Andy Savva: Everybody needs a plan to develop their staff and businesses, but is it wise to consider a franchise or multi-site model?
Over the years many people have asked me about the business models of the independent garages I’ve owned. Specifically, the business I get asked about the most is Brunswick Garage, which was conceived, marketed and branded as a main dealer alternative. The question that I was asked most often is: ‘why don’t you consider franchising the model?’
Well, it sounds good, expand the empire, grow the brand and of course hopefully get a better financial return. However, I believe it’s one of the most difficult industries to turn into a franchise. About three years ago a workshop in Coventry opened in a blaze of glory with the stated aim that there would soon be one similar in 25 major towns across the nation.
The originator of this idea was not from within industry but from the world of white-collar recruitment. I remember when the second site was opened I was asked my opinion and I was then as I am now very clear now that it’s practically impossible for it to succeed. To date I think I’ve been proved right as the business in question called in the administrators not long after a third site was opened.
There are too many processes, procedures, and interactions between customers and staff members that you can’t just franchise. We are dealing with emotions and behaviour that just can’t be accounted for. What works in one area of England may not necessarily work in another, there are so many variables and barriers to consider, customer and vehicle demographics, land and property costs differ up and down the country.
Having said that, there is no reason why your ambition should be to only run a single garage. There are a lot of examples of aftermarket business owners who do have garages over multiple sites, often in different towns. Of course there is a crucial difference between being an owner-operator of multiple businesses and developing a model for others to emulate.
However, no matter what your goals are as a business owner, it’s important to review the pros and cons of growing your business in order to hone your vision and assess potential stumbling blocks before they arise. Believe me, owning a multi-unit business is hard work. Below I have tried to highlight some of the key points to consider if you want to expand into multi-site independent garage operator.
- Economies of scale: When purchasing parts of equipment, you should be in a position to achieve better prices.
- Marketing activities can be combined: Wider message at a lower cost – increasing brand awareness.
- Pool of talent: Staff can work between locations depending on need.
- Reduced management: One manager could be spread over two or three sites.
- Equipment sharing: There is the possibility of sharing specialist tools and diagnostic equipment – depending what services you offer at different locations.
- Make money: More profit achieved with multiple sites.
- Plan retirement: A successful multi-site can attract a larger corporate buyer if an exit strategy is the final objective.
- Family institution: If family are involved could be easier to expand – families tend to form a grounded and loyal foundation. In built support system. It could bring long-term stability and trust. Having said that…
- Dysfunctional families: Family businesses can create a lot of challenges too. Difficulties arise when it comes to succession planning, sibling relationships, promotion and leadership. This can result in dysfunctional behaviour affecting business decisions.
- Increased capital investment: Opening a garage isn’t cheap.
- Location is critical: Is it easy for customers to get to, and near transport links so they can leave the vehicle with you?
- Local knowledge: What works in one area may not work in another. It is important to research and understand the customer type and vehicle demographics in that specific location.
- Common policies: Multi-sites are difficult to manage if you don’t have rigid processes and procedures in place that are clear to all staff members.
- Pay grade: It can be difficult to manage staffing levels and correct management structure with the right pay incentives.
- Reputation spread: Poor customer service from one site can affect another site.
- Cost control: Managing costs across several locations not easy. Controls need implemented. Cost can spiral out of control if other sites are not successful.
- Personal touch: With attention divided amongst other locations there could be a distance created between stakeholders and staff.
- Increasing difficult to attract competent, skilled staff – inherent with our industry.
- Finding staff: It can be hard enough to get the right people for one site, let alone multiple locations.
Whichever way you may decide to take your garage – there are pitfalls and benefits in all camps – single site, multi-site and franchise. Ultimately it will come down to the desires and ambitions that you set yourself.
You can find out about Andy’s consultancy services by contacting savvaautomotive.com