Clients on tap

By Sarah Stowe | 29 Oct 2015 View comments

Jim Penman, founder of Jim’s Group talks about how the franchising model has led to him to success.

I can’t speak for retail, but in the service sector the main attraction of a franchise is undoubtedly clients. In the past 20 years, clients have been more and more inclined to use ‘name’ brands for services, both for personal security reasons and for someone to go to if the job goes wrong. What this means for us is that we only spend just over one per cent of turnover on advertising. And yet last year, during an economic downturn, we actually knocked back more than 50,000 leads. I imagine most franchisors had a similar experience.

A franchise can also be attractive for reasons of training and support. Business can be discouraging at times, and having someone to turn to makes a lot of difference. We know from our surveys that franchises who are called regularly and attend regular meetings are far more likely to be happy with their business and to last long term. Specific training can also be a help. When water restrictions came in a few years back, our mowing division began a new induction course focusing on extras. As a result, while lawns were dying from lack of water our first year attrition rate actually dropped from 17 percent to 11 per cent.

Having said this, a franchise is no guarantee to success and there are a number of systems which provide little or no support. Be wary of any franchisor who is not obviously checking you out. I once asked a quite high profile franchisor what he looked for in prospective franchisees. He told me $50,000 and a pulse.

Anyone considering a franchise should phone as many as possible of the current franchisees, and make sure your list contains all of them. If the great majority don’t give their system a thumbs up, go somewhere else. If they do, then you are well on the way to an exciting and prosperous future.