunity I could prepare a business
plan to interest the Bank Manager.
Agencies, Exchange and Mart and the National newspapers all
offered a range of business opportunities. My problem was that
I didn't really know what to do. I had no passion for any one
sector. The companies I had worked for manufactured engineering
products and none of these really fired my imagination.
I had considered buying a franchise but was prejudiced by bad
press. The advantages of a Franchise however were very relevant
to my circumstances. I had some idea how to run a small company
but really needed a ready made product or market.
I scoured the franchising magazines and visited a couple of
Franchise trade shows.
I made a number of contacts but was not initially encouraged.
However I persevered and then became interested by the growing
number of service based ideas and discovered and bought into
Pirtek in 1993.
I took the plunge.
Pirtek is a business meeting the need in a wide range of industry
for a fast response service for the repair and replacement of
hydraulic hoses. The organisation flourishes in Australia and
had just been introduced to the UK.
Several things were significant in making the decision.
Firstly the negotiations were completely open. My contact was
with the MD but I had unrestricted access to all the other staff.
Also I was given a list of all the other Franchisees and encouraged
to contact them.
In hindsight, I think that developing a relationship with and
trusting the Franchisor is critical, and that contacting other
franchisees is probably the second most important thing to do
before making a decision. If contact with other franchisees
were withheld I would be suspicious.
The advantage of buying a franchised business is enormous.
Set up effort for marketing and administration can be minimal
leaving most time for the crucial activity of selling. In my
case the PC came loaded with a complete stock file, prices and
an accounting system ready to produce the first invoice. Selling
and promotional literature was already designed and available.
Operational procedures were tried and tested. I had excellent
help recruiting and training staff. Following the system was
made easy and gave the best chance of success.
Shop's open.
The first contact with Pirtek was in February 1993 and I opened
for business with three trained staff in fully operational premises
on 21 June less than four months later. The plan showed losses
for the first twelve months of trading as the business grew.
Sales were very much in line with forecasts but careful management
of outgoings meant that losses were restricted to the first
eight months and we never looked back. Five years on I had taken
over a neighbouring area, had 16 employees and a turnover of
£1million.
Support is crucial.
Throughout the Franchisor has been supportive. For example,
in the early days I fell and broke my wrist at a time when one
of my staff was on holiday. On the same day the Franchisor sent
one of their employees from London to Ipswich to help out for
a week free of charge!.
So with a Franchise one is not alone. However there are other
things to consider. To succeed the Franchisee will need to work
hard at his part of the business. The Franchise Agreement will
describe obligations for both parties and whilst day to day
relationships are managed without resort to the Agreement, if
the Franchisee fails to meet his obligations a good Franchisor
will seek redress under the terms of the Agreement. This is
often necessary for the good of the whole organisation. So reading
and understanding all parts of the Agreement is essential. As
is looking carefully at the clauses relating to the transfer
of the business as one day for whatever reason you may want
to sell.
I have now sold both Franchises to my satisfaction and the new
Franchisee is in place and doing well.
By Peter Speller, former Pirtek Licensee.
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