Franchising A Business w/ Suzie McCafferty & Eddie Ray

Transcript

Unknown Speaker  0:02  

The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.

Christian Rodwell  0:19  

Welcome to Episode 151 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders and I'm joined today by my side, Mr. Kevin Boylan.

Unknown Speaker  0:28  

Hello, Chris. Good to be with you again. Second time in a row, isn't it? We've been next to each other

Christian Rodwell  0:33  

getting cosy. Yeah, no, it's good to be back out in the real world now and, you know, back recording live. And we have a great episode today. Batch got two guests today. Okay, so, the topic of our conversation today is all around franchising. So this sits firmly within our seven pillars specifically pillar number five, the business pillar. And we've invited the CEO and founder of platinum wave franchising, Susie McCafferty. Award winning Oh, Susie is a true expert in her field of knowledge when it comes to franchising and that will shine through in today's conversation. Fair enough. Yeah, we've also got one of our members. So Academy member, Eddie Ray has recently joined, and he's got experience of turning his business into a franchise model. So really hearing how that's worked out for him. So we're hearing

Unknown Speaker  1:25  

it from both sides of the coin, flip one side, you're getting to understand if you're an existing business owner, how you could potentially turn that into a franchise opportunity. On the flip side, not everybody wants to create a business, or not everybody's capable of creating a business. And we know franchising is a very popular method for those who are used to employment, looking to transition into being an entrepreneur, but perhaps want to copy a format. So that is the name for often use of franchising called Business format. Franchising, in other words, the systems, the processes, the marketing, you know, the entire methodology is done for you so that you can plug and play. And as long as you're doing the right research, it's the right thing that suits your style, your wealth dynamic, it could be an absolutely brilliant way of transitioning, and being able to sack your boss, Chris, and escape the rat race and do all those wonderful things that we know are employed members often are trying to do.

Christian Rodwell  2:35  

Yeah, so there's lots of ideas, we really hope you're gonna enjoy listening to these two interviews. And we'll be back afterwards with the debrief. Susie Wallmark. Welcome to wealth talk today. Hi, Christian. Thanks for having me. Great to have you on with us. And Susie, we actually kind of connected not directly but through one of your team members at the recent biz X event, where there were over, you know, 1500 business owners, and that was run by ActionCOACH. That was a fantastic event. And, you know, we've got chatting there. And it was just so fascinating to discuss the, the, you know, the possibilities for a business owner to start franchising and looking at that model. And, you know, then we had a chat and we thought we have to get your wealth. Talk to me to tell our listeners a bit more about this.

Unknown Speaker  3:21  

Oh, wonderful. Well, I always love chatting about all things franchising is anybody that knows me knows only too well. so delighted to be here today. Thank you.

Christian Rodwell  3:30  

Yeah. And you come with some experience, right? I believe over 20 years worth of franchising experience behind you.

Unknown Speaker  3:35  

Yeah, I started in the wonderful world of franchising at the tender age of 23. And never did I ever think I would build what went on to be these multimillion pound businesses through this thing called franchising. So looking forward to chatting more about that with you today.

Christian Rodwell  3:52  

Yeah. And you're the CEO and the founder of platinum wave, which is largest independent franchise consultancy, I believe. So. You know, tell us tell us a little bit about what you do at platinum wave to begin with?

Unknown Speaker  4:04  

Yeah, so we're accredited by the British Franchise Association. And what we do is we help businesses of all sizes, literally all sizes, from corporates, to small companies, looking to scale up and all kinds of sectors, you know, food, retail, professional services, beauty, leisure, education, chose activities, you name it, and really scale up their businesses realise their brand potential and value through the vehicle or franchising. So, really helping businesses who are serious about growth, who had already a proven and profitable concept and grew basically and expand to franchising.

Christian Rodwell  4:43  

Yeah, I'm sure there's so many benefits for a business owner to do that. Obviously, wealth builders, we talked about the ability to create kind of sustainable predictable recurring income in your business and I'm sure by you know, franchising and having those you know, those franchisee fees That's one recurring income stream that obviously is reliable stream.

Unknown Speaker  5:04  

Yeah, I mean, there's so many advantages to franchising your business. And I think one of the first things that people always say to me is, I'm not franchising No way no one can do it like me. And what actually, I proved with my own businesses that I franchise over the years that if you set up really good systems and procedures, and provide really good training and support, and really provide a culture of collaboration, then you can actually have franchisees outperform anything you ever did yourself. So it's a really powerful growth and tool, but franchising has got to be a win win. Unless your franchisees make money and are happy and engaged and profitable, then you'll never become a good franchise and company. But by no means, you know, of setting up a franchising company, how you do generate this additional income and build this additional wealth is selling franchises on a local level, you know, direct to from individual franchisees, where you would attract initial franchise fees, and then these ongoing royalty fees management fees, which are typically a percentage of the franchisees turnover. But that is when you're just doing single territory franchising to single franchisees, when actually, there's a massive culture of multi unit development. Now, here in the UK, especially where people will be interested in developing multiple territories as opposed to just one but also where the real fun begins. And when I realised my personal growth, potential through franchising was international franchising, when you start to do selling country licences, to entities or well well funded and experienced individuals to take your brand to their country, and roll that out. It's serious skill under a master franchise or area developer model. So lots of growth potential through franchising.

Christian Rodwell  6:54  

Yeah. And I can see that it makes so much sense to do that. Because if you don't have that local knowledge of other territories, and the connections and all the other things that go with that you're tapping into that experience through the franchising model there.

Unknown Speaker  7:08  

Yeah, I mean, when I went into national that was a case in point. And, you know, when developed into Dominican Republic, Kuwait, and you know, into Portugal and Spain, I didn't speak the languages and most of these countries, let alone be able to manage my own and corporately owned development there on a daily basis. So having partners who were out there who weren't fully immersed in the market, who would experience that either ruling out other franchise brands or other businesses, and brands. And that was a really powerful way to grow my business out there.

Christian Rodwell  7:40  

Yeah. And when we spoke the other day, Susie, you told me this is now estimated to be a 20 billion pound industry, or is that dollar industry.

Unknown Speaker  7:48  

And that's, that's a 20 billion pound industry in the next couple of years think it's sitting at about 17 point 2 billion at the moment. So and that's, that's just, you know, it just shows you the power of franchising, but how wildly underestimated so it's a growth strategy. You know, I'm, I'm always talking to people about franchising, and, you know, my last 23 years of industry experience, you know, the last 10 years in the UK, especially, it's really weird. I've seen franchising actually coming into its own, and you know, it's not got the reputation that it potentially has before. And you're seeing lots of good brands making really good success of franchising here, that really interesting mainly in the last sort of couple of years, we're seeing a lot of international brands now coming into the UK, and which is really exciting, big brand names, your Wendy's your Ben and Jerry's your, you know, big, big restaurant and quick service restaurant brands and more. So it's certainly an industry that's that's they're alive and kicking, and was playing to your favourite growth potential. And I think the other thing we're noticing more and more, as you know, in terms of the people who are buying a franchise and investing into a franchise, I think the last study that was done by the NatWest bank and the British Franchise Association, massive percentage of those that were actually buying franchises are coming from employment. So this is people who are sick of their Acme sick of being restructured at risk of redundancy, again, and they're really looking at ways to get into a new industry, but pretty fast, where they've then got, you know, the support on an ongoing basis. So, you know, we help people find franchises through what we do at platinum we've and it's amazing to see the, the the vehicle to help people change their life. And you know, in terms of work life, balance, financial wealth, and all these types of things that come with it.

Christian Rodwell  9:52  

Yeah, because we know, building a business isn't easy, right? If you're starting from scratch, especially if you're coming out of employment, and perhaps you've always had that team that network that structure around you. And then suddenly you turn into the entrepreneur who has to wear all the hats and have all of these skills suddenly. And that's tough. And that's probably why the the rate of business failures is high in the UK. But you know, when you're buying into a franchise, you've already got that support system, you've got that structure. So tell us about, what does that process look like for someone who's maybe listening now, maybe, as you say, they're in the rat race, they just, you know, really want to have something that they have more control over? How would they come to you, and what's the general kind of, you know, process and timeframe for someone to, to assess the different opportunities, and then to be able to actually get going?

Unknown Speaker  10:38  

Yeah, so it can be quite a journey for a lot of people, you know, it's not, it's not normally an instant decision of I need to leave, I want to buy a franchise in this sector, quite often. And what we do at platinum readers help people figure out what that next step looks like, we had a great case study recently, which was my little sister, believe it or not, working for 20 odd years for one of the major banks, and has a bit of an illness. And I've gone back and decided that actually, she should be doing something else that give a better work life balance, and had no idea as a business analyst, what she was going to be doing in terms of her next career and our next project, whatever. As it happens, we worked through her passions, her likes or dislikes her, you know, her earnings expectations and all these things. And she's now gone into home design franchise, which satisfies her passion for interior design, but also potentially provides the return on investment that she's looking for. So that's just one story. And, you know, we had another great success story. At the start of the year, when somebody had bought a franchise and a courier franchise 10 years ago for 25,000 homes, had come from a completely different backgrounds, didn't know anything about courier franchises, and anything like that. And we helped them sell that 10 years later. And 10 years later, they sold that for just over a million pounds. And that's a $3,000 2% return for somebody who got into an industry that was completely new. And so that's given them for this particular person. And their retirement, which is great.

Christian Rodwell  12:20  

Yeah, yeah. mentioned some numbers there. I mean, perhaps in the past, is there been a perception? Perhaps it costs a lot of money to get into franchising? And has that changed? Is there different ways of funding that now for people?

Unknown Speaker  12:33  

Yeah, so I mean, the rule of thumb is, the higher the franchise fee, the higher the investment, the longer it takes to get a return. But the higher that return potentially is. And so a lot of the food franchises for example, you buy into a franchise for 15 20,000 pounds, but your investment on fitout equipment, Scott working capital could be up to sort of 350 to 500,000, that return on investment, you'd be looking to make that back within sort of three and a half to four years kind of thing. But you know, if you have a cluster of units like that, that's, that's quite a substantial portfolio to be sailing with as ambitious people who are buying into things like children's activity franchises for 10,000 pounds, but actually, through working a part time flexible model, we've still got the potential some of these children's activity franchises to turn a six figure sum with really good profits. So but you can get that normally over a faster period. So it's quite interesting, you know, in terms of the different opportunities that are out there, and the different levels of investment that are out there. But generally, people will sign a five year franchise agreement. So you're looking for people to actually be in, you're making a turn on that business within sort of three years, making a profit within the first year to year and a half and bringing home some decent profits within three years.

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