Redundancy a springboard to business ownership, says franchise founder

Franchising is not recession-proof but it does offer clear advantages over other small business during the financial crisis, according to Café2U founder Andy Simpkin.

In an economic period where retrenchments and ensuing redundancy payments are becoming more common, he also said a franchise provided the platform to not only get yourself a job but achieve business ownership with a good income stream.

“Redundancies and an increase in unemployment is a bi-product of the current economic climate, where some people may be forced out of their career of choice and into other jobs. They may have to start at the bottom again just to pay the bills,” he said.

“However a redundancy payment could also provide the collateral to let them go out on their own. The natural advantage a franchise can offer them over starting from scratch in a downturn such as this, is the branding, marketing, operational support and proof of business concept.”

Using a redundancy payout wisely depends on having a plan in place, according to Mr Simpkin of the coffee franchise.

“Some people may use it to stay afloat as they look for more work in their industry but for others it provides a springboard to start afresh. To purchase a business with it is a great alternative. Often people don’t know what to spend it on and it is frittered away. As a nest egg it won’t sustain you indefinitely, so doing something proactive in order to generate cash flow and income moving forward is a serious consideration for the retrenched. It is a great way to invest your money, somewhere that you can control it with limited risk”

He recommended anyone interested in joining a franchise should do their homework and ask plenty of questions.

“There are over 1000 franchises to choose from so you need to gather as much information as possible to create any sort of shortlist. Take a ‘what’s in it for me ?’ approach and ask the right questions – what is your territory potential, how strong is market demand, what level of marketing support exists, not to mention operational support within the system itself.

“In all our new territories we have development managers that undertake the initial hard work of creating a customer base so that we can guarantee our new franchisees $500 turnover each trading day, from day one of their business. With no staff, rents or rates it makes a compelling business case in these economic times when people are naturally risk adverse”

Mr Simpkin started Café2U in Australia four years ago and has grown it into the world’s largest mobile franchise, producing over 4.5 million cups of coffee per year.