Expense Reductions Analysts has a big 2020-2021 planned as the cost and supply management franchise looks to double in size.
The business has added 17 franchisees in the last three years to bring the network total to 29.
Now David Rounsevell, managing director, Expense Reduction Analysts Asia-Pacific, tells Inside Franchise Business the goal is to reach 50 franchisees within two years.
“We’re growing really well, revenue was up 63 per cent last year, and we expect a 60 per cent increase for franchisees across the board this year.”
It’s one of the businesses that comes into its own in tougher economic conditions, he says.
“Everyone wants to look at how they can save money. We are a business that can do well in any economy but during a slowdown we do particularly well.”
Expense Reduction Analysts’ business model
Expense Reduction Analysts (ERA) has a distinct business model quite unlike most other franchises. And that differential has helped the brand grow its footprint in Australia, Rounsevell says.
“It’s been the way we operate, we’re a lot like a professional services firm. Franchisees work together in our franchise. If a client has a number of different cost categories we bring in expertise across our group (telecoms, waste for instance). A lot of franchisees work in groups of eight to 10 for one client. That’s quite a different approach.”
What’s different about the recruitment of franchisees is that the business is viewed as a whole. Rounsevell will consider where a potential franchisee might fit in to the group. It is an interconnecting group of individuals.
“Some franchisees are good at bringing new clients on and focus on that. Some are not so strong but might have industry expertise. They will use that knowledge to deliver savings to clients.”
How ERA works
A franchisee focused on acquiring clients will identify where the client’s money is being spent and the potential areas for savings. They then engage in a joint venture with fellow expert franchisees who can deliver those savings to the client.
Franchisees share fees so the person who gains the client will get half of all fees. Each expert will get 50 per cent of the fees on their own project.
“It’s a complex web of people working together,” Rounsevell points out. “It takes away some of the loneliness of being a solo franchisee, working with other independent business professionals. Some work regularly together. “
There is no territory restriction for franchisees who can source clients and operate anywhere in Australia. Prospective and existing clients are managed through a CRM system.
Franchisees can even sign up a client for international business, working across borders and sharing the fees in the same way as a domestic partner.
The Aussie-born business started in 1992 and has proved itself quite an export success, operating in 40 countries with more than 700 global franchisees.
Further growth in the region is on the cards with Rounsevell looking to develop more Asian franchisees and build up the 12-strong network in New Zealand.
“The people we generally recruit have a corporate background. Their only hesitation is usually moving from job security to self-employment.
“The people who join us have got to a point in the career where they want to work for themselves. They can earn more, but without the same sort of hours.”
Rounsevell reports it takes about two to three years to achieve a corporate income and then earnings start to ramp up.
Clients pay their fees over a two year period so franchisees need a bank of working capital for the first couple of years.