A memorable experience can make a wonderful gift or a unique way to mark a special occasion. Over the past few years weÕve seen a growing number of companies offering everything from an acrobatic flight in a jet fighter to a workshop in flower arranging, yet despite their apparent success there are very few franchises in this area. Does that mean providing an experience presents a particular challenge?
Philip Ciniglio thinks not. As managing director of Marketing Minds he tells would-be franchisors that just about any business can be franchised. He believes that success or failure has less to do with the nature of a business than its ability to meet certain fundamental criteria.
“For someone considering starting a franchise, the considerations are always going to be the same,” he says. “Do you have a point of difference? Can you compete in the Australian market – whatever your product or service happens to be, is it viable and sustainable? Will you and your franchisees see a return on investment within a reasonable period of time? Are you being realistic in terms of growth and income?”
Considerations will also be the same for someone buying into a franchise. While a particular experience is more likely to ignite a passion and feel as if it’s ‘meant to be’, this is no time to scrimp on due diligence. When passion meets a sound business proposition the outcome can be extraordinary – but no amount of passion can rescue a poor franchise model without a viable future.
Braaap
For a living, breathing example of how passion can fuel a workable idea look no further than Brad Smith, managing director of Braaap.
At 16, he was racing full-size motocross bikes. At 17, he imported his first shipment of mini bikes from China, working at four jobs to pay for them. By 18 he was in China briefing manufacturers to build mini motocross bikes to his own specifications.
“My dream was to sell them in my own stores,” he says. “I wanted a hub for braaap, a place where you could get all the clothing and protective gear, learn from the mechanics and the people with all the knowledge and just enjoy hanging out. I wanted to make mini motocross a sport that families could enjoy together. And, from the start, I knew I needed to go Australia wide make this work.”
As a teenager with nothing behind him, he was refused finance by every bank in Australia. The turning point came when he started winning prestigious young entrepreneur awards; suddenly, banks were interested. Today, still only 22 years old, he owns two stores in Tasmania and one in Victoria. He has also transformed braaap from a store to an experience by building multiple tracks and starting a Braaap club.”
“The club is officially affiliated with Motorcycling Australia, which means we can hold race days, ride days and coaching days for riders,” he says. “It’s also an opportunity to make a contribution to the community by providing a safe, controlled place for people to ride legally.”
With one franchised store so far, Smith has 60 people working on the recruitment process and is negotiating a master franchise agreement in the US.
“The past three years have been about putting the foundations in place,” he says. “Now we’re ready to build on that – over the next three years my goal is to open 50 stores in Australia and at least 50 in the US.”
Franchisees need around $400,000 for a stocked and ready-to-go store, with support and education.
“I’ve had people interested in opening three or four stores and the hardest thing in the world is saying ‘no’ to someone who’s standing in front of you with a chequebook,” Smith says. “But we have to stick to our brand and our culture. This is not the kind of business that’s going to succeed if you stand behind a desk and wait for people to come to you. You have to be prepared to get your hands dirty.”
That doesn’t mean franchisees have to be mechanics.
“Our support network includes everyone you could need – the best people are at the end of the phone.”
Flight Experiences
It started as a hobby 10 years ago – three aviation enthusiasts with a flight simulator in a garden shed. Then a friend asked whether she could buy some time for her husband. A day later, her neighbour asked the same thing. Wondering whether they’d stumbled on a business opportunity, the founders put an advertisement in the local paper – and promptly earned $30,000.
By 2005, the partners had established the Flight Experience brand and opened a retail store with a replica Boeing 737 in a Christchurch shopping centre. Today, there are 10 franchises across New Zealand, Australia, Singapore and Hong Kong with another about to open in Kuwait. The company is also working hard to launch in the US, starting with a company-owned store in Los Angeles.
Each store offers experiences ranging from a cityto-city flight, take-offs and landings to infamous ‘white knuckle’ approaches. The authentic replica cockpit delivers a total immersion virtual reality environment, with 180¡ wraparound visuals, high-fidelity sound and even a slight seat vibration. No experience is needed, though the simulation is so realistic that the Civil Aviation Safety Authority has approved the simulator for certain aspects of pilot training.
“Now pilots can come to us for what’s known as ‘Instrument Recency’ training – they have to be sure their knowledge is up to date,” says Iain Pero, who is joint owner of the company and owner of the Sydney franchise. “Pilots of turboprop planes who want to move up to a 737 or similar can also use the simulators for interview preparation. And we’re just about to get involved with TAFEs and universities offering Bachelor of Aviation
degrees. Part of their curriculum is to use simulators but, at the moment, that’s generally nothing more than a PC with a joystick.”
At $750,000 to $800,000, cost of entry is at the higher end of the scale but this buys a business that’s ready to go and should start earning from day one. However, the simulator can be leased so the investment won’t necessarily be a lump sum.
Word of mouth is still a crucial form of advertising, generating around 35 per cent of new business.
“It works for us from two angles,” says Pero. “The person who buys a gift voucher recommends it as a great present, while the recipient tells his or her friends how great it was. This is why our best franchisees are people with good business skills who really understand customer relationships. They’re more like to have a background in hospitality or sales than aviation.”
Long-time friends Belinda Fraser and Melanie Gleeson offer their clients the very opposite of an adrenalin rush – what they describe as ‘down to earth spa heaven’.
“When we opened our first Endota spa in 2000, there were only a handful of day spas in Australia,” says Gleeson. “They were expensive and intimidating, and most people saw them as ‘not for me’. We believe that spas are for everyone, so we created Endota for women and men of all ages and from all walks of life. And we price our treatments so that people return again and again.”
The directors’ complementary skills are ideally suited to the venture. With a degree in economics and experience as a licensed real estate agent, Fraser is well qualified to manage the financial and economic aspects while Gleeson, who is a qualified hair and make up artist, has in-depth industry knowledge. Together, they have built Endota into Australia’s most recognisable spa brand, with 72 day spas across the country.
Franchisees have two different models to choose from. With two or more treatment rooms, the original has a focus on relaxation and longer treatments and generally works best in locations such as wineries, golf clubs, hotels and tropical islands. The newer spa studio model is smaller and more retail-focused. This is ideally suited to shopping centres and department stores, where clients can dip in for a ‘quick spa fix on the go’.
The cost of entry is $55,000 plus GST for the spa, $45,000 plus GST for the studio. In both cases, an additional cost of $7000 plus GST covers project management and site selection. The investment also includes two weeks’ background training and two weeks of in-spa training once the business has opened, then access to regular workshops.
“Many new Australian spa operators fall into the trap of following the US example; costly fit-outs in expensive rental locations,” says Fraser.
“By contrast, the Endota fit-out keeps costs down, and aesthetic appeal up. We ensure that new business owners have the best possible start in their spa business with no surprise expenses and no costly mistakes.”
Franchisees need sound business and spa operating skills but not beauty or massage therapy training. It might even be a disadvantage.
“We find that some therapists in this position tend to work in the business rather than on the business, which of course, is not our preference, and nor is it in their best interest,” says Fraser.