BUYING IN TO A FRANCHISE

Business can be tough for small and local, independent firms. Despite the freedoms associated with running a business that is at liberty to do whatever it likes in terms of appearance, business model, etc., there isn’t the financial assistance or technical information that a bigger brand, franchiser or buying group can provide.

One business owner who has had a thorough experience with an automotive garage franchise is Kamran Saleem, now owner of the independent MotorServ UK service centre business. Prior to running his current venture, Saleem operated a branch of the iAuto garage network. Describing the initial set-up of the branch, Saleem said: “The actual delivery and installs and everything of equipment and fixtures for the garage, that actually ran very smoothly and we were very happy with what was going on at the start of the franchise, it was brilliant. They provided a lot of support.”

Saleem and a technician in the workshop

Through the iAuto network, Saleem, whose background was in automotive sales and ‘knew as much about car servicing as the man in the street’, was able to learn the ins and outs of the industry. “It gave me the insight, all the trade secrets, background etc. So that’s probably a year’s worth of experience in a week,” he said. At the time, Saleem was paying five percent of turnover as a franchise fee, as well as some fees for software licences.

Marketing

Initially, Saleem recalled that things like supplies, kit, trade contacts, branding and more were ‘spot on’, but issues started to arise after the set-up. “When we actually opened, day one, it was like: ‘okay, how do we get the cars in now?’,” he said. Sales did not pick up substantially, and Saleem noted that a lack of marketing by the franchise did not help. “What they needed to do is focus on marketing, focus on sales, focus on this or that, but they were too busy selling franchises that they were over run.” Plus, Saleem claims that his own efforts to market the business were not heeded quickly as all the initiatives needed approval which too long to obtain.

Eventually, Saleem decided to leave the franchise, which was a negative experience in itself, requiring the need for a BFA lawyer. “The franchise agreement, they’re heavily weighted towards the franchisor,” said Saleem. “There aren’t a lot of lawyers around that will actually take on a franchise agreement that’s written properly.” iAuto agreed to terminate the contract, but Saleem claims it took ‘about nine months in total to get out’, and ‘ended up costing me probably £70k in costs and loss in income and sales growth during the period all this was going on’.

Programmes

However, Wendy Williamson, Chief Executive of the IAAF, makes a distinction between franchises and garage programmes and believes that the latter are beneficial for the industry. “To me, the definition of a ‘franchise’ is a business that is absolutely run to a very tight set of rules and regulations,” she said. “And I think it’s not what we see in the aftermarket. We see garage programmes where the independent garage still has their independence, they are still Joe Bloggs independent garage…”

Williamson was once involved in the Unipart Car Care Centre scheme, which provided a ‘much more professional image for the garage,’ she explained. “These days, many of our key distributors offer similar programmes with UAN, Groupauto, UK Parts Alliance, ECP, all having very similar programmes which I’m a big fan of and still think they are absolutely key to giving garages as much support as they possibly can,” she said.

Ultimately, when it comes to pros versus cons, Williamson notes that: “I wouldn’t necessarily really see that many cons with these programmes”, and thinks challenges facing the independent aftermarket such as connected vehicles and data access mean that: “the more that the independent sector can support each other right the way through the supply chain, the better it is for the whole sector.”

There are benefits to being being in a group or franchise, but talking to fellow businesses within the industry might help.

“Don’t necessarily rely upon the data that you’re given by the franchisor. Look at the other franchisees, if they exist; you’re going to be in their shoes after all,” said Saleem.

“So make sure you’ve got access to them. And if you are blocked access to the other franchisees or you’re not given the opportunity to discuss things … then there might be something up”  he concluded.Buis

This post was written by:

- who has written 31 posts on CAT Magazine.


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