Food Franchise Magazine Autumn 2015 by MVHmedia

Fast food Franchise

QSR Franchise

Coffee franchise

Sandwich franchise

Pub Franchise

Restaurant Franchise

AUTUMN 2015

FoodFranchise Be Inspired We find out what it takes to be an award-winning food franchisee with Rachel Shaw from Subway

Top 50 Food Franchises

Intro to Franchising

A look at the top 50 food franchises currently available in the UK market ranked on the number of stores currently open

We speak to some of the men and women at the helm of the UKâ&#x20AC;&#x2122;s largest food franchises to find out more about this lucrative industry

Print edition ÂŁ3.99

One to Watch

Franchise Insight

We visit German bakery franchise bake&TAKE and hear about their ambitious plans for the next 12 months

Franchise consultant, Manzoor Ishani talks to us about owning multiple franchise units and the benefits of doing so

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Editor’s message Hello and welcome back to the Autumn edition of Food Franchise Magazine. Editor Scott Rumsey scottr@mvhmedia.co.uk Office: +44 (0) 333 003 0499

Commercial Manager

It seems only a few years ago that the only technology fast food franchises incorporated was the microphones at the drive-thru, but in recent years the big players in the market have really upped the ante trying to make the process of ordering food, quicker and quirkier. From the rollout of contactless and ApplePay in most chains to innovative packaging such as the bucket of chicken with a built in polaroid printer to the pizza box which turns a smart phone into a full scale projector, technology is truly playing a major role.

Lewis Wantling info@mvhmedia.co.uk Office: +44 (0) 333 003 0499

Recently I had the opportunity to speak to BBC Radio about table service in McDonald’s and their new touchscreen ordering points and must say I have been hugely impressed with the plans from one of the world’s largest QSRs.

Advertising sales

Anyway, onto the autumn issue. As always we round up all of the latest Industry News from the world of food franchising and find out more about openings, takeovers, mergers and successes in the process.

Sandra Bouillet sandrab@mvhmedia.co.uk Office: +44 (0) 333 003 0499

Finance

We feature the Top 50 Food Franchises based on the number of stores, and see how some brands have established themselves whilst looking at others who are just starting out.

Laura Williams finance@mvhmedia.co.uk Office: +44 (0) 333 003 0499

This months’ One to Watch features bake&Take one of the UK’s most exciting new opportunities. Their self-service deli and bakery offering has proven to be a big hit in Europe and has some fascinating growth forecasts for the next 12 months.

Design

The Intro to Food Franchising feature is full of information on why the industry is booming and we speak to some of the experts from within the industry about why they recommend entering a franchise agreement.

Simon Warbrook design@mvhmedia.co.uk

One of the most common questions we receive here in the office relates to the subject of owning multiple sites and in this issue we hear from Manzoor Ishani on the subject in Franchise Insight. As always we try to bring you one of the most inspirational stories from a franchisee in our Be Inspired section and this issue is no different as we speak to a Subway franchisee with a very interesting story. As well as all of this we run our regular column on Accountancy and Law as well as taking a look at the financial climate in Market Watch. We hope you enjoy this issue and of course, until next time, happy reading.

Publisher MVH Media Ltd. Unit 9 Wilkinson Court, Clywedog Road South, Wrexham Industrial Estate, Wrexham LL13 9AE The publishers do not accept responsibility for advertisements appearing in this magazine. The opinions expressed are not necessarily those of the editor or the publisher.

GET IN TOUCH www.foodfranchisemagazine.co.uk @franchise_food /foodfranchisemagazine1

Front cover image courtesy of Mckenna Townsend PR

AUTUMN 2015 Food Franchise | 3

Contents AUTUMN

06 News round-up A look at some of the latest developments in the food franchise sector

17 Papa John’s Learn more about one of the UK’s fastest growing food franchises – Papa John’s

18 Top 50 Food Franchises

A look at the top 50 food franchises currently available in the UK market ranked on the number of stores currently open

28 Sherrards Franchise law can be a minefield, but it doesn’t have to be with companies such as Sherrards offering quality consultancy services

30 Intro to Franchising We speak to some of the men and women at the helm of the UK’s largest food franchises to find out more about this lucrative industry

35 Subway Subway are currently the largest food franchise operating in the UK and they show little sign of slowing with their fantastic franchise opportunities

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37 One to Watch We visit German bakery franchise bake&TAKE and hear about their ambitious plans for the next 12 months

40 Franchise Insight Franchise consultant, Manzoor Ishani talks to us about owning multiple franchise units and the benefits of doing so

42 Be Inspired We find out what it takes to be an award-winning food franchisee with Rachel Shaw from Subway

44 Legal The experts at Sherrards discuss the finer points of franchise law

46 Accountancy We hear from the experts at McPhersons about how the Summer Budget can help or hinder small businesses

48 Market Watch

A look at the financial markets and how some of the largest food franchises are operating on a global scale AUTUMN 2015 Food Franchise | 5

News

round-up Table service to launch McDonalds back to the future McDonald’s is to continue their turnaround and return to the good old days after public demand called for changes to the way the burger giant served their food The brand is offering table service in the UK for the first time in a move which harks back to the days of the American diner. The company is trialling the new approach at a branch in Mottram, Greater Manchester, and plans to roll it out to 11 more locations by mid-September, before taking the system nationwide. But fear not for those who prefer to queue, there will still be the option of ordering at the till. The table service scheme is the latest attempt to modernise the image of McDonald’s restaurants in the face of competition from gourmet burger brands such as Five Guys and Shake Shack, and established rivals such as Burger King. Customers will be able to order from digital kiosks or staff with tablet computers, with the food then delivered to their table. The initiative is targeted at young families and customers who do not want to wait at the traditional McDonald’s counter. The new managing director of

McDonald’s UK, Paul Pomroy, is overseeing a refurbishment programme of the company’s restaurants estimated to be costing more than £350m. This includes providing Apple iPads and Samsung Galaxy tablets, installing digital kiosks where customers can make orders and building glass shopfronts on McDonald’s restaurants. About 250 McDonald’s restaurants will have been revamped by December. Pomroy said McDonald’s was making changes to restaurants and introducing table service in response to customer feedback but that the company would not increase prices to pay for the overhaul. “We have listened to customer feedback and to meet their evolving expectations, we are significantly investing in our restaurants to create an exciting new environment and improve the customer experience. “We also plan to test some new ideas. For example, we know that for parents it can be tough juggling the kids and carrying your food, so we have decided to trial table

service, whereby customers place their order via our new kiosks and then have their food brought to them. “It is currently on test in one restaurant here in the UK, but with plans to increase the trial to about a dozen restaurants over the coming month. It’s an idea that has been successfully launched in France, and we are keen to see if it will prove as popular with our customers in the UK.” McDonald’s first opened in Britain in 1974 and now has more than 1,250 restaurants in the UK.

Hotcha to raise £1m through crowdfunding bond Hotcha, the Chinese takeaway chain franchise, has launched a four-year mini bond on popular crowd funding platform Crowdcube to raise £1m to further develop its franchise brand Crowdcube, the world’s first and leading investment crowdfunding platform and the trailblazing team behind Hotcha is delighted to have already raised almost half of their million pound target. Investors have been offered 8% interest per annum on their investment over a four year term. Hotcha currently operates ten stores across the South West of England and aims to open another 22 sites in the next three years, which will see the company fulfil its ambition to become the first truly national chain of Chinese takeaways. Hotcha CEO James Liang commented: “The market has been dominated by independent operators who rely on expensive in-house chefs. Hotcha is filling

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the huge gap in the market for a national Chinese takeaway and delivery chain thanks to our central food production unit operated by our highly experienced executive chefs that delivers ingredients daily to the restaurants.” The investment raised on Crowdcube will facilitate the opening of a number of new company owned stores around the country, with experienced multi-unit franchise investors opening a series of Hotcha outlets in large territories across the UK. For anyone investing £50,000 via Crowdcube, Hotcha will waive the normal franchise fee of £15,000, subject to the individual meeting the company’s normal franchise recruitment requirements. The

total investment required for a typical Hotcha store is approximately £135,000. An average franchised store should be generating revenues of up to £500,000 per annum with a gross profit margin of 70-75% . These are exciting times for Hotcha as it works towards becoming a household name alongside the other major franchise brands that have dominated their particular food sectors. Hotcha was set up in 2011 by London and Hong Kong restaurant entrepreneur James Liang, who has enlisted the help of former Dominos Senior Executives Andy Emmerson and Clive Mellor to ensure the brand reaches its full potential here in the UK.

Franchisees help to clean streets in ‘Love Where You Live’ campaign Over 40 bags of rubbish have been collected by fast-food workers in Sheffield in an incentive to keep the streets clean and promote social responsibility Workers from five fast food restaurants volunteered their time and helped clear one of the main routes into Sheffield city centre. The staff from restaurants including McDonald’s joined with Veolia Environmental Services and Keep Britain Tidy earlier in the month to clear litter from Penistone Road, an area that is known for problems with littering. The 18 volunteers took three hours of their time to collect the litter and is just one of a number of clean-ups that McDonalds has organised across the UK. The commitment is part of a five-year partnership with Keep Britain Tidy for its Love Where You Live initiative. The Yorkshire Post who launched its Clean Up Yorkshire campaign, found that the cost of keeping streets in their area clean was costing local authorities in Yorkshire £77m a year. Speaking about the initiative, McDonald’s Business Manager

Coffee Republic continue openings with Bedford and Golders Green sites Coffee Republic one of the UK’s fastest growing food franchises have announced the openings of two new sites in Bedford and Golders Green The new bar in Bedford, is situated on the High Street near St Paul’s Square and has 48 seats, free Wi-Fi and sells a range of hot and cold drinks, as well as fresh food made on site and desserts by the Hampshire-based Jude’s Ice Cream company. Ten members of staff have already been hired and the company said it would ‘continue to bring local jobs and support the community’. Following the Bedford launch, Coffee Republic then opened its 25th coffee bar in Golders Green, London. The small but cosy 99sqf bar designed to the new Coffee Republic look and feel offers 25 comfortable seats, Free WIFI and power sockets so busy customers can continue their work in comfort whilst enjoying great tasting products. Dritan Alsela, a Coffee Artist from Germany entertained the community at the launch with his beautiful designs that were crafted on each free coffee. The bar has already hired 5 members of staff and will continue to bring local jobs and support the community. Valentina the franchisee is excited to be working in the store to add an extra friendly welcome. Coffee Republic is set to double the size of its UK estate by the end of this year. The company is experiencing the most successful period of growth since new owners took over in 2009. Coffee Republic currently operates four managed sites and 21 franchised sites.

Gavin Murray said: “It was great to see everyone come together to take action against the eyesore that had developed along Penistone Road. “We as a business understand the important role we play in making the area a better place. Whilst in the first instance we are keen to actively discourage littering, community events like this one help make a big impact on the local area.” Keep Britain Tidy’s interim Chief Executive Rich McIlwain added: “McDonald’s has shown a real commitment to tackling the problem of litter, both through their own businesses practices and through their work with communities to clear up. “Daily litter patrols, Love Where You Live activities throughout the year and their continued support for Keep Britain Tidy’s aims, as an environmental charity, show that they understand the importance of clean and tidy places and show a level of commitment that should be a model for all businesses.”

Costa confirm new openings Costa Coffee has announced it has opened two outlets in south Wales The coffee chain has agreed two 10 year leases for 50/52 Albany Road in Cardiff and 67 John Street in Porthcawl for £30,000 per annum per store. Both stores will create a combined 28 jobs. The 2,000 sq. ft. unit located on Albany Road opened in early August and will have the capacity for 81 seats, whilst The 1,800 sq. ft. unit on John Street in Porthcawl opened a week earlier and will have space for 87 seats. Retail & Leisure property specialist EJ Hales acted jointly with Cooke & Arkwright for private investors on the Cardiff unit. EJ Hales also acted for landlord Callowgate Limited for the unit in Porthcawl. Philip Gwyther, partner at EJ Hales, said: “Both locations are in highly populated areas for shoppers and residents which will, no doubt, mean Costa Coffee will perform well in both areas. “It’s great to see national chains continuing to invest in Wales and follows on from our letting to Costa for its first drive-thru in Wales in Swansea.” Rob Palmer, associate in the retail team at Savills, said: “Costa continues to go from strength to strength and we are pleased to be supporting the chain’s ongoing expansion. The new store on Albany Road is well placed to at the heart of this popular residential suburb.” The news comes as coffee shop rival Starbucks could be developing a second drive-thru outlet in Swansea.

AUTUMN 2015 Food Franchise | 7

News

round-up Food Franchise, Neds Noodles support Tuck-in project

Restaurants and cafes in Basildon are being urged to make small changes to make their food healthier under a new government initiative, the Tuck-in project

Basildon Council is just one of a number of local councils aiming to make changes to the way their constituents eat and are actively supporting the Department of Health’s Tuck-In project, which encourages local businesses to commit to improve the nutritional quality of their food. Asked to consider the fats, salts and sugars in their food, the local businesses will adopt a shared responsibility to providing nutritious food to the residents whilst not compromising their own trade. This can be done by making small changes such as reducing fat in food frying and letting food drain properly after it has been cooked. Speaking about the launch of the Tuck-in campaign, Terri Sargent, the councillor responsible for environment and community in the area, said: “I am pleased Basildon Council is working with food outlets to improve nutritional quality of their food. “When take-away food and eating out are such a central part of our lives, it is encouraging that Basildon’s food businesses are taking positive steps to ensure healthy eating plays an important

part in improving people’s diets and reducing ill health.” Over the last few years the trend for eating on the go has grown enormously and consumers are constantly on the lookout for dishes with lower saturated fat, salt and sugars. One of the most popular trends has been to take inspiration from Asian cuisine and Roberto Marroni who runs Ned’s Noodle Bar, one of the most exciting food franchise opportunities on the market, is just one of the business owners serving these sort of dishes. Commenting on the initiative, the food franchise owner, Roberto said: “We are delighted to be part of this great scheme, we have been serving healthy noodles dishes for the last 15 years. “It is about time we focus on eating healthily in the UK. “We think the scheme will help people realise how healthy noodles are, and will stop people thinking we are just another local Chinese take away!”

PoundPub to launch franchise offering PoundPub, the chain who urge their drinkers to ‘Keep Calm and Drink Economically’ have experienced rapid growth over the last few years, bringing their bargain booze to the public A move that looks set to continue with franchising opportunities being created. The chain which currently operates from four locations across the north of England, offer their drinkers the chance to purchase alcohol from 8am until 11pm at very low prices. In the PoundPub a drinker can purchase half a pint of beer or lager from just £1 and can upgrade to a pint for as little as 50p. Selling ‘premium products at bargain prices’ is the ethos of the company and founder Mike Wardell, who believe that a string of

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business deals he’s cultivated on behalf of the chain means that franchising is a viable option. Talking on the possibility of expansion through franchising, Mr Wardell said: “We keep going from strength to strength and the existing pubs that we have turned into PoundPubs have grown in volume by four times.” “I didn’t want to advertise or introduce franchising whilst we were still between suppliers but we are now in a good position to do that and I expect to be able to advertise the option by August.” The owner of the ‘no-frills’ pub concept is now hopeful that the first site will be open by the end of the year and that he can grow to around 15 site, including 10 franchised units by summer 2017. Since the inception of the chain which operates in Liverpool, Manchester, Stockton-on-Tees and Newark, Nottinghamshire, there has been much scepticism but Mr Wardell has defended the concept saying: “Every time we open a site there are sceptics but I believe that we are a responsible retailer. “We’ve proved the critics who said there would be people rolling around the streets drunk wrong, and that’s not the case. “We’ve found a sense of community and the people think of the PoundPub as their local, it is after all a traditional local with a modern twist and the price is no issue either, we offer community atmosphere but for the same price as supermarkets offer their beer.”

Over 44,000 stores in more than 110 countries worldwide

This is your chance to get on board with the

Number One Franchise Opportunity! *

2 Outlet opportunities currently available 2 Low cost, simple operation 2 20 franchisee support offices throughout the UK and Ireland

2 70% of franchises purchased by existing owners

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To find out more visit

www.subway.co.uk/business www.subway.ie/business or call 0800 085 5058 (UK) 1-800-413-076 (Eire) *SUBWAY® is the number one QSR brand by total store count (as at January 2015). ©2015 Doctor’s Associates Inc. SUBWAY® is a registered trademark of Doctor’s Associates Inc.

News

round-up Marston’s share price rockets despite industry shake-up Shares in pub and restaurant group Marston’s has rocketed in recent weeks as it reported continued “profitable progress” for the last 41 weeks Investment in new build restaurants and premium pubs was in line with plans and its strategy is well-suited to leveraging market growth in local, premium and craft beers, the group said. Plans to introduce a £9 an hour living wage by 2020 in the UK budget will increase wage costs but the group had expected increases to be above the rate of inflation, it noted. The company added that the additional cost of meeting the higher living wage target by 2020 will mean that wage costs will be modestly greater than it had expected. But it said the impact was mitigated by the fact that it had anticipated increases above the rate of inflation, and by the lower rate of corporation tax it will have to pay from 2017. Talking about the brands performance, Chief executive Ralph Findlay told investors:

“We have good visibility over our site pipeline and remain focused on securing further good sites for our future growth. “These investments, together with the disposal of smaller wet-led pubs and the growth of franchises, have successfully transformed our business over the last three years. “In brewing, the post-acquisition integration of Thwaites’ brewing business is now complete and has gone well. Our strategy is well-suited to leveraging market growth in local, premium and craft beers, and the increasing importance of the off-trade.” In destination and premium, like-for-like sales were 1.7% up on last year, including like-for-like food sales growth of 1.6% and like-for-like wet (drink) sales growth of 1.6%. The operating margin was slightly above

KFC embrace technology with ‘Memories’ bucket KFC has long been known for thinking outside the box, but now it seems as though they are thinking ‘inside the bucket’ KFC is constantly pushing the boundaries and are well known for embracing technology. In celebration of the chain’s 60th year in Canada, KFC put some of its best researchers to work on a product that seamlessly blends cutting edge technology with their amazing chicken. The result was the Memories Bucket. All the user has to do is link up their smartphone with a KFC Memories Bucket which will then quickly print a photo of your choosing onto a Polaroid. While there’s no word if this crafty little creation will ever be available for mainstream use, it sure represents an interesting if not peculiar way to celebrate 60 years of chicken. Owned by Yum! Brands KFC seem to be following in another of the groups businesses, Pizza Hut, who recently introduced us to a pizza box capable of turning into a movie projector.

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last year and Marston’s said it remained on track to complete 25 new-build pub restaurants in the current financial year.

Papa John’s founder insures hands for £10million We all enjoy a good pizza, but one pizza company has taken the love of dough to the next level and insured its founder’s hands – for a staggering £10m ‘Papa’ John Schnatter, the founder and CEO of Papa John’s , is thought to be the first pizza maker in the UK to have his hands insured in the deal which is intended to ensure one of the company’s most priceless assets. The palm policy has been insured by syndicates at Lloyd’s of London and is a bespoke agreement that covers Papa John for the loss of his hands should the worst occur. Papa John, who founded the company back in 1984, knew from very early on that he wanted to make pizzas for a living. He says: “I started making pizzas at a local pizza restaurant in Jeffersonville, Indiana. I knew that if I made it right, the plate came back empty, and if I didn’t, the plate came back with pizza on it. “Since day one, I knew that if we were going to strive to serve the best pizzas in the world, we needed to use “better” ingredients, and that remains our philosophy today.” Earlier this month Papa John joined 338 employees at Potter’s Field in London as they smashed the Guinness World Record for the most number of people tossing dough. Papa John’s has almost 300 stores across the UK, and more than 4,600 stores in 37 countries worldwide.

Birmingham welcomes Doner Kebab Franchise The UK’s first German Doner Kebab franchise has opened at 84 Bull Street to officially launch the franchise opportunity in the UK market The company which claims to offer a healthy doner kebab different from the rest of the UK started in Germany in 1989 before opening shops in Sweden, Dubai, Pakistan and Kuwait. Kamshad Zadeh, Managing Director of GDK Europe, said: “Due to our special production the meat is not greasy. “Also we prepare all salad, vegetables and sauces fresh in store to achieve our high standards of quality.” “All our meat is 100% Halal. We serve both beef and chicken and all meat is imported from our German production directly.

“This is the main reason why our meat is different to the rest of UK, we are producing the meat ourselves in highest quality. Also we always use a fresh skewer at the start of the day.” Birmingham was chosen as the location for the group’s first UK store and it is expected that four more will open across the country throughout the rest of the year. Speaking about the opportunity, Franchise Relationship Manager Emre Salci, said that there was plenty more to come when he remarked: “We’ve got five openings in the UK this year and then we’ll be looking at taking the franchise to Canada and the US,” “The difference between us and other kebab shops is the ingredients and the way it is prepared. “The pitta bread is unique and authentic - we toss it and it becomes crispy. “We make sure our meat is high quality 100% halal beef and our veg is delivered fresh to the store every day. “We also have signature sauces - garlic, yoghurt and a spicy option - and customers can customise their order.”

YO! Sushi reopen in Liverpool ONE after makeover YO! Sushi one of the UK’s most exciting franchise opportunities are delighted to announce the relaunch of their Liverpool ONE site after an extensive revamp

Soho Coffee comes to Yate Leisure Centre after similar success in Bradley Stoke Customers at Yate Leisure Centre can enjoy Fairtrade coffee after the opening of the latest SOHO Coffee Co outlet The coffee shop has had some success in leisure centres already, with a coffee shop in Bradley Stoke Leisure Centre and a coffee pod at Longwell Green. Talking about the launch, SOHO Coffee Co. Director, Penny Manuel, said: “We’re delighted to be opening another outlet with Circadian Trust. “Together we’ve created a great space that members and non-members can use at any time, with an offer which is right for Yate Leisure Centre; whether it’s a quick breakfast after an early gym session or tea for the kids after swimming lessons; a leisurely lunch or a coffee to go.” The Cheltenham-based company’s arrival in Yate is part of an ongoing programme of improvements at Active leisure centres across South Gloucestershire. The coffee chain has created a protein shakes menu for cater to the fitness enthusiast customers, as well as salads and a lighter food range alongside its usual fare. Ben Beasley, director of commercial development at Circadian Trust, the not for profit organisation which runs the Active facilities, added: “We are always looking for ways to improve the leisure centre facilities and add to the customer experience. “SOHO Coffee has done a fantastic job in Bradley Stoke and we are sure the Yate community will equally enjoy the new facilities.”

The team of shop fitters and designers have worked tirelessly to give the site a makeover and bring it up to speed with the company vision. With all new upholstery, new chairs and booths the new-look unit is expected to become even more popular than before it’s temporary closure. A spokesperson for the group said that it was: “The perfect place to get comfortable with friends for a fun and Japanese night out.” New lights and LED screens have turned the restaurant much brighter and funkier, and you can grab a true taste of urban Tokyo with a scene of the Tokyo skyline across the back wall and with modern edge technology in place. Founded in 1997, the restaurant brought the concept of a Japanese ‘kaiten’ sushi bar that delivered food to customers via a conveyor belt travelling 8cm per second to the masses, and became the original and most famous sushi brand in the UK. YO! Sushi has grown from a London-only sushi brand to an 84 strong group of restaurants worldwide, serving over 6 million customers a year. Although sushi is at the heart of the concept and brand, you can choose from over 80 Japanese inspired items, including soups, rice or noodle-based dishes, salads, tempura and even hot classics like Chicken Katsu Curry, Salmon Firecracker Rice or Gyozas.

AUTUMN 2015 Food Franchise | 11

News

round-up Creams café confirm new openings with Newcastle launch Finishing touches are currently being made to Creams, the late-night milkshake and ice cream cafe, which is set to open soon on the former Pizza Hut site in Newcastle’s Bigg Market Following weeks spent fitting seating booths, tables and display cabinets, its new staff are now getting ready for the big day when the London-based chain makes its Newcastle debut. The first customers can try the Creams range of imported Italian gelato ice cream and milkshakes plus crepes and coffees in the Newcastle site. The venture is a first for the Mahmood brothers who are taking on the franchise following the success of Creams in the capital and a flurry of new stores around the South. The brothers, who are investing £300,000 in the new business, are convinced of Creams’ appeal for Geordies too. And those with a sweet tooth will have the chance to indulge it at all hours as its licence allows it to open for business daily from 11am until midnight on Sundays to Thursdays and until 2am on Fridays and Saturdays. The hope is that Creams’ sweet treats - hot on the heels of

the city’s first late-opening ice cream parlour, Kaspas in Clayton Street - will help fill a gap in the market and tempt the likes of young people, students and families for an evening visit. The parlour is expected to create up to 25 jobs and one of the brothers, Asim Mahmood has moved to Newcastle to run it. Speaking about the venture, Asim said: “I think it will do well. “We wanted to go into a city that’s growing fast and has the audience for a venture like this, and Newcastle really fits the bill. “It’s also an up-and-coming area and we had discussions with the council who told us about the Heritage Lottery Fund money being put into regenerating the Bigg Market so we thought the time was right too.”

Food franchises flock to Bradford Bosses at developers Westfield, are hailing news of nine new retailers including some of the UK’s biggest food franchises at Bradford’s Broadway shopping centre as a “fantastic vote of confidence” The nine new tenants include six firsts for the city, according to a Westfield spokesperson, where alongside luxury baker Patisserie Valerie sits food franchises, Taco Bell, Wrap Chic and Spud U Like.

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With a Subway already open, this means the centre’s food court is now fully let. Keith Mabbett, director of leasing at Westfield, said: “To be able to announce nine new sign-ups is an absolutely fantastic vote of confidence in both The Broadway

and in Bradford as a whole. “These new retailers are another fantastic step forward for The Broadway and we’re thrilled to welcome them all. Each brings something different to the centre and we know they’ll provide local people with more shopping choice. “The latest sign-ups include more firsts for Bradford, confirming the development as the choice destination for major retailers who haven’t previously been able to find a suitable location for their business in the city. “We have built up fantastic momentum in terms of securing retailers, and there are many more great names to come in the next few months.” The Broadway, which is due to open this autumn, will create 2,500 new retail jobs and over 70 per cent of the centre’s floor space has now been taken.

McDonalds appoint new senior staff as turnaround continues Burger giant and food franchise McDonalds have appointed several high profile staff members in a bid to continue their turnaround Just a few short months after announcing Steve Easterbrook as the new CEO, the company have announced that Robert Gibbs will be the chain’s new Executive Vice President and Silvia Lagnado joins as Global Chief Marketing Officer. Easterbrook, to who both will report, said: “Robert and Silvia are both highlyrespected, talented leaders who will bring a wealth of experience and outside perspective to McDonald’s as we build a more modern, progressive burger company. “Returning excitement to our business proposition and brand is foundational to our turnaround plan, and Robert and Silvia – with their respective teams – will play critical roles in bringing this strategy to life.” Gibbs came from The Incite Agency, a strategic communications advisory firm he co-founded in 2013. Prior to that he held several senior advisory roles in the

White House, serving as President Barack Obama’s press secretary during his first term, then as senior campaign advisor during his re-election campaign and he replaces Bridget Coffing who announced her retirement earlier this year after 30 years of service. Lagnado on the other hand, was most recently chief marketing officer of Bacardi Limited, where she was responsible for setting the marketing vision for multiple brands. Prior to that she spent 20-plus years in positions of increased responsibility at Unilever, including serving as executive vice president of the Savoury business unit. She has also been recognised by Ad Age as one of its “100 Most Influential Women in Advertising” and by the Wall Street Journal as one of the “Top 50 Women to Watch.”

Tilted Kilt search for franchisee to make UK debut Tilted Kilt, one of the leading sports bar chains in the US and Canada, is looking for a franchise partner to open at least 20 sites in UK cities as they aim to tackle this lucrative market The bars which specialise in serving traditional pub food and drinks, offer their customers the chance to watch the latest sporting events from around the world live on HD TV screens. The food franchise are said to be looking for a franchisee to act as a foodservice operator in the UK. The investor will help it launch the concept in the UK which, and the owners believe that the UK market could be home to at least 20 sites. It says the ideal franchisee will have considerable experience running a strong, marketing-oriented food-related business, with access to at least £630,599 capital per site. They will need an intimate knowledge of the UK market and willingness to take on a venture that requires a dedicated focus on

restaurant and bar development, marketing and operations. Ron Lynch, president of Tilted Kilt, said: “We aim to be the best, most respected, most recognisable, and entertaining sports pub in the world, through unrivalled service and hospitality, and after real success in the US, we’re now seeking global domination. “Tilted Kilt offers a hugely exciting opportunity to those looking for their next franchising challenge, and we’ll provide extensive support throughout the launch process, beginning with five weeks of training at our corporate headquarters in Tempe, Arizona. “We say that at the Tilted Kilt, ‘A Cold Beer Never Looked So Good’. We’re chomping at the bit to introduce our growing entertainment concept to sports bar fans in the UK.” Tilted Kilt currently has over 100 sites across the US and Canada. Sites are generally between 500 and 750 square metres, with average annual revenues of $2.2million.

Franchisee Viewpoint

A living wage? Much has been made in recent weeks over George Osbourne’s decision to introduce the new living wage in the United Kingdom as part of this summer’s wider budget changes. Effective next April the scheme will see wages rise for employees over 25 to a massive £7.20 per hour, a rise of 70p, and the hourly rate will then increase to £9 by the year 2020. As a business owner with a conscience I’m constantly trying to find ways to try and improve the welfare of my employees as a way retaining and motivating them. We run bonus schemes for managers, customer service rewards, medical payment schemes and various other staff benefits packages, something we gladly do because we want to. With this new plan in place the average worker will be getting an extra £1200 per annum and we have 25 staff working for us, you do the maths. As a Subway franchisee there are certain things I cannot change due to the very nature of a franchise system, I have several fixed costs that will not be altered whether I like it or not. That’s not to say I’m not happy with the way franchising works, it serves me well, but some costs are not changeable. Food costs are a feature of any food business and invariably these costs nearly always go up, even with excellent buying power overall costs are not likely to decrease anytime soon. So with all this in mind there are only likely to be an increase in costs to me and my business, VAT isn’t going to come down, rates won’t reduce, so what gives? All those extra benefits I was mentioning, that’s what gives, I will have to start stripping back the frills and the niceties that I offer my teams thus reducing the incentive to over achieve or possibly even just meet standards. On top of that, no longer will I be able to drop my prices for special promotions or discount offers, I will be penny pinching even further to maintain profits and this is after a tumultuous few years after a major recession. The only way I can see of getting out of this is following suit with what some of the major supermarkets are suggesting, hire younger staff and push up my prices. To top it off, the living wage is also coming in time to those who are under 25, this no will no doubt become an annual occurrence that future governments will enjoy pushing up every year to keep voters happy. I’m no economist but I can only presume this will have an effect on inflation, restaurant prices, cost of goods and life in general is going to get more expensive which will have a knock on effect on everything else. Editor’s Note: The above column is the personal view and opinion of Ian Dawes and does not reflect those of Subway or their affiliates.

AUTUMN 2015 Food Franchise | 13

News

round-up Baskin Robbins heads to Manchester Baskin-Robbins, the world’s largest chain of ice cream specialty shops, have announced the grand opening of a new shop in Manchester, located at 191, Wilmslow Road to be operated by BaskinRobbins franchisee, Vikram Seth from Graviss Group As a long-time fan of the brand and experienced franchisee, Vikram is excited to share Baskin-Robbins’ world-class ice cream flavours, including favorites like Pralines ‘n Cream and Jamoca Almond Fudge, custom ice cream cakes, frozen beverages and ice cream sundaes with the community of Manchester. Talking about the venture Jim Johnstone, General Manager of Dunkin’ Brands UK said: “Having passionate and dedicated franchisees is key to Baskin-Robbins’ success. “Vikram is enthusiastic, engaged with the brand and shares our love for ice cream – all qualities that represent the essence of Baskin-Robbins.” Vikram was also feeling positive when he said: “Ice cream is a delicious treat for

all ages, so we’re very excited to be able to celebrate this official grand opening with the Manchester community” “We can’t wait to share the famous BaskinRobbins ice cream flavours, sundaes and ice cream cakes with all of the local Manchester residents”. Baskin-Robbins currently has more than 150 locations in the UK, including freestanding restaurants as well as concession locations in other shops and Cineworld cinemas. The shops offer Baskin-Robbins’ famous selection of ice cream flavours as well as a wide array of frozen treats, including ice cream cakes, frozen beverages and ice cream sundaes. The brand continues to recruit qualified franchisees to help it expand its presence across the UK.

Taco Bell to open 7th UK site in Barnsley Taco Bell, the world’s largest Mexican-style quick service restaurant chain, is opening its seventh UK outlet, Barnsley, South Yorkshire To celebrate the grand opening, the popular QSR chain will be offering free Crunchy Tacos and limited edition t-shirts to the first 100 fans. Following the lead of the two Taco Bell high-street locations in Sheffield, and one in Chelmsford, the Barnsley restaurant’s contemporary design is inspired by its Mexican-style cuisine and the brand’s California-based heritage. It has an urban fresh look which brings to life the brand’s belief in

14 | Food Franchise AUTUMN 2015

freshness and made-to-order food which can be seen live from the open kitchen. It will also offer free Wi-Fi access and charging points for customers enjoying their meals. The 100-seater restaurant has a great selection on the menu with international classics like Crunchy Taco Supreme, Crunchwrap Supreme and Grilled Stuft Burritos to go along with the refreshing Sol Cerveza - which is currently only available in the UK High Street locations. Speaking about the launch Ms. Ellen Gault, Marketing Manager – Taco Bell Europe said “The demand for Taco Bell in the UK has never been stronger and we’re happy to give our fans in Barnsley the best we have to offer right from the start. In addition to showcasing our range of great tasting products at affordable prices, launching the open kitchen design along with open plating AND beer is really exciting for us because it’s been a work-inprogress for quite some time. The whole team is very proud of this restaurant and we think our fans in Barnsley are really going to love it.” Mr. Arjun Patel, Taco Bell Barnsley owner said “We are delighted to have our northern most store in the UK open in the great town of Barnsley. We look forward to bringing Más Heart, Más Value and Más Flavour to the amazingly proud and passionate people of Barnsley. We can’t wait to open these doors.”

Shelley & Anu Goel to open second One Stop Franchise Shelley and Anu Goel, one of the original pilot retailers for One Stop Franchise, are set to open their second franchise in Birmingham, following the outstanding success of their Acocks Green store The second store is located in Warstock, a residential suburb of Birmingham, and began its transition to becoming a full franchise this week, following the installation of One Stop’s EPoS system. The store, which Shelley and Anu have operated under its own fascia for a number of years, is scheduled for the complete One Stop refit during October this year. As part of the refit, the store will have its sales area expanded to 1,600 sq. ft. and will include a combi Post Office, offering customers both Local and fortress solutions. Trading hours will also be extended as part of the conversion. Shelley and Anu’s first store ‘Gospel Lane Post Office’ became franchisees during One Stop’s pilot stage, in the summer of 2013. At the time, they were struggling to compete in their local area and were turning over less than £10,000 a week. Having thoroughly researched and spoken to all the symbol groups, Shelley decided that something different, via One Stop’s

franchise model, was the answer. The introduction of an enhanced chilled and promotional range gave them the tools they needed to fight back against the competition. The store also extended its trading hours, as recommended by the franchise team, whilst installing a new Local Post Office counter, to maximise its convenience to customers. Weekly turnover has since more than doubled to £23,000 a week and is still rising. Once the refit has taken place, Shelley and Anu will manage one store each,

citing One Stop’s simple ways of working as a means of being able to operate more than one store and still remain close to customers. Whilst not anticipating quite the same turnover increases that they’ve seen at Gospel Lane, Shelley nevertheless is hoping to replicate both the model and the success that they’ve achieved at their first franchise. And as Shelley now confidently states: “I no longer worry about the local competition. With One Stop I am the competition!”

Domino’s show huge profit in strong opening half Domino’s Pizza Group has announced strong results yet again as franchises in this sector continue to flourish In the first 26 weeks of the year to June 28th 2015 the pizza giant showed an increase of 10% in UK like for like sales to £378.8 million. The underlying operating profit is also up 30% from £24.7 million to £32.1 million and system sales increased 14% to £426.7 million. Talking about the fortunes of the company, Chief Executive Officer David Wild, said: “We’ve had a strong first half, driven by an excellent performance in our core UK business, which has again recorded double digit like-for-like sales growth. “Our international operations have also shown improvements compared to last year. “Our success in the UK is a result of the investment we have made in marketleading e-commerce initiatives. Our App has now been downloaded over 10 million times and our App sales have overtaken desktop sales for the first time. Domino’s who’s first UK store opened in Luton in 1985, have gone from strength to

strength over the last few years and their expansion is picking up at a rate of knots, The group have opened 21 stores during the first half of the year compared to eight last year. Franchisee profitability has also show strong growth making it a promising venture, the EBITDA performance for those franchising with the pizza chain was up from 12.9% to 15.1%. David Wild highlighted the growth and added: “The 21 new stores opened in the period are performing better than ever. Our roll out is well supported by our franchisees, who are benefiting from increased profitability and are seeing a good reaction from the UK consumer to our bundle deals and other initiatives. “Whilst we are pleased with our performance in the first half, we face tougher comparators in the rest of the year. We have a continued programme of e-commerce initiatives and other marketing campaigns. The UK new store pipeline is solid and we are well-positioned for the future.”

AUTUMN 2015 Food Franchise | 15

INTERNATIONAL industry news

Chopstix and Petrogas partner up in Ireland One of the fastest growing food franchises, Chopstix have revealed that they have developed a professional relationship with Petrogas, the largest Irish independent forecourt retailer Petrogas has made the commitment of opening several Chopstix outlets across the Applegreen estate, their motorway service station and forecourt brand. Talking about the deal, Max Hilton Jenvey, Chief Operating Officer, said: “We are delighted with our operating partners at Applegreen. “The passion and commitment with which they consistently deliver for the Chopstix Noodle Bar brand roll out is outstanding helping satisfy our customers every time.” The newest site is the Jobstown restaurant which is the fifth site in the Chopstix and Petrogas’ partnership, and follows on from the huge success of the pilot sites, in Galway and Templepatrick. The concept of Chopstix was conceived over a decade ago, it has picked up pace and rapidly expanded in the last 4 years. Talking to reporters about the partnership, Sam Elia, Co-Director of Chopstix, said: “It is always a pleasure to work with our operating partners at

Applegreen. “Following continued and accelerated growth for our brand, we are delighted to share our success with such an amazing partner as Applegreen. We are delighted they are part of the Chopstix’s family!” As a result of the openings, Chopstix, the fast emerging Oriental fast-food

chain currently has 50 sites across the UK and Ireland, bringing the best fusion of authentic Oriental inspired fast food with casual, convenient dining at an affordable price. Following the formation of the partnership, it is expected that a total of 7 sites will have opened by the end of the year.

Asian rollout as Esquires take their coffee to China Coffee franchises are on the rise and in a landmark deal one of the UK’s fastest growing franchise opportunities, Esquires Coffee, are heading to China Ellen Zhang, the Managing Director of Esquires Coffee’s Chinese operations, and other members of Esquires’ corporate team have signed a deal which will see a number of franchised coffee shops pop up in China. At present, Esquires has twenty-one company-owned outlets in China, with eleven of those being in the capital city of Beijing and franchising is now seen as the next logical step.

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Discussing the deal, Zhang said: “There’s a lot of opportunity for us in China. “There is a growing trend to drink coffee and talk business. “At one time coffee would have been reserved for foreigners, and you would have had to go to a hotel to get it. “Now, if Chinese people don’t visit coffee shops they are considered old-fashioned and behind the times!” Under the new agreement it is expected that the total number of stores will rise to forty-five by the end of the year, all in what will be considered prime locations to take advantage of the booming middle-class. The long-term plan will see hopefully see the chain open up at least one franchised coffee shop in each of China’s thirty-one separate provinces with thirty in Hunan alone. Speaking about the deal, BBG’s chairman Tian Wang commented about Esquires ethical position in the market place and indicated that it will give them a competitive advantage in a growing marketplace: “It’s Organic, Fairtrade and artisan position makes it an aspiration destination,” he said. In an accompanying statement to the press, Esquires stated that they were on track to be operating 800 stores around the world by 2020.

business profile

Herne Bay is Perfect for Pizza! Just over a year ago, Bhrijesh Patel joined Papa John’s as a franchisee. Now Bhrijesh and his brother Rajan run the Banstead, Portsmouth, Reigate and Guildford Papa John’s stores and are about to open a fifth in Herne Bay, Kent “We recently had the opportunity to purchase a freehold in Herne Bay near the main high-street,” explains Bhrijesh. “With a mixed demographic and lots of families in the area the location is perfect for pizza! “We live in Kent so are keen to expand in the surrounding region and over the past year we have worked closely with Papa John’s to realise this goal. All the stores we have opened up until now, have been re-sales, taken over from existing franchisees This strategy has enabled us to expand quickly. However, Herne Bay will be a brand new venture, which is exciting! “We come from a retail background. Our family owns a chain of stores but my brother and I were keen to diversify. We met with Papa John’s at a franchise show then talked to the Banstead franchisee. We did a deal and the rest, as they say, is history! “There is no real secret to our success so far, it is just down to hard work! We try to keep things simple, working with the franchise system and not against it. Papa John’s has the knowledge of how the model works and we stick to our training, we don’t over complicate matters. “We know that customer satisfaction is critical. Customers order pizza because they are hungry. They don’t want to be kept waiting! They also want the food to taste great. All our pizzas are made with 100% fresh dough for a better natural flavour. Better Ingredients, Better Pizza, is our mantra so we focus on providing the best quality product to keep our customers happy.

“The team is also so important. We expect results and hard work but we look after our employees. Motivation is central to our management style and we like everyone to have fun while making pizza! Sometimes we have competitions like who can sell the most ice cream, then the winner is rewarded at the end of the evening with special staff discounts or other little rewards/incentives. Our employees are always smiling and happy staff who care and who are passionate about making food means it tastes better! “Our goal for the future is to expand and run more stores with Papa John’s over the next few years. As Papa John’s grows we plan to too!” Papa John’s is one of the largest pizza companies in the world. As a franchise, the Company supplies all the assistance needed to get your successful Papa John’s up and running including help with location selection and shop fit-out and full training. Papa John’s was founded in the USA in 1984 and now has more than 300 stores across the UK and 4,700 stores in 38 international markets and territories. .Papa John’s is the only branded pizza chain to use only 100% fresh dough, giving a better natural flavour and the Company’s unique tomato sauce is made from the best Californian tomatoes, picked and packed from vine to can in just six hours. Combine popular pizza with excellent customer service, rapid delivery times, a strong brand, comprehensive staff training and some hard hitting marketing support, backed by national TV advertising and the franchise serves-up a fantastic offer for those looking for a quality investment opportunity. Tempting incentive deals give franchisees a helping hand at the outset to ensure they will be quick to taste success. Papa John’s is aiming to attract more enthusiastic and business minded franchisees and therefore deals can include marketing support, equipment and reduced royalty payments. As one of the largest pizza companies in the world, Papa John’s and has opportunities for franchisees throughout the UK including the key locations of the South East, Yorkshire, Manchester, West Midlands, East Midlands, South West, North East, Wales & Scotland. FF

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top 50 food franchises 2015

Food Franchises The UKâ&#x20AC;&#x2122;s food and drink market is growing at an astonishing rate, as is the concept of franchising. When you put the two together itâ&#x20AC;&#x2122;s a potent combination and can be very profitable for those operating within the market

There are opportunities for both franchisors and franchisees and the demand for food from franchises has never been higher. Food-to-go seems to be the current trend with consumers leading increasingly deregulated lives and with convenience a top priority, itâ&#x20AC;&#x2122;s not hard to see why these businesses are booming. In the first ever Food Franchise magazine - Top 50 Franchises feature, we look at the key influencers in the market, the big brands that adorn our high streets, the regional franchises who have found their

18 | Food Franchise AUTUMN 2015

market and the newcomers, where a simple business concept has been rolled out to much success. There are pubs, noodle bars, sandwich shops, coffee houses and burger bars on the list as well as pizzerias, chicken shops and mobile units. The list is a comprehensive look at the diversity and size of the market and as such we have validated all the facts and figures and ranked the businesses on the number of UK units that each franchise currently operates*.

It is really amazing that by compiling this list you can not only see the diversity of the brands and the world cuisine that is represented but the different levels with which food franchises operate. In this list the top fifty comprises of businesses that have over 2000 units and those that have just 7 sites. The interesting thing is that you will begin to recognise growing brands and over the next 12 months we should see plenty of movement from the smaller brands as they try and establish themselves in this ever-growing and highly competitive market.

top 50 food franchises 2015

Top 50 2015

Food Franchises

1. Subway

2400

= 26. Pepe’s Piri Piri

2. Costa

1968

= 26. Harry Ramsdens

3. Marston’s

1700

28. Oakhouse Foods

4. McDonalds

1250

29. Top Pizza

5. Domino’s Pizza

881

= 30. Soho Coffee

6. KFC

860

= 30. Shakeaway

7. Starbucks

791

32. Auntie Annes

8. Burger King

780

33. Esquires Coffee Houses

9. Pizza Hut Delivery

650

= 34. Dunkin Donuts

10. Bargain Booze

600

= 34. Greene King

11. Coffee Republic

326

= 34. Jaspers Corporate Catering

12. Papa John’s

300

37. Roly’s Fudge

13. Baskin Robbins

150

38. Creams

14. Dixy Chicken

110

39. Chesters

15. Pizza gogo

107

= 40. Vom Fass

16. Chicken Cottage

100

= 40. Chozen Noodle

= 17. Mr Simms

= 42. Oggy Oggy Pasty Company

= 17. Favorite Fried Chicken

= 42. Wok & Go

19. Millies Cookies

= 42. Wrap it up

20. Wimpy

45. Hot Sausage Co

21. Wiltshire Farm Foods

46. Hotcha Franchise Ltd

22. Cafe2U

47. Wrapchic

23. Giraffe

48. Caffe Latte

24. Muffin Break UK

=50. Taco Bell

25. Chopstix

=50. Yo Yo Noodle

#1 Subway To regular readers it will be no surprise to see Subway sitting at the top of the pile. The US sandwich chain has seen astronomical growth over the last few years and as recently as this spring opened their 2000th unit in the UK. This growth has shown little sign of stopping as consumers embrace the range of products and the fact that they can have the sub exactly as they want it. Subway is seen by many as a healthier alternative in the QSR market and this has led to a total of 2400 stores in the UK and Ireland.

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top 50 food franchises 2015

#2 Costa Coffee is big business and demand in the UK is higher than ever. There are a whole range of coffee shops currently offering franchising and many feature on this list. Costa however lead the way when it comes to the number of stores with a total of 1968 to their name. Over the years Costa have seen real opportunities in the market and a number of ambitious sites such as their most recent solar powered one in Birmingham and their presence in many of the UK’s service stations. They also run the Costa Express service which allows operators to sell the same great coffee on a smaller scale in convenience stores and petrol stations.

#3 Marston’s Marston’s are the first chain of public houses to feature on the list and will be a surprise to many as they feature so highly. In the world of managed and leasehold pubs many will consider these to be independent businesses but in truth they are franchises units paying a rent and rates to operate under the umbrella of Marston’s. This makes them a franchise and a good one at that. The company still own many of the properties but the size of the business

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gives them 3rd spot on the list with a total of 1700 units.

#4 McDonald’s 4th on the List is McDonald’s weighing in with over 1250 sites across the UK. For many McDonald’s would been considered as the most recognisable brand in the world. The American burger giant has seen mixed results over the last few years and whilst they seem to struggle in their native country the UK market has been highly profitable for them. Over here they have seen 36 consecutive quarters of growth and have opened several new sites in 2015 alone. Under the guidance of new CEO Steve Easterbrook, McDonald’s are refreshing their image, embracing technology and moving back to their roots with a smaller yet better menu. In a recent interview Mr Easterbrook suggested that the company will aim to open 25-35 franchises per year moving forward.

#5 Domino’s Pizza Domino’s Pizza sit in 5th on our list and with good reason. With a total of 881 sites they are growing at a rate of knots and have nailed down their target market. They are proactive when it comes to

social media marketing and advertising and have captured the imagination of the public with their menu and the way they have incorporated technology. They have worked hard on developing their online platform as well as their mobile app and are seeing the rewards with order being made through these technologies in record numbers.

#6 KFC Kentucky Fried Chicken (KFC) are one of the most well-known names on the list and with fried chicken proving more popular than ever the business is thriving. At present the company are operating 860 sites across the country and have seen a cult following for some of their meal deals, buckets and burgers. The brand have advertised themselves well over the years and the mystery surrounding the secret recipe seems to be a big pull for their followers. An ever evolving menu has kept the brand fresh and it is perceived as the premier fried chicken shop.

#7 Starbucks Coffee shops are evolving and demand for premium coffee is at an all-time high. Consumers are flocking into these

top 50 food franchises 2015

franchises in their thousands and profits are rising. Starbucks have seen a successful period of growth and have excelled when it comes to choosing their 791 sites. Under the guidance of UK CEO, Mark Fox the franchise is reinventing itself as a new social hub. Extended opening hours and the incorporation of alcohol makes transforms the coffee shop into a ‘new local’ a friendly place to relax and eat good food with great coffee. The diversity of this business make it an attractive proposition for potential franchisees.

#9 Pizza Hut Delivery

#8 Burger King

#10 Bargain Booze

Burger King have seen significant growth over the last few years and are one of the frontrunners in the franchise world. With 780 sites in the UK they make the top 10 and are climbing the ladder. The company seem to have weathered the storm in the UK and are going from strength to strength. The competition may be fierce in the market with so many independent and gourmet burger chains popping up but quality and value for money prevail and Burger King franchisees appear to be doing rather well.

Slightly different to other food franchises in that bargain booze operates as an alcohol retailer but the opportunities with the brand are plentiful. When the recession hit, many consumers decided to cut down their alcohol consumption as well as many other products which can be seen as a luxury. It was however the pubs that were hit and not the off licences. Bargain Booze posted strong numbers and continue to do so in the midst of a supermarket price war, where many of the big retailers appear to use alcohol as a loss leader. The company

Pizza Hut Delivery is the franchised part of the Pizza Hut business and has proved highly successful since its inception. With 300 of the 650 Pizza Hut units in the UK being franchised out as delivery sites the reach of the brand is huge. Pizza is one of the most competitive markets in the UK with three internationally renowned brands all operating in the top 15 places on the list so it will be interesting to see how their numbers stack up next year.

are said to be currently looking to recruit franchisees which could see them move beyond the current 600 stores.

#11 Coffee Republic Coffee Republic have made huge gains in the market over the last few years with a total of 326 sites across the UK. By serving a range of quality products and opening in high footfall areas the franchise is going from strength to strength. At present most of the 326 sites are run as concession stands but the actual number looks sure to rise over the next 12 months. The business also operate a large number of self service units which obviously adds revenue and raises brand awareness.

#12 Papa John’s Thanks to fantastic growth in the UK market Papa John’s now find themselves just outside the top 10 and look highly likely to make a push over the next 3 years. The team behind the US pizzeria brand have put everything into the UK market in the last 18 months. With an ambitious marketing campaign and recruitment

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top 50 food franchises 2015

strategy they have made huge inroads and subsequently find themselves in 12th spot with over 300 sites. With new openings and franchisees signing up for sites every week it won’t be long before they rise even higher on the list.

#13 Baskin Robbins A huge brand making a big impact on the UK food franchise market are Baskin Robbins. Following in the footsteps of so many brands coming over from the US, Baskin Robbins are proving to be a popular investment for franchisees. With a versatile portfolio of over 150 shops in the UK, of all different sizes, the group is quickly gaining momentum. Smaller concessions and units working in spaces such as cinemas prove very popular and acquiring a licence with them proves highly profitable. The demand for their sweet treats is high and we’d expect many more stores throughout the year.

#14 Dixy Chicken Dixy Chicken have made huge gains over the years. The quality of the food and the franchise offering has seen them rise to 14th place in the list with 110 stores. The

22 | Food Franchise AUTUMN 2015

popularity of chicken is on the rise and you can expect this brand to still be one of the largest this time next year.

they can’t command more of the market share.

= #17 Mr Simms #15 Pizza GoGo Pizza is one of the most popular types of cuisine in the UK. It is perfect for sharing and can also be sold in individual slices as a grab-and-go item. Pizza GoGo sit in 15th on this list with 107 sites is a testament to the quality of the ingredients and the pizza. The company has worked on the development of many toppings and the great taste is what makes the customers come back for more.

#16 Chicken Cottage With 100 sites in the UK and following an extensive re-brand Chicken Cottage are really making inroads in the world of food franchising. The quality of the product that they sell is very high and with innovative meal deals and good national coverage it seems very plausible that over the coming years they will become one of the most recognisable names on this list. Of course they have to compete with others in the market but if their following keeps growing the way it has been there is no reason that

Mr Simms Olde English Sweet Shop is different to the vast majority of the food franchises on the list. Working under licence, the franchisees sell a large range of sweets in the settings of a mock-Victorian sweet shop. The franchise now operates out of some of the largest cities in the UK and has 88 outlets in total.

= #17 Favorite Fried Chicken With 88 sites in the UK Favorite Fried Chicken are in something of a battle with Chicken Cottage and Dixy chicken and KFC, but the fried chicken market is booming thanks to demand. The brand has grown quickly and are commanding a higher piece of the market than this time last year. Offering quality produce and with several new sites planned they are a testament to this area of food franchising. It will be really interesting to see where all of these companies will sit in the coming months. Don’t be surprised to see FFC smash through the 100 store mark.

top 50 food franchises 2015

#19 Millies Cookies

#21 Wiltshire Farm Foods

#23 Giraffe

Millies Cookies are one of the brands that really know their target market and have established themselves as one of the countries premium dessert franchises. Often found in large shopping centres or in close proximity to a cinemas, Millies is a strong company and cornered a unique area of the market where demand is high and choice or operators is relatively low. Just inside the top 20 with 85 sites we can see them cement this position over the next few months with a string of openings in the pipeline.

Another unique franchise opportunity is the offering that Wiltshire Farm Foods provide. Their home delivery and readymeal service has seen a real rise in the last few years and with consumers regularly looking to make life a little easier and with convenience at a premium it will be no surprise to see more people ordering quality meals straight to their door. With an increase in demand, the franchisees are busier than ever but at present your only chance of getting involved would be to take a franchise resale.

For Giraffe it seems to be a case of location, location, location. The group have tied down 69 sites and most of them are in travel hubs and airports. The franchise is growing fast and with plans for growth pressing on there will surely be plenty of news from them in the next few months.

#20 Wimpy

#22 Café 2 U

Wimpy are perhaps one of the most famous names in the world when it comes to burgers but over the years the openings have slowed in the UK. This could have been for a number of reasons including the rise of the independent or that they are focusing in the US. The good news however is that Wimpy are trading strongly in their 82 sites. This number looks to remain the same however as the brand aren’t actively recruiting franchisees at the moment.

Mobile franchising is big business and one of the most well-known brands in this sector is Café 2 U. Their eye-catching coffee vans offer franchisees the flexibility of both time and location and by having a large geographical area it is possible to build a strong business. These types of businesses are often found in city centres where space comes at a premium and the flexibility of being able to choose your pitch has seen 70 franchisees sign up already.

#24 Muffin Break Muffin Break sit just inside the top half of our list and rightly so. The group are currently operating 56 sites in the UK and franchisees report that trade has never been better. The opportunity is a growing one and it won’t be long before they get closer to the top 20. Looking at one of these franchises could see handsome returns for both parties and will ensure that the brand cement their position as a premier food franchise.

#25 Chopstix Asian food is on the rise in the UK and this is largely thanks to the popularity of street food. The idea of tasty, hot food

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top 50 food franchises 2015

that you can get quickly and conveniently is very appealing and the versatility of the products has an influence on the popularity of the cuisine. Chopstix already run 50 locations and are gaining more sites, it will be no surprise to see them rocket up the rankings over the next few months.

= #26 Pepe’s Piri Piri Aside from the popularity of fried chicken in the UK market, the next big trend seems to be in the flavouring. Brands like Nando’s put signature sauces on the market but in terms of the franchises doing it, Pepe’s are leading the way. Their 41 sites offer some of the best tasting chicken around and consumers are going crazy for the food.

franchises already sold the business is sure to grow and this could be the perfect opportunity to get involved. Harry Ramsden’s won’t have 41 units for long.

yet. The pizza supplies arm of the business guarantees quality and consistency and is the reason why so many customers keep returning.

#28 Oakhouse Foods

= #30 Soho Coffee

From their head office in Wiltshire, Oakhouse Foods offer franchisees the opportunity to be involved with one of the nation’s leading ready meal services. Currently the business which was established 20 years ago send out thousands of ready meals every week and has a portfolio of over 300 recipes for their 40 franchisees to take to market. The van based delivery service is split into territories and has proved very profitable for those involved.

Most of the Soho Coffee Co.’s sites are either in high footfall areas, service stations and travel hubs or are as a concession in places such as WHSmith. This means the brand is getting great exposure and that the popularity of their products is increasing. With several sites targeted and an active franchisee recruitment drive Soho should be moving up this list in the coming months.

= #26 Harry Ramsden’s Harry Ramsden’s are without question one of the most recognisable names on the list, yet too many it will be a surprise that they are a franchise. With the heritage and the branding as the nation’s favourite fish and chip shops the dream is to roll out franchised units and QSR’s onto the high streets of the UK. With some regional

24 | Food Franchise AUTUMN 2015

#29 Tops Pizza Tops Pizza currently operate out of 36 sites in the UK and the vast majority of those are in the South West. The brand is one of the fastest growing pizza companies in the market place and are said to be actively looking for franchisees although they haven’t committed to an exact number as

one to watch

www.sherrards.com

AUTUMN 2015 Food Franchise | 25

top 50 food franchises 2015

= #30 Shakeaway Milkshake sales are really on the rise in the UK with a whole host of restaurant chains offering them on their menu. So with such popularity it is no surprise to see the dedicated milkshake franchise, Shakeaway on the list. With 33 sites already open and more in the pipeline this is a great franchise opportunity to be part of.

#32 Auntie Anne’s Auntie Anne’s seem to a have crept in under the radar which is a surprise as they are such a large brand. The pretzel market in the UK is not quite as big as it is in the US but the reality is that the team at Auntie Anne’s are changing all of that. Innovative menu choices, striking branding and the way they have embraced technology means that the message is getting out there. The 32 sites that they currently operate are busier than ever and with plans for several new sites it won’t be long before the whole of the UK is served these tasty treats.

customers to enjoy their coffee and the range of products available is superb. For those looking at a franchise opportunity, Esquires offer a model that allows for maximum trading opportunities and they have a really strong following, making the venture highly profitable.

#33 Esquires Coffee Esquires Coffee Houses have opened a number of units over the last 12 months and as such find themselves in 33rd spot on the list. Their 26 sites are well designed and comfortable places for

franchise opportunity for those looking at opening a store they also offer the opportunity to trade under licence within an existing store. Their cabinets can be found in supermarkets and retail spaces and they are very much a growing brand.

= #34 Greene King = #34 Dunkin Donuts Dunkin Donuts are currently operating out of 24 sites in the UK and it is highly likely that they will add to this in the next 12-18 months. As well as offering a quality

It may seem a little unfair to find Greene King as low on the list as they currently operate the most units out of everybody on the list. The ties that are in place means that pubs are particularly hard to split up but the team at Greene King were more than helpful when saying that 24 of their units were run by franchisees. The group have a range of different pub formats and the Meet and Eat sites offer top quality, traditional fayre and are proving hugely popular with franchisees and consumers alike.

= #34 Jasper’s Corporate catering is big business and the team at Jasper’s are responsible for one of the UK’s leading services in this sector. With such a healthy market and the need for quality food that can be served hot or cold, quickly and to large numbers it is vital that we have recognised brand in the sector, with Jasper’s you get all of this and more. A savvy company that constantly look for new opportunities, Jasper’s have established themselves in the top 50.

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top 50 food franchises 2015

#37 Roly’s Fudge Forget a food franchise, what about a fudge franchise. The team at Roly’s have ensured a sizable growth recently and with 23 sites offering the homemade treat for those with a sweet tooth the brand finds itself firmly in the top 50. As more and more consumers look for personal and individual gifts and treats the market is growing so there is no reason to suggest that the number of sites won’t rise.

#38 Creams Creams Café are one of the most intriguing franchisee opportunities in this list, they currently operate a model over 18 sites which allows consumers the chance to eat and drink in a café during the day and stay late into the evening with the milkshake, ice cream and dessert bar. The franchisees that have taken on these site have seen huge growth and a great response. Recent openings in places like Newcastle and London highlight the demand and more big cities are expected to welcome Creams to their high streets.

#39 Chester’s The premier fried chicken shop of the North, Chester’s have sites across, Cheshire, Lancashire, Merseyside and beyond. The quality of the food has seen the brand gain a positive reputation and it won’t be long before they spread their wings further afield. Plenty of enquiries into this great concept means that 18 sites

could double in no time and the whole country can get to taste this great product throughout the day and into the evening.

Europe could see themselves cement their place on the list next year by moving up from 16 units.

= #40 Vom Fass

= #40 Chozen Noodle

Oil’s, Vinegar’s, alcohol and gifts appear to be the order of the day for those shopping at Vom Fass and whilst there have been some closures in recent years this franchise are really cornering a niche in the market. By choosing premium locations with high footfall such as shopping centres, Vom Fass are on the rise. Smaller pop-up units look likely to appear and with a new franchise offering the brand which do so well in

As we all know the noodle market is a very busy one at the moment with consumers fighting to get their hands on this popular cuisine. Chozen Noodle have chosen well (no pun intended) in terms of their locations with 16 in the UK. Most of these are at motorway service stations or other transport hubs and for someone looking to work in these prime retail spaces then you should really look at the Chozen Noodle offering.

= #42 Oggy Oggy Traditional Cornish pasties are one of the nation’s favourite dishes and with bakery products increasingly suitable for the graband-go market is it no huge shock to see the Oggy Oggy Pasty Company on this list. At present they operate 15 sites in the South West of the country and all of the locations are proving very successful.

= #42 Wok & Go Noodles are big business and for those regular readers you will notice that we have covered the various Wok & Go openings over the last few issues. They are a brand

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top 50 food franchises 2015

on the up and the food they sell is gaining a real cult following. Seen as a perfect meal for lunch or dinner and with a varied menu it seems as though the public have embraced the franchise. Always looking to add to their portfolio you can guarantee that Wok & Go will have more than 15 sites this time next year.

= #42 Wrap It Up From their early beginnings on Dragons Den to making the UK’s top 50 food franchises has been some achievement in the last few years and Wrap It Up can attribute their success to two things, the passion of Founder, Tayub Mushtaq and the way they have embraced the trend of world foods . You can now get fillings for your wrap from Mexico, Greece, India and many more meaning that your customers can try something new everyday. With a concept like this the whole world really is your audience. The brand are currently looking for franchisees and operate 15 stores.

#45 Hot Sausage Co Mobile catering is huge at the moment and with this transferring to the food-togo market it’s no surprise to see the likes of The Hot Sausage Company doing so well. By carefully selecting areas of high footfall in busy cities, The Hot Sausage Company franchisees are reaping the rewards that the model has to offer. High quality products and a large range means that the customers keep coming back. With much of the UK market and some of the big cities not served there are plenty of opportunities and it could only be a matter of months before the numbers start to increase.

#46 Hotcha The prospect of owning a premium franchise offering excellent Chinese food has always had a calling in the market and Hotcha have quickly established themselves as a major player. Opening 10 sites in a very quick period sees them enter the top 50 and with an ambitious yet detailed plan for growth you can expect to see them rise up the ranks in the coming months.

28 | Food Franchise AUTUMN 2015

#47 Wrapchic

#50 Yo Yo Noodle

Everything about Wrapchic has to be admired, the shop fits that the brand insist upon are some of the best in the food franchising world and the quality of the products has seen them launch 9 sites in the UK. These are a franchise that we are watching very closely and we’d expect to see them double in size at least over the coming months. Wraps are big business and the opportunity presented is one which many people entering the market will look at.

Pan-Asian food is on the rise as is street food so it must surely be a good sign for those at the head of Yo Yo Noodle. The company are gaining a good reputation and offer an enticing package to potential franchise partners meaning that there will be a rise.

#48 Caffe Latte Caffe Latte currently have 8 sites open in the UK and are one of the newcomers when it comes to coffee franchises. Their branding and the quality of the products makes them really stand out and within a matter of months you should all be seeing a lot more of them. With new franchisees being actively recruited and existing ones having the opportunity to open more sites, this premium brand will feature higher next year.

#50 Taco Bell One of the largest brands on the list in terms of total number of stores worldwide without question, Taco Bell who operate under the Yum! Brands banner are just emerging over here. If you think of them in the same league as Subway and McDonald’s it may but a very quick rise for them. The opportunity to be part of a fast growing chain is an exciting prospect and we’d expect a large roll-out over the next year. Reports that the brand have several promising franchisees lined up means that these great tacos are just about to explode onto the UK market. * (Total number of UK stores correct and verified at the time of going to print) FF

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introduction to franchising

Introduction to

franchising Franchising in the UK is on the rise, especially in the food and drink industry. Here we cover the basics of franchising and speak to some of the leading industry voices about getting started in this lucrative market

30 | Food Franchise AUTUMN 2015

introduction to franchising

Franchise beginnings The concept of franchising is often traced back to the 1880â&#x20AC;&#x2122;s and in particular to Isaac Singer, who first brought about the idea of selling a product under license to certain geographical areas.

available, those incorporating food seem to thrive and in this feature we look first of all what exactly a franchise is and secondly speak to some of the experts currently working at the top of the industry.

What is a franchise?

Singer, who produced high speed sewing machines knew that he wouldnâ&#x20AC;&#x2122;t be able to meet the demand of the US public without a sales team, regular orders and all the associated travelling. Instead he agreed to sell the sewing machines to independent salesmen in exchange for a licence fee, the salesmen would then take orders and sell the machines for a profit giving a small commission back to Singer. All that was required for the use of the brand and the ability to purchase the machines was a promise that the salesperson would give all the necessary training to the customer and that they would also take care of any repairs.

A franchise is the agreement between two parties the franchisor and the franchisee. The franchisor will allow the franchisee to sell products and trade under their brand in exchange for a fee and a share of the royalties.

From these early beginnings more and more business owners decided that they would try a similar approach and so franchising was born. In the US the size of the territories was so big it was the only way to do business. In the UK the concept of franchising took far longer to catch on. Of all the franchise models that are

For the franchisor it is not just a case of taking however, they will be expected to recruit the right type of person for the job. These people must meet a franchisee criteria and usually have to have a set amount of money at their disposal. As well as the experience and drive to promote and build the brand.

The franchisee will pay the franchisor a set amount for a shop fit or for the equipment they need to provide the service. In nearly all cases all of the products that are sold by a franchisee will be purchased from the franchisor. In essence the franchisee becomes a selfemployed outlet for a larger business.

Franchisors will also receive what is known as an administration or marketing fee, this will be used for the promotion of all the franchises and company owned stores under the brand. The more franchisees that there are the more that goes into the marketing spend and so the cycle continues, growing the brand.

Types of franchise businesses Although there are many variations on the franchising model there are only two actual types of franchising. Business Format and Product Distribution. The Business Format model relates to a franchisee taking on a business under the branding of the franchisor. They pay a set fee for the right to trade under a brand. They franchisee will also fund a shop fit within their fee and will be required to buy all of the products from the franchisor of which to sell. In terms of the food franchise market the typical examples of this type of franchise would be Subway, McDonalds and Papa Johnâ&#x20AC;&#x2122;s who offer a menu set by the head office and stores that are laid out in a similar way, with similar design etc.

AUTUMN 2015 Food Franchise | 31

introduction to franchising

The Product Distribution model, relates to in independent business from the franchise selling their products. In the UK market franchises such as Thornton’s and Dunking Donuts operate in this way. Service stations, newsagents and shops are able to place display units in their stores and sell products under license alongside their other goods. The franchisor licences their logo and branding to the franchisee but does not provide them with an entire system for running the whole business.

Types of franchise agreements When it comes to striking a deal and making a franchise agreement there are three main types of franchise agreement.

1. Single Unit Franchise A single unit or direct unit franchise is the agreement that the franchisee will take on one outlet for the brand. They have the rights to trade from one property or mobile unit as a franchisee. This type of franchise is the most commonly sold in the UK and offers great opportunities for those who do not want to operate as an independent.

32 | Food Franchise AUTUMN 2015

2. Multi-Unit Franchise A multi-unit franchise opportunity is where a franchisee signs a deal to a set amount of franchise units over a designated period of time. This could be a number throughout the country or across a specific territory. Doing things in this way could see the franchisee gain geographical protection.

3. Master Franchise

from some of the experts at the helm of the industry. We put questions to some of the industry’s leading authorities on a range of topics and their answers give a comprehensive intro franchising and should answer your burning questions.

Branding insight with Chris Palmer Commercial Manager, Harry Ramsden’s

Expert Opinions

Why is picking the right brand important for a franchisee? “Choosing the right brand can mean the difference between success and failure. Franchisees who opt to engage with renowned national and international brands such as Harry Ramsden’s benefit immediately from significant consumer knowledge of their products and services with the associated trust and loyalty already ingrained within a core base of customers that keep them coming back time and again.”

After learning a little more about the beginnings of a franchise model and the types of franchises that are available we thought that it would be best to hear

How can the right brand be instrumental in successful business? “Brands which can successfully develop a franchise model tend to be those which

A master franchise is normally when a franchisee signs a deal to open all of the franchise units in a certain area or country. They are responsible for growing the brand and building the company’s reputation. The franchisee, in essence, buys the licence and this allows them to be more involved with the main business decisions. This is the most costly option but it can bring the biggest financial rewards with it.

introduction to franchising

are well established and already have systems and processes in place which can be easily replicated by a franchisee. With Harry Ramsden’s, our franchisees are buying into an experienced and successful brand that works best when our tried and tested model is followed, providing training and support continuously through the franchising agreement.” What advantages does an established brand and franchise model have over opening an independent business in the same field? “Engaging with a known brand offers a myriad of advantages including instant customer recognition which assists with sales, a proven business model and its associated buying power which assists with profitability not to mention existing, all-encompassing support structure and inherent quality assurance programme which assist with day to day operations.”

Property Insight with Anthony Round, Business Development Manager, Papa John’s What do you look for in terms of a location for your franchises?

“In terms of location Papa John’s are currently looking for property on local high streets, retail parades and neighbourhood centres that fulfil the following criteria:

“The aim is to cater for the whole of the UK and to progress our rollout establishing ourselves as the number one operator in the category.”

• 12ft Frontage • Minimum area of 750-1000sq.ft • High visibility for cars and pedestrians • Minimum 20,000 households within an 8 minute drive • Adjacent to supporting traders and with car parking.”

Do you have a responsible growth policy? “Yes. Papa John’s regularly opens new stores and are sympathetic to the requirements of all those affected when we do.

How important is it to match location with the target demographic of your customers? “At Papa John’s we look for an area with high footfall, good community links and with a mix of socio-economic groups within the trading area. “Getting this right is vital and many of the new sites that we have opened in the UK have been in close proximity to universities and areas with a growing population. Making sure that we place our product in areas that are developing and with a high demand is a must and it gives the franchisee the best possible opportunity to grow their business and our brand.

“The types of issues that frequently arise in planning applications include concerns over increased litter, anti-social behaviour, traffic disruption and unpleasant cooking smells. Our Responsible Growth Policy aims to address precisely these issues before they ever become a problem. The Papa John’s business models means that over 75% of our orders are for delivery to our customers’ homes, which both minimises the likelihood of customers ‘loitering’ around stores and the risk of litter being dropped on the surrounding streets. “Papa John’s currently only sells fullsize pizzas (with the exception of some express service outlets that are limited to non-public locations). As a result, the size, temperature and consistency of the

AUTUMN 2015 Food Franchise | 33

introduction to franchising

product deters customers from consuming pizza ‘on the go’, which further reduces the possibility of litter being irresponsibly discarded.

open on the other side of the road. Instead of this driving customers away from their store this has actually brought more people in.

“During the planning of a new store, we work with the relevant authorities to ensure there is adequate parking and access for our delivery vehicles in order to minimise the impact on local traffic. Equally, all of our staff members are briefed to act in a responsible manner in terms of reducing the noise from drivers and vehicles.”

“A recent email I received from a customer of the store highly commended the staff for their service and welcoming attitude to her breastfeeding her baby, which she had not received from our competitors. The lady is now a loyal customer because of the good service on her first visit.”

Customer Service viewpoint with Kerry Noble, Marketing Manager, Esquires How important is customer service within a franchise unit? “Customer service is probably the most important aspect of running an Esquires Coffee franchise. If our food and drink is of fantastic quality, our surroundings and atmosphere are stylish and comfortable; but our staff are miserable and unhelpful then we will be certain to lose customers. “ How can customer service help you stand out for you competitors? “Good customer service encourages loyalty and repeat visits. For example one of our stores based on the south coast has recently had a competitor coffee chain

Are there any guidelines in relation to service for a franchisee to follow - i.e. a brand/company way? “At Esquires we operate a five second rule, all of our customers must be greeted within 5 seconds of entering the store. Our customers must always be acknowledged and thanked throughout their visit to our stores. A simple smile and thank you on the way in and out of our store goes a long way.”

Mobile Franchising insight with Martyn Ward, National Franchise Recruitment Manager, Café 2 U What are the main benefits of a mobile franchise? “The main benefits of a mobile franchise are low overheads and the ability to go where your customers are – we don’t have to sit and wait for people to come to us!

This in turn means increased productivity and flexibility within the business operation. “In addition to this, with a mobile business you are able to adapt to changing market conditions quickly and easily – not a simple process when you are committed to a lengthy shop lease!” Are mobile franchises constricted by geographical locations or set trading areas? “Not at all. Cafe2U franchise partners are actually protected by having exclusive territories. They are trading safe in the knowledge that there will be no competition from within the network as we continue to grow. “Cafe2U territories have been pre-defined using over 15 years of experience and a specialist mapping company, and are also designed to allow our franchise partners to develop further – we have several who operate multiple Cafe2U vans within a single territory!”

Final Thoughts. Franchising is without question on of the safest, easiest and most rewarding business models currently available in the UK. Food franchising in particular can be highly profitable due to the fact that it fulfils an essential need that we have. The need to eat. The market at present is very diverse and there are plenty of opportunities to open a franchise in many sectors and in to suit all budgets. Those looking at going into franchising will have a set of considerations in terms of what they want to achieve from the business as well as the type of opportunity that they wish to operate. They will also need to think of the personal implications of opening a franchise such as giving up an existing job, raising the funds and balancing work with family life. The questions that our panel have answered will give you an idea of how the industry works and what you need to consider before entering an agreement. FF

34 | Food Franchise AUTUMN 2015

business profile

Fantastic franchise opportunities available with the SUBWAY® brand The SUBWAY® brand has over 2,000 locations in the UK and Ireland and more than 44,000 SUBWAY® stores in over 110 countries What’s more, the brand is continuing to expand and is actively seeking new franchisees to become part of its success story. New SUBWAY® franchisees can be confident in the strength of the SUBWAY® brand as it is globally recognised and has built up the support and loyalty of millions of customers worldwide. Being a SUBWAY® franchisee allows you to sell superb products that are known and loved around the world.

Case study

for an MBA in finance at The University of Birmingham. Mehdi worked in the university’s SUBWAY® store as part of a case study assignment about the marketing, HR and finance procedures of franchises in comparison to other restaurants. This placement gave him a great introduction to the SUBWAY® brand. “After finishing my MBA, I did a lot more research into other types of franchises, but I decided to invest in the food industry, as I have always wanted to work in a customerfacing industry.”

Mehdi Bahram Choobin is a successful SUBWAY® franchisee in Birmingham who has recently opened his second store in the city. Since opening his first store at the Maypole Retail Development, Mehdi has seen the business go from strength to strength, thanks to a combination of both his hard work as a franchisee and the support of the SUBWAY® brand.

Following the success of his first store, Mehdi made the decision to expand his business and opened his second store in July 2015 in nearby Broadway Plaza. Mehdi’s considerable knowledge of management and finance, along with the experience gained through his first store have provided him with all the skills he needs to expand and grow within the SUBWAY® brand.

Before opening his SUBWAY® store, Mehdi studied management at university and worked as an accountant for nine years in Iran. He moved to the UK to study

As well as his tireless hard work to make his stores successful, Mehdi believes that staff members are a company’s greatest asset, and has worked very hard to make

sure his staff are well trained and very well rewarded. He currently employs 11 staff at the Maypole Retail Development store and eight staff at the Broadway Plaza store. “I strongly believe that employees are our assets and they must enjoy their work place. Twice a year we offer a £100 cash bonus to the best employee to show our appreciation for their efforts.” Thanks to Mehdi’s finance qualifications, he appreciates the economies of scale that come from owning more than one store and has some valuable advice for anyone thinking of taking on a franchise for the first time. “The franchise business can be very lucrative and works best as you scale up and open more stores. To make sure that your franchise business continues to work for you as you grow, you need to perfect each unit before moving on to the next.” As the SUBWAY® brand continues to expand there has never been a better time to start thinking about what new opportunities may be out there. For more information: Tel: 0800 0855 058 (UK) or 1800 413 076 (Eire) Email: franchiseopportunities@subway.co.uk Web: www.subway.co.uk/business FF

AUTUMN 2015 Food Franchise | 35

one to watch

One to Watch

bake&TAKE

In recent years the UKâ&#x20AC;&#x2122;s high streets have taken something of a battering but this is all changing thanks in part to the rise of the food franchise Consumer demand is at an all-time high and research suggests that families and consumers in the UK have more expendable income and that they are spending more on food for out of home consumption. The deregulation of lifestyles means that more and more of us are looking to find a product that we can eat on the go, that is readily accessible and that we can consume at any time of the day. Whilst many food franchises tick the first few boxes, few can claim to offer the perfect menu choices regardless of the time of day.

36 | Food Franchise AUTUMN 2015

Another main factor in the transformation of the high street is the influence we take from other parts of the world. Street food has taken its roots from Asia and South America yet many of the food franchises that come to the UK come from America and Europe. One such company that follows all of the above guidelines and is sure to be a success therefore is bake&TAKE. New to the UK market, bake&TAKE is a sophisticated self-service Continental deli-

style bakery and cafĂŠ operation and looks to be in very steady hands after buying the master franchise in 2013. The brand originates from Germany, where it is known as backWERK. Across Europe the company already has over 325 established franchise cafes in Germany, Austria, Netherlands and Romania, so itâ&#x20AC;&#x2122;s no surprise to see the model coming over here. Responsible for the UK launch are business partners Robin Page and Steve Mahon who between them have bought the Master

one to watch

Rights for the brand in the UK and N. Ireland. Discussing the opportunity, Robin told Food Franchise Magazine: “The market is very good at the moment and when we were looking at a new concept I was very keen to bring bake&TAKE over here. “I wanted to bring something that wasn’t currently available and that myself and Steve thought was in demand. “It’s a very exciting time and we believe that the offering we have, ticks the boxes for all socio-economic groups. We have something for people of all ages, tastes, budgets and above all the eat-in and takeaway options we provide is suited to the lifestyle needs of everybody.” Following the opening of the corporatelyowned store in Greater Manchester Robin and Steve have already started franchising the brand with three new franchisees already signed up highlighting not only the public demand for the product but the realisation that the business offering is one that works for those looking to break into this lucrative market.

The first of these franchise stores is already in an advanced stage and will open in London early October 2015. bake&TAKE are actively looking for more franchisees and it is common knowledge that both Robin and Steve are pushing the brand which many believe the UK market is crying out for. The pair are currently offering entrepreneurial businessmen and women the opportunity to open their own bake&TAKE stores across the country as part of an ambitious expansion. Robin and Steve, who both boast a formidable background in retail and franchising having held director roles at Argos, Littlewoods, Wine Cellar and Cash Generator to name a few, are privately funding the joint venture. They have dynamic plans for the business, and have plans to open 100 stores within the next five years. Talking about the proposition, Robin said: “Our franchise exists to fulfil a gap in the market and provide our customers with a high quality, freshly prepared range of up to 250 different products.

“bake&TAKE would provide the right partners with a fantastic opportunity to grow a business that meets their aspirations, where other food franchises have little or no choice of territories to offer.” When questioned on what made him decide to take on the Master Rights for this business model Robin commented: “I was approached through my franchising contacts to launch bake&TAKE in the UK. “Taking into consideration the enormity of the task, I asked Steve to join me. Together we have a strong set of skills in both retail and franchising. “We spent the first 12 months putting the infrastructure in place and with a significant investment of more than £1million we are now ready to take this business to the next level. “Our flagship store in the UK has been open for 14months and is trading well ahead of budget”. At present the bake&TAKE model combines superb coffee, similar to that served in all the top coffee shops, with an impressive

AUTUMN 2015 Food Franchise | 37

one to watch

selection of delicious savoury and sweet products. These include Kaiser Rolls, Turkish Flatbreads and a range of fantastic cakes and tray bakes. With its modern European look and the designer made sandwiches the brand is sure to delight consumers across the UK. With a heavy focus on lunchtime trade and meal deals the savvy business is almost certain to throw down a huge challenge to some of the established bakery brands over the next twelve months and franchisees investing in the model will do so safe in the knowledge that they offer a far superior range of products at a fair price and in a format that allows for the ease of self service and the grab-and-go nature of the current social climate.

bake&TAKE apart. “The café in Greater Manchester showcases all that bake&TAKE can offer, and furthermore the menu has been designed to cater for specific times of the day, providing suitable options for breakfast, lunch and dinner.” Regional product variations has also been accounted for and many of the products on offer in London are specifically designed for the region. Along with all this, bake&TAKE now offer a fantastic business to business catering menu for business breakfasts, lunch buffets along with an outdoor catering service to suit all conferences and events.

Commenting on the current franchise environment and the offering of bake&TAKE, Steve said: “There are plenty of coffee shops and bakeries in the UK but there is nothing like the bake&TAKE in the marketplace.

These factors and the fact that the model allows for the provision of a full catering service for all children’s birthday parties including a personalised birthday bake or for other functions gives a real flexibility and a real scope for successful business.

“The self-service angle, combined with the comprehensive cosmopolitan menu, which focuses on freshness and affordability sets

Investment is always an important consideration when it comes to buying a food franchise and Robin highlighted what

38 | Food Franchise AUTUMN 2015

those interested in working with bake&TAKE might need, he said: “New Franchisees should have a minimum of £75,000 of their own cash. The major banks will support creditable applications for business loans providing the applicant has a means of securing the loan. “If this criteria is met then we can start to discuss the future in terms of new stores and multiple units. “There are different store sizes available and dependant on what properties are available in the franchisees location a bespoke design will be produced.” Robin and Steve currently have plans to open 15 new stores in the next 16 months and the pair commented that there is plenty of room to grow with bake&TAKE. This is without a doubt one of the most exciting opportunities currently on the market and is very much one to watch for the team here at Food Franchise Magazine. Prospective franchisees or those looking for more information can contact: Robin Page Co-Owner: r.page@bakeandtake.co.uk FF

business profile

Meet Sherrards Solicitors

We know the franchising sector inside out It’s no great surprise that the food sector continues to flourish – it’s an exciting place to be. We all love tasty food and great dining experiences, and the globalisation of our lives is opening the door to new flavours and dining experiences every year. To build a successful food business takes more than just energy and passion – it requires a good business head, exceptional leadership skills, the ability to communicate with people at all levels, the support of specialist professionals in law, property and accountancy, and of course a sprinkling of good luck! The most recent NatWest/British Franchise Association survey shows that there was a six per cent increase in the number of hotel and catering franchises in the last year, with 8,300 franchise businesses now operating in this sector, making it one of the most popular categories. The successful franchisors and franchisees we work with have all sought professional advice from the outset –robust legal foundations are essential and pay dividends as the business goes through its life cycle. The prospective franchisor will need expert advice on whether their business model can be understood, mastered and therefore replicated by another business owner, whether here in the UK or overseas, and whether franchising offers the best route to growth. If the answer is ‘yes’, there will flow the need for a welldrafted master franchise agreement and possibly, regional and developer franchise agreements. Franchising your business in other locations requires you to be in full control of your assets and to have highly developed systems and processes.

As such, your legal contracts must be water tight and forward oriented. The importance of this cannot be emphasised strongly enough. As all franchise contracts for your network will be the same, it is important to get it right from the outset because one defective franchise agreement will mean all your franchise agreements will be defective, with the possible consequent loss of your whole network. Some of the high street’s most recognised food brands work with our Franchising Team to expand their businesses here in the UK and overseas – names such as Dominos, Muffin Break, Southern Fried Chicken, Esquires Coffee Houses, Café Fratelli and multi-unit franchisees within the Harry Ramsdens network. We are proud that our client base has grown largely due to the recommendations of clients such as these. Successful franchisees such as Mike Arbuckle, franchise MD of Muffin Break UK, who has worked with us to manage the constant changes to its property portfolio of over 50 outlets in retail shopping centres comments: “Sherrards were recommended to us because of their retail experience and because of the fact

they could provide City-level expertise at regional rates ... and deliver it with good old-fashioned service.” Many food franchisees go on to operate multiple outlets and will need to employ further staff and lease property for their premises. A complex set-up requires solicitors who can negotiate on your behalf, offer high quality employment law support, and unfortunately on occasion, resolve disputes. As a law firm with a wide range of commercial services, we can take care of all of this for you and more. And when it comes to export, experience of international development and master licence agreements, and how to organise and structure a franchise business internationally becomes hugely important. Our membership of international alliance of law and accountancy firms Alliott Group ensures a safe pair of hands wherever in the world your business takes you. We can help you get started in franchising or further develop your business – contact Sherrards Solicitors in St Albans (01727 832830) or London (020 7478 9010). Alternatively, please email franchising@ sherrards.com or visit our website www.sherrards.com

It is important to get it right from the outset because one defective franchise agreement will mean that all of your franchise agreements will be defective. AUTUMN 2015 Food Franchise | 39

Franchise insight

FRANCHISEES AS MULTIPLE OWNERS The problem of obstacles to growing their franchise network is uppermost in the minds of most maturing franchise networks One of the principal advantages of franchising is that it enables a supplier of goods or services to rapidly penetrate the market, and therefore anything which hinders the growth in the number of outlets opened is taken very seriously. As competition for recruiting franchisees becomes increasingly difficult, franchisors are turning to other methods for solving their problems. New franchisors generally follow the practice of determining in advance the profile on which they will base their selection process for new franchisees. Given that many new franchisors are fairly small businesses, it is unlikely that they have any other option and rare for them to come across prospective franchisees who far exceed their selection criteria in terms of management expertise and financial resources.

40 | Food Franchise AUTUMN 2015

Mature franchisors on the other hand will have experienced good days and bad days in terms of franchisee recruitment. The redundancies of the early 90â&#x20AC;&#x2122;s provided a large pool of good quality prospective franchisees. Prior to that in the blooming 80â&#x20AC;&#x2122;s, franchisee recruitment was a problem and before that the economic troubles of the early 70â&#x20AC;&#x2122;s again proved to be a good period for franchisee recruitment at a time when the franchise sector was in its infancy. The recent economic crisis has been different in that employees who have been laid off, have not received generous redundancy packages which in previous years would have enabled them to go off and buy a franchise. So mature franchisors are becoming increasingly familiar with, what seems to be, the cyclical nature of franchisee

recruitment. Those franchisors who are strong and or brave enough, have upgraded their franchisee profile with a view to giving preference to those prospective franchisees who have the potential to grow their franchised businesses beyond a single unit. The advantages of multi-unit franchisees has not escaped them, but as with everything else, there are disadvantages to a franchisor who encourages multi-unit franchisees. However, by and large, these disadvantages are either overlooked, deliberately ignored or assessed and the view taken that on balance, the advantages outweigh the risks. What are the principal advantages? Multi-unit franchisees cost a good deal less per franchise unit opened than individual franchisees. Once a franchisor has done the know-how / show-how bit

Franchise insight

for a franchisee for its first unit, second and subsequent units opened by the same franchisee require a good deal less input from the franchisor, thereby saving the franchisor valuable management time and expense. After all, the franchisee has done it before, is familiar with the franchisor’s requirements with regard to site selection, fitting - out, stock purchase etc. A goodly proportion of the initial franchise fee therefore goes directly to the franchisor’s bottom line. Some franchisors offer a discount on the initial franchise fee for second and subsequent units opened by the same franchisee, sometimes as an incentive for the franchisee to open more units, sometimes simply because it seems the right thing to do. However, it is rare for a franchisor to take only a nominal or indeed no initial franchise fee at all. Even in terms of training, once a franchisee has grown to a certain level, the franchisor need only train the franchisee’s trainer who is then responsible for training all the franchisee’s staff. This is particularly true of franchise operations which are labour intensive, such as fast food operations. Again further savings for the franchisor. Multi-unit franchisees tend to be more sophisticated than individual franchisees in terms of their business acumen, management and administration and therefore require less hand-holding and support from their franchisors. All in all therefore it seems to be a good deal for franchisors if they can encourage their franchisees to take on more franchised units. As for the disadvantages - experience shows there are two principal disadvantages. The first is that unless the franchisor is extremely careful in the selection of its franchisee and keeps a very close eye on the franchisee’s managers or supervisors, the ill effects of going against the basic concept of franchising can have a profound effect on both the franchisee and the franchisor’s business. One of the fundamental reasons for franchising is that a franchised outlet should be able to generate a much higher level

of turnover than a managed outlet and increase its market share because the owner is behind the counter serving the customer. The franchised business is his business, the profits of that business are his profits. In the case of a managed outlet, the manager is an employee and although there may be sophisticated bonus schemes it is never quite the same as being the owner of one’s own business. If a manager is unwell he will nurse his cold at home and call in sick. A franchisee on the other hand will drag himself out of bed and open the restaurant. A manager will be anxious to go home at closing time whereas a franchisee will serve his customers for as long as necessary and close up when the last customer has left of his own volition. The second disadvantage clearly relates to the size of an individual franchisee’s business. The larger the franchisee’s business the more demanding that franchisee will be of his rights and of the franchisor. There comes a time when the size of the franchisee is such that he can more or less deal, or at least feel he can deal, with the franchisor on equal terms even if the franchisor may be considerably bigger than him. A multiple unit franchisee’s pockets are deeper when it comes to contentious matters than those of a single unit franchisee. A multiple unit franchisee will be more questioning of the franchisor’s motives and more challenging of the franchisor whenever the franchisor introduces changes to the system or new products. Multi-unit franchisees in the United States are common place and there is now increasing litigation between multi-unit franchise holders and their franchisors. Some have scored notable successes. In a litigious society such as the US, this is only to be expected, whereas going to court in the UK can be ruinous. Clearly the strength of the franchisor is crucial when planning a strategy for multi-unit franchise holders. It is certainly a good way of expanding the number of franchised outlets thereby overcoming the problem outlined at the beginning of this article. However, as

in all things a balance has to be struck. Franchisors who encourage multi-unit franchise holders need to gear their management and administration to meet the demand of their growing and more sophisticated franchisees. There is no doubt that multi-unit franchising can catapult a franchisor into a different league in terms of the numbers of outlets operating under the franchisor’s brand but such a strategy needs to be carefully planned and executed if it is to be successful in the long term and not eventually derail the franchisor. As for would be multi-unit franchisees, they need to assess very carefully the quality, propensity to innovate and strength of their franchisor. They need to access future market trends for the brand and their products and the strength of the brand they are investing in and ask themselves how much they are risking their future financial welfare by putting all their eggs in one basket instead of diversifying. . FF

Manzoor has more than 35 years’ experience in UK and international licensing, franchising and distribution law and has lectured on the subject for various organisations and institutions (including the International Bar Association, the City of Westminster Law Society, the International Franchise Association, the European Franchise Federation, The Institute of Marketing, NatWest Bank, Barclays Bank and RBS) to businessmen, academics and lawyers in Mexico, America, Canada, United Kingdom, the Middle East, Scandinavia, continental Europe and Australia. He has assisted franchisors to franchise in 32 countries. Manzoor is a well respected author on the subject of franchising and his publications include: Author: “The European Community” (Fourmat Publishing (Tolley), 1992) Co-author: “Franchising in the UK” (2nd Edition, Franchise World Publications, 1989) “Franchising in Europe” (2nd Edition, Cassell Publications 1993) “Franchising in Canada” (MacMillan Canada, 1992) Advisory Editor: Journal of International Franchising and Distribution Law (1995-2001)

AUTUMN 2015 Food Franchise | 41

BE INSPIRED

Be Inspired Every issue we look at somebody who is making a difference in the world of franchising and this edition is no different. Here we speak to award-winning SUBWAY® franchisee, Rachel Shaw who operates two stores, in Thornton Heath and West Wickham. Rachel joined the SUBWAY® brand team in 2007 and opened her first store, the Thornton Heath branch in September 2007. The married mother of three worked tirelessly to build her business and soon went on to open the West Wickham site. An award winning franchisee of the highest level, Rachel won Best Single Unit Franchisee operator in London in 2012 and 2013 as well as, Best Local Store Marketing Franchisee in London in 2011, 2012 and 2013. Then in 2014 she was awarded with one of the highest honours in the industry when she was recognised by her peers to be

42 | Food Franchise AUTUMN 2015

crowned the BFA’s Female Franchisee of the Year. Prior to joining the SUBWAY® brand, Rachel enjoyed 17 years’ of success and service with McDonald’s where she reached the position of Operations Consultant looking after nine restaurants. Here we find out what it’s like to be a SUBWAY® franchisee and her plans for the future. Did you have a background in the food and drink industry prior to opening a food franchise? “As I mentioned, I worked for McDonald’s for 17 years and I have a wealth of knowledge in the food and drink industry.

Having said that, I do not think this is necessary to become a successful SUBWAY® franchisee as the brand offers great training and guidance every step of the way. “I do believe that you require a good understanding of business controls, great customer service and the importance of good safe food operating standards. I have always enjoyed serving fresh food and going that extra mile to provide a great dining experience – it’s very rewarding. “It’s great to interact with the customers on a daily basis, throughout my career with the SUBWAY® brand I have met some great people from all different walks of life.”

BE INSPIRED What made you choose the franchise model over running an independent business? “Having a well-established brand behind you offers extra security, a well-known brand tends to be trusted more, and the policies and procedures are all set out to assist the franchisee in running a successful, profitable business.” What made SUBWAY® stand out? “I fell in love with the SUBWAY® brand and its concept during a visit to Australia, I loved the healthy, fresh approach of the food. The fact that the food was prepared in front of you was great, like an open kitchen - this in itself gives confidence to the consumer. “The entire process is very transparent; again I think this is something that consumers warm to. The whole process from greeting the customer to preparing their Sub is very intimate and individual - you also have time to interact with the customer [and] find out exactly how they like their Sub. The final reward comes when the customer is delighted with their finished Sub. “I believe that this is now a concept that many other chains in the food industry are starting to follow. “ How long did the process take from making a franchise enquiry to opening your first store and how did you find the process?

“It took around three months for me to become a franchisee, as I had done a lot of my homework prior to applying. It then took me around four months to find my first site. “The SUBWAY® brand also assists with this process, as they have an excellent team of property agents who can advise on all aspects of sites and locations. Once a site is proposed a SUBWAY® representative will also come out and assess the location to see if it ticks all of the boxes – the brand want you to invest wisely and be successful with your investment.“ What plans or commitments do you have to opening more sites in the future? “I have recently purchased another SUBWAY® franchise and have a third site in the pipeline, which is very exciting.” How did you fund the venture and how easy was it to secure the capital? “There are many high street banks that are familiar with how the SUBWAY® franchise model works financially and are willing to help new franchisees, even with their business plans and forecasts. I believe most banks are looking for a franchisee to be able to fund a minimum of 30% of the investment.” Why would you recommend franchising to others? “It’s been a great journey for me - I have been able to work for myself, whilst still

having the security of a brand supporting me. “The development team responsible for SUBWAY® in Greater London has been extremely supportive of the new local store marketing ideas that I have wanted to do over the years, in turn I feel as though I have had the freedom to test my entrepreneurial skills. I do not believe that I would have been able to achieve this working with another brand.” How would you describe the market at the moment in terms of demand, number of stores, competition and growth? “The fast food business is a very healthy market at the moment, as we now live in a world of convenience. It is apparent that we eat out a lot more as a nation. “The SUBWAY® brand is certainly one of the most popular quick service restaurants for offering healthier options on the high street. There will always be competition and choice but that’s good for everyone on the high street, as it brings more footfall to any town. “There’s now more than 2,000 SUBWAY® stores across the UK and Ireland, but there’s still demand for more, as consumers now expect to see us in every high street! There’s also over 500 SUBWAY® stores in non-traditional locations, including within convenience stores and on petrol station forecourts, which is fantastic news for the strength and popularity of the brand.”. FF

AUTUMN 2015 Food Franchise | 43

legal

Just a small matter ofâ&#x20AC;Ś

employment

law The hard work has been done. The Franchise Agreement is in place and the Franchisee is good to go. What could possibly go wrongâ&#x20AC;Ś?

44 | Food Franchise AUTUMN 2015

Legal

At the outset of a franchise arrangement, the overwhelming desire on both sides is to see the new franchise succeed. That is of course entirely understandable, but there is still a small matter of employment law to consider, which is often overlooked. It is not difficult to see why it is overlooked. As far as the Franchisor is concerned, the Franchisee employs the staff in the franchise and it is strictly speaking a matter for the Franchisee to ensure it takes appropriate steps to ensure compliance. From the Franchisee’s perspective, it does not want to be confined by red tape, rules and regulations when it has a business to run and more specifically, when it needs to meet the performance targets set by the Franchisor. As far as the Franchisee is concerned, it has much bigger issues to contend with. This is however a dangerous mind-set to fall into, for both Franchisor and Franchisee. A failure to comply with employment law can be costly, not just financially but also in respect of potential reputational damage. The maximum compensation for an unfair dismissal claim now exceeds £70,000 and indeed there have been instances where Franchisees have been declared insolvent as a result of successful Employment Tribunal claims against them. Successful employment claims can also lead to untold reputational damage on the part of the Franchisor. The vast majority of customers and consumers will not appreciate the finer points of a franchise relationship. They will simply infer that the Franchisor is responsible and that will damage the brand. In addition, employment disputes and claims are a strain on internal resources, taking up considerable management time and often having an adverse impact on the

morale of the rest of the staff, particularly if disgruntled employees are indiscrete. All this serves to do is make it less likely that the franchise will succeed. There is no doubt that employment law is overwhelming in its scope. At the outset of employment, and within the first two months, all employees are entitled to receive written particulars setting out prescribed terms and conditions. And there is now also a legal obligation on an employer to auto-enrol all employees into a qualifying pension scheme with a minimum employer contribution. During employment, employees are entitled to a myriad of rights (such as the right not to be unfairly dismissed) and protections, such as protection against nine recognised forms of discrimination including sex, race, disability and age. There are invariably going to be issues relating to pay and holiday entitlement, and indeed recent case law has suggested that overtime should now be incorporated into the calculation of holiday pay. In the context of a franchise arrangement, particularly in the food industry, the common issues to contend with are usually a high turnover of staff, regular disciplinary matters and

In the context of a franchise arrangement, particularly in the food industry, the common issues to contend with are usually a high turnover of staff, regular disciplinary matters and ensuring compliance with minimum wage legislation and immigration laws.

ensuring compliance with minimum wage legislation and immigration laws. There are, simply put, an abundance of traps for the unwary. Fear not, there is a potential solution to this problem. The HR and employment law requirements can be outsourced to a specialist provider such as Sherrards’ Peak People service. If structured sensibly, the cost of this service can be split among a number of Franchisees ensuring the service is provided at a nominal cost. The Franchisor can take comfort from the fact that specialist resource is available to take that unhelpful burden away from the Franchisee, and those specialists will ultimately have the corporate brand in mind when advising the Franchisees. From the Franchisees’ perspective, he is able to focus on the primary objective of running the business and making it successful in the knowledge that specialists are taking care of the HR side. It can then really be a small matter of employment law. FF

Mark Fellows is an employment Solicitor and joint head of the Employment Law Team at Sherrards Solicitors, a law firm that advises a number of food related franchises including major high street brands as well as smaller single and multi-unit operations. For more information, please email Mark Fellows (mf@sherrards.com). Or for more information on Sherrards’ Peak People fixed price, outsourced HR and employment law service, please email employment@sherrards.com

AUTUMN 2015 Food Franchise | 45

accountancy

Summer 2015 Budget Update Two months on from the General Election result, the Chancellor of the Exchequer delivered his second Budget of 2015 in July. This was the first Conservative Budget for almost 20 years and with the Conservatives now commanding an overall majority, Mr Osborne had far greater freedom to pursue policies which had previously been blocked by the Liberal Democrats In his opening statement, the Chancellor told MPs: “This is a Budget that puts security first, and recognises the hardworking British people. “[It] sets out a plan for Britain for the next five years to keep moving us from a low wage, high tax, high welfare economy; to the higher wage, lower tax, lower welfare country we intend to create.”

set to be reduced to 19 per cent in 2017 and 18 per cent in 2020. The Chancellor is optimistic this will increase employment.

Key proposals The Chancellor set out his plans to eliminate the deficit – although the pace of the reduction is set to be far slower than some expected. The first Budget surplus, forecast to be around £10billion, will not arrive until 2020.

One of the biggest surprises of the Budget was the introduction of a National Living Wage, affecting many in the catering sector. This will apply to over-25s and will start at £7.20 next April, rising to £9 by 2020. Mr Osborne said that 2.5million people would see a pay rise as a result of the changes.

Nonetheless, another round of departmental budget cuts will be required, with further details on these savings set to be announced in the autumn.

There was less good news for public sector workers, with pay awards set to be capped at one per cent a year for the next four years.

Of the £17billion savings confirmed today, Mr Osborne said that £12billion would come from welfare cuts and £5billion from a further crackdown on tax evasion/ avoidance.

It was announced that the annual investment allowance – which it was feared would fall to £25,000 – will in actual fact rise to a permanent level of £200,000 a year from 1 January 2016. Mr Osborne said that this would be a big help for small and medium-sized businesses.

Previously announced cuts in personal taxation were confirmed, while the Chancellor moved to position the Conservatives as the party of working people with the announcement of a compulsory Living Wage.

Business, enterprise and employment In a boost for business, further cuts were confirmed in corporation tax – which is

46 | Food Franchise AUTUMN 2015

There will, however, also be significant changes to dividend taxation from April next year, which will impact many ownermanaged businesses, and the effective tax rates on extracting profits.

The Chancellor also spoke about the importance of apprenticeships and said that while some firms were doing an excellent job training employees, others were falling short of what was expected. A new apprenticeship levy will be imposed on all large firms, but Mr Osborne promised that those who take apprentices on will get far more back in terms of funding than they put in.

As was rumoured earlier this week, Mr Osborne confirmed that local councils and elected mayors would be handed new powers to set trading hours on Sundays. This policy, which will be put out to consultation, has attracted some criticism, but the Chancellor argued that local people should have the right to decide if the shops open for longer.

Motoring Drivers will be pleased to hear that there will be no change to the fuel duty plans announced in the Chancellor’s previous Budget four months ago. Fuel duty will remain frozen until the end of the year. There will, however, be a new Vehicle Excise Duty (VED) tax for new cars. The levy will apply in three bands (zero emission, standard and premium) and is set to be introduced in 2017. Mr Osborne said the change was designed to make the car tax system considerably fairer, arguing that the current arrangements penalise those who can’t afford new cars.

Personal tax In a move that will please many traditional Conservative voters, Mr Osborne said that the Inheritance Tax (IHT) threshold would be increased. This will allow £1million to be passed on tax-free and “end the levy on family homes.” Elsewhere, mortgage interest tax relief is to be limited on buy-to-let, which Mr Osborne hopes will “level the playing field” in the property market.

accountancy

The Chancellor said the Government would also press ahead with election pledges to increase the tax-free personal allowance to £11,000 from next year. While the threshold for the higher rate of income tax is also set to increase to £43,000.

automatic entitlement to housing benefit for those aged 18-21.

However, Mr Osborne resisted calls from many in his own party to reduce the top rate of income tax.

Trying to counter fears about the perilous state of the health service’s finances, Mr Osborne told the Commons that “our priority is the NHS.” Although he reiterated previous comments that a strong economy was essential to support services.

Pensions, savings and benefits The Chancellor spoke of the importance of increasing savings. He told the Commons that he would consult on creating ISA-style pensions, where people would lose the tax relief when they pay in, but would be able to withdraw their money tax-free. Likely to prove less popular are plans to reduce the lifetime allowance for pension contributions to £1million (down from £1.25million) from April 2016. The annual allowance for pension inputs will also be reduced for those earning more than £150,000 – tapering away to £10,000, down from £40,000. There was bad news for those who rely on tax credits, which Mr Osborne said were subsidising employment in a way that had never been intended. Workingage benefits will be frozen for four years, although statutory benefits such as maternity leave will not be affected by this. In additional child tax credits will only support the first two children from April 2017. Other radical changes to the welfare system will see the benefits cap reduced to £20,000 (or £23,000 in London) and no

In total, the shake-up of the welfare system will save £12billion by 2019-20.

Health

As the Conservatives had promised before the election, extra funds will be pumped into the health service to help meet the needs of a rapidly ageing population. The Chancellor confirmed that it would receive £8billion on top of the extra £2billion provided earlier this year. Or £10billion a year more by 2020.

Education Mr Osborne argued that the system for student maintenance grants was “unsustainable” and revealed that it would be scrapped from 2016-17. It will be replaced by a series of loans, which people will start to pay once they are earning more than £21,000 a year. The Chancellor said that fears that tuition fees would deter those from poorer families from going to university had proven unfounded and that the charges would continue to rise in line with inflation.

Tax evasion, avoidance and aggressive tax planning Plans were announced to plough extra funds into tackling tax evasion/avoidance.

An extra £750million will be set aside for HMRC to claw back money and serial offenders will be named and shamed. Far tougher rules for non-doms were also confirmed. Mr Osborne has refused to scrap the non-domicile status outright, as Labour had pledged before the election. But the new regime will mean that from 2017, non-doms who’ve spent 15 of the last 20 years in the UK will pay the same tax as everyone else. The new arrangements are expected to raise £1.5billion for the Treasury.

Summary Mr Osborne said that the Budget would pave the way for the Government to finish the job of eliminating the deficit. He argued that the British economy was fundamentally stronger than five years ago, but the crisis in Greece showed how dangerous it would be to become complacent about the nation’s improving finances. With the Conservatives now holding an overall majority, the Chancellor had the chance to introduce long-awaited changes to Inheritance Tax (IHT) and further cuts in Corporation Tax. Elsewhere adjustments to income tax thresholds are expected to benefit around 29 million people. Critics will argue that the dramatic changes to tax credits will hit many working families, although Mr Osborne tried to counter this with the headlinegrabbing announcement of a National Living Wage. “One purpose, one policy, one nation,” he concluded.

Need more help? This feature aims to give some informal hints and tips. McPhersons Chartered Accountants are offering businesses free advice so get in touch now to arrange your meeting. Simply email Peter Watters p.watters@mcphersons.co.uk or call our Head Office on 01424 730000 for a free consultation at McPhersons’ London, Bexhill or Hastings offices. www.mcphersons.co.uk

AUTUMN 2015 Food Franchise | 47

market watch

Market Watch

Of all the questions that we receive here at the Food Franchise office, a large proportion of them are to do with finance and the safety of investing in businesses in this sector. With that in mind we decided to start a new, informative feature, looking at the global financial markets and how the food franchises that are listed perform. Brand in Focus Starbucks

18 million in the US and over 23 million globally.

Starbucks has reported a global like-forlike sales increase of 7% during the second quarter of 2015 and expecting to continue climbing over the coming months.

Commenting on the success, Howard Schultz, chairman and CEO of Starbucks, said: “Starbucks Q3 fiscal 2015 stands as among the strongest and most remarkable quarters in our over 23 years as a public company.

The 7% global increase has been driven by a 4% increase in traffic as well as comparable sales for the Europe, Middle East and Asia (EMEA) division increasing 3%. Consolidated net revenues across the global operation increased by 18% over the third quarter, to a quarterly record of $4.9bn (£3.17bn) and operating income saw a 22% increase to $938.6m (£606.3m), whilst operation margin expanded 70 basis points to 19.2%. Globally, the company opened 431 new stores, bringing the total store count to 22,519. Year-on-year comparable store customer transactions increased nearly

48 | Food Franchise AUTUMN 2015

“The 4% increase in global transactions we reported equates to our having served an additional 23 million customer occasions in Q3 of this year over last year, clearly evidencing a continuation of the strong momentum we have seen across our business and around the world this fiscal year. Scott Maw, chief financial officer at Starbucks, said: “Starbucks very strong year over year financial performance in Q3 demonstrates our commitment to delivering best in class financial and operating results while at the same time

investing in our future growth - building new stores, renovating existing stores, deploying new technology. “We believe that by getting this balance right, we will be able to continue delivering exceptional growth, profitability and increased returns to our shareholders.” The company expects to achieve full year revenue growth of 16% to 18%, with comparable store sales growth remaining in the mid-single digit, and total net new store openings globally remain at 1,650, with 200 openings in the EMEA division, primarily licensed. In the EMEA division, 58 new stores were opened, and revenues saw a 9% decrease to $294.7m (£190.4m). A source at Starbucks claimed that the decrease in revenue was primarily driven by unfavourable foreign currency translation and the shift towards more licensed stores. Partially offsetting the decrease was a 3% increase in comparable store sales.

market WATCH

Hot/Not

Papa John’s PZZA

+10.1% Domino’s DOM

+7.4%

McDonalds MCD

-0.6% Krispy Kreme KKD

-2.8% Marstons MARS

-3.7% Dunkin Brands DNKN

-6.1%

Yum Brands YUM

-6.6%

In order to give our readers the most accurate overview of the ever-changing markets, we look at how certain stocks have performed over a three month period and rate them accordingly on our Hot or Not chart. Papa John’s International Inc (PZZA) – The pizza market within food franchising has been a growing market over the last few months and Papa John’s (PZZA) have maintained a strong position within the market. Since we last looked at them their price has rocketed and they are top of the stocks in this issue. Their closing price last time we commented was at $61.47 and as the time of writing we find them at $67.73. This increase represents a 10.1% increase and puts them at the top of the heap. New store openings and a strong marketing campaign are thought to be responsible for the increase Domino’s Pizza Group plc (DOM) – Like Papa John’s the team at Domino’s (DOM) have continued to be on trend with their offering. An ever expanding range of products and inventive menus have been vital. A large number of new stores opening has meant that Domino’s now find themselves at a historically high share price. At time of writing they were up from 774.50p to 832.50p an increase of 7.4%. McDonalds Corporation (MCD) – There has been a lot of negativity in the press about McDonalds and it appears a little unfair, in truth the brand have seen 37 consecutive quarters of growth in the UK market and this has in turn help to stabilise the global position of the group. With a new team at the helm the only way is up for one of the world’s most recognisable brands. The period of transition and changes in-house, would unsettle some firms but they are showing a rise with their price moving from $96.58 to $97.12 a rise of 0.6%. Krispy Kreme (KKD) – Krispy Kreme were always going to struggle in the early

part of the year with so many new units and retail locations opening. The brand seem to have steadied the ship and are preparing for growth at the start of 2016 with an ambitious marketing campaign. In the world of food franchising this could be one to watch. Recent figures show the group down 2.8% from $17.81 to $17.31. Marston’s plc (MARS) – Following a shake-up in licensing laws and scrutiny over whether or not the pub companies could tie their tenants down to buying from them, this area of the industry looked set for a lean period. Added to the summer budget and the increases in the minimum wage many thought the group would struggle, they haven’t. Marston’s find themselves higher than they were at the start of the year. Over the last three months they have provided investors with mixed results, only dropping 3.7% moving from 158.5p to 152.5p. Dunkin Brands Group Inc (DNKN) – From the best performing stock of the last quarter to one of the worst, it has been a rocky few months for DNKN – the Dunking Brands Group, a series of strong sales helped the stock rise hugely but in recent months the market has stagnated and as such DNKN have dropped a little. Moving from $52.12 to $48.94 in the last 12 weeks investors will be disappointed with a 6.1% fall. Let’s hope that the next few months is more profitable and they take a step in the right direction. YUM Brands Inc (YUM) – It been an interesting year for YUM Brands, who look after the interests of franchise opportunities, Pizza Hut, KFC and Taco Bell. Following on from 10.4% growth in the last quarter things have slowed down a little in the last few months. Their price is down from $85.97 to $80.22 meaning a drop of 6.6%. Investors are struggling to pinpoint if this fall is to do with one of the brands or is just due to unstable markets but you would be wise to assume that things can turn around once more. All information correct as of 03/09/2015

AUTUMN 2015 Food Franchise | 49

diary dates

Dates for your diary Find out what events are taking place in the world of franchising over the next few months

Takeaway Expo Olympia, London 29th-30th September 2015

The event is designed to give you all the tools you need to grow and to develop your takeaway, whether that is franchising your restaurant, adding an automated online ordering system or re-branding yourself to move to the top of the food chain. You’ll be able to talk shop with peers and suppliers, hone your business skills and take away a wealth of free expert advice on everything from Murgh Masala to e-marketing.

that cover new food technology, marketing, maximising your output, new food and menu ideas as well as the Keynote Theatre 120 Exhibitors The Show aims to bring you the widest range of products and services from leading lights in the catering and business world. With everything from shop front signage to online ordering systems, to food wholesalers; to help you find the perfect way to diversify your business.

Takeaway Innovation Expo 2015 will include the following: Workshops Their series of ‘How To...’ workshops aim to give you the inside track on how to grow your takeaway; find out from the experts exactly what will be involved and how to make it work for you.

The National Franchise Exhibition NEC Birmingham 2nd – 3rd October September 2015

New Start Scotland SECC Glasgow

Keynote theatre Hear from some of the UK’s leading experts in business and catering as they impart their skills, knowledge and expertise on how you can improve your takeaway, as well as speakers from catering offering some fascinating insights into the food service industry.

85 Free seminars These seminars are run by some of the foremost experts in the food industry; they’ll be speaking from seven theatres

Find out more and to order your free ticket, visit www.takeawayexpo.co.uk.

With over 500,000 Brits now employed in franchising across the UK and an industry turnover amounting to £13.7 billion*, there has never been a better time to adopt one of the UK’s most successful business models.

Huge range of brands Choose a brand to suit you and your budget from franchises across a variety of sectors including accountancy, education, fitness, food & drink, property, children’s activities and many more!

Discover how you can be your own boss with the support of an established brand at the UK’s largest franchise event – The National Franchise Exhibition on 2 & 3 October at the NEC, Birmingham. The event has been running for over 20 years and is exclusively in association with the British Franchise Association (bfa), meet face-to-face with brands that have met the bfa’s code of ethics.

Over 60 free seminars Learn all you need to know about franchising from the experts the free seminars. Topics include an introduction to franchising, how to avoid any pitfalls and how to raise finance for your franchise. Hear from financial and legal experts as well as representatives from The British Franchise Association (bfa).

Whether you are looking to get your new business idea up and running or you want to protect and grow your existing business in a difficult climate, the New Start Scotland Exhibition has everything you need under one roof. In addition to face to face advice from more than 150 exhibitors, you can also take part in the extensive range of free seminars, workshops and live features all designed to

ensure your business not only survives, but flourishes.

The show is packed with a vast range of live features, designed to inspire and assist both new and existing businesses. Our experience with the New Start Scotland and Scottish Business Exhibition Technique and Innovation Demonstrations.

understand the next trends and fashions in food retail.

Network with the best of Scotland’s food entrepreneurs, and meet the suppliers and partners you need to drive your business forward. Our facilitated networking sessions will build your networking skills and provide the opportunity to meet vital business contacts face to face.

12th-13th November

Restaurant & Takeaway Business Live SECC Glasgow 12th-13th November

Learn the latest food preparation techniques and discover fresh cuisine from around the globe in our live demonstration area. See, taste, and enjoy live demonstrations from Scotland’s upcoming chefs and

50 | Food Franchise AUTUMN 2015

Discover the skills you need to re-vitalise your marketing. Social Media and internet marketing have reinvented the way restaurants and takeaways find and keep new customers. Our dedicated interactive workshops will teach you the techniques to do this for yourself, and explain the importance of your brand and how to maximise its impact. Over the past ten years means we have developed various show features.

Visit Free

Restaurant & Takeaway

BusinessLive 12th & 13th November

SECC Glasgow

The event for the Scottish Food & Drink Industry Co-located with Scotlandâ&#x20AC;&#x2122;s largest Business Exhibition Seminars

Workshops

50+ Exhibitors

121 Advice

Customer Loyalty

Maximise Profits

Cost-Effective Suppliers

Live Demos

www.rtblive.co.uk 0800 157 7950 @RTBizLive

FEEDING HEALTHIER NATIONS

FAST FRESH & HEALTHY

NEDS NOODLE BAR ARE NOW FRANCHISING NATIONALLY AND INTERNATIONALLY For more information visit our website

www.nedsnoodlebarfranchise.com or come along to location M240 at the National Franchise Show NEC Birmingham 2nd and 3rd October 2015

52 | Food Franchise AUTUMN 2015