Former award-winning franchisees Peter and Penny Ferguson have notched up more than 25 years in the franchise sector. And they’ve got a few tips for potential franchisees…
“I started at Autobarn as a 17 year old kid and at 26 my wife Penny and I were given the opportunity to become a franchise partner,” says Peter. “We got a Young achiever Award, and were named franchisee of the year at about 28. At that point we had two stores with a partner who was a founding director and able to offer particular insights into the business.”
The people-focused culture helped keep the pair with the brand for two decades, the people at the top cared about the people at the bottom, says Ferguson.
Despite being happy with the organisation, after 21 years with Autobarn the couple sold the two outlets and took their skills elsewhere.
“We were tired of retail, had seen the writing on the wall of the impact of the internet on retailing and thought food would be a good thing – people have to eat.”
The couple purchased a greenfield Red Rooster site, and then took on two local company owned stores, and were with the fast food chain for six years.
Working with 15 to 18 year old casual staff was a new challenge, but so too was the highly competitive food retail space which works on tight margins and is all volume related.
Ferguson says “There’s a very fine margin between running with money and losing money.”
Lack of brand and product differentiation added to their challenges, he says, and four years ago the couple sold their Red Rooster stores.
Ferguson believes that moving into the O’Brien real estate business and working with the director as the brand grows into a franchise operation has given him insights into the way the business functions, and the firm’s culture. If he decides to buy a franchise in the future, he’ll have a good understanding of just what he’s investing in.
So what have Peter and Penny learned from their franchise experience?
5 hot tips for franchise buyers
- Try before you buy. Be a manager before you become a franchisee, and spend 12 months in the business before you buy it. Like a relationship, it can all look good from the outside
- Go and do your own research. Do extensive due diligence: ring 50 franchisees not five, spend six months researching.
- Remember that the franchisor is there to help you but not run your business. You still have to use your own business acumen.
- Make sure the franchisor’s first priority is the growth of people. You’re going into a partnership, it’s a lifelong commitment, so make sure the people at the top care about the people at the bottom. Look for good training in all elements of the business.
- Understand what it takes to be a franchisee. Franchising is superbly suited to people who have the drive to their own business and do more than be an employee.