Food Franchise Magazine Spring 2015

Fast food Franchise

QSR Franchise

Coffee franchise

Sandwich franchise

Pub Franchise

Restaurant Franchise

SPRING 2015

FoodFranchise One to Watch Take a look at Wrap It Up who went from Dragons Den to the high streets of central London and beyond

25 Up-and-Coming Food Franchises

Be Inspired

We look at some of the most exciting food franchises to look out for in 2015 Print edition £3.99

1 | Food Franchise SPRING 2015

Mum, Franchisee, Olympic Champion?

Welcome to the world of Domino’s franchisee Lisa Tobias

Papa John’s

news round-up

An investment so good, one franchisee bought five!

A look at some of the latest developments in the food franchise sector

2 | Food Franchise SPRING 2015

Contents SPRING

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

15 Papa John’s One of the leading pizza franchises tells us about their latest offerings and a new investor

06

16 25 Up-and-Coming food and drink franchises In this issue we look at 25 of the most attractive new franchise opportunities on the market and look at the ones that could be growing quickly during 2015

16

28 Choosing the right food franchise A look at the food franchise industry and how best to choose the right one for you

15

34 One to Watch A look at one of the fastest growing food franchises, Wrap It Up, who are breaking out of London to go nationwide

28

34 SPRING 2015 Food Franchise | 3

38

38 Accountancy The experts from McPhersons Chartered Accountants tell us what we should be doing with our money

42

40 Franchise Finance A look at the hidden cost of franchising and how to avoid the traps

42 Be Inspired Multiple franchisee, mother of two and training for Olympic gold, we talk to Lisa Tobias as she aims to conquer the world

44 Franchisee Corner Subway franchisee Ian Dawes gives us an insight into the world of franchising

45 Food Review Resident columnist Trevor Langley gives us his thoughts

47 F ranchising v Independents The experts at Jaspers Catering give us their view on the benefits of a franchise compared to owning your own business

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47

Editor’s message Hello and welcome to the Spring Issue of Food Franchise.

The start of 2015 has been a busy one for the team here at MVH Media and I think you’ll notice that as you flick through the pages.

Editor Scott Rumsey scottr@mvhmedia.co.uk Office: +44 (0) 333 003 0499

Editorial contributors Trevor Langley

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

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

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

Design Simon Warbrook design@mvhmedia.co.uk

The last issue was taken to both the Hospitality show in Birmingham and ScotHot in Glasgow where it received a really positive reception with many suggesting that it fills a gap in a big market. The issue that you currently have in your hands or online will be heading to the IFE show in mid-March and again this is a testament to the hard work by our dedicated team.

On to this issue then, here’s a look at what you can find inside, we have two interesting features, the first of which looks at the top 25 up and coming food franchise opportunities on the market, whilst the second looks at the best way to choose your food franchise. The features pair nicely to give you yet another informative read.

It’s also an exciting time in this month’s one to watch as we look at the latest opportunities from Wrap It Up. The sandwich chain has taken London by storm since appearing on Dragon’s Den and shows no sign of stopping.

Our Be Inspired column this issue takes a look at Domino’s franchisee, Olympic athlete and ‘super mum’, Lisa Tobias who somehow manages to balance the running of nine busy stores with family life and aspirations for the Olympics in Rio de Janerio 2016.

As well as these features we also have all the latest industry news, our regular columns from Ian Dawes and Trevor Langley and a guide to the markets.

As we remain committed to making this magazine a valuable resource for franchisors and franchisees alike there are also plenty of pages looking at legal factors your business may face, accountancy and finance.

If you are at any of the upcoming shows pleased feel free to pop and see us or drop us a line and we’ll get back to you.

Our next issue is out in May, so until then 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.

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SPRING 2015

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ONE TO WATCH

We look at some of the most exciting 2015 food franchises to look out for in Print edition £3.99

Mum, Franchisee, Olympic Champion?

Welcome to the world of Domino’s franchisee Lisa Tobias

PAPA JOHN’S An investment so good, one franchisee bought five!

1 | Food Franchise SPRING 2015

TOUGH CHOICES How to choose the perfect food franchise for you

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SPRING 2015 Food Franchise | 5

News

round-up McDonald’s names UK-born chief executive Food franchise and fast food giant McDonald’s have announced that UK-born Steve Easterbrook will take over the top job at the company and will be charged with turning around the fortunes of the fastfood chain as they battle falling sales.

Easterbrook takes over as its Chief Executive and President after Don Thompson stepped down amid a drop in sales and pressure mounting on the company’s share price.

Mr Easterbrook has worked for the company for the majority of his career, only taking a two-year hiatus to become the Chief Executive of Pizza Express in 2011.

The 47-year-old, grew up in Watford, and had received widespread praise during his first stint with the company. Joining in 1993 Easterbrook was largely applauded for turning around McDonalds’s UK business after being tasked with this challenge in 2006. He was subsequently made president of McDonald’s Europe where he also flourished.

Many were surprised when he left the company in 2011, moving to Pizza Express, but this experience as well as that gained during a brief stint with Japanese themed restaurant Wagamama.

Easterbrook currently sits in the role of Senior Executive Vice-President and Chief Brand Officer and has done since he re-joined McDonald’s in 2013. His new position will start as of March 1 2015

however some have warned of a transition period.

Easterbrook seemed delighted and privileged when talking to the press about his appointment saying: “I am honoured to lead this great brand, and am committed to working with our franchisees, suppliers and employees to drive forward our strategic business priorities to better serve our customers,” Current CEO Thompson, has sat in the role for around two-and-a-half years and is himself a long serving employee. The 25-year McDonald’s veteran oversaw a fall in same-store sales in 2014 for the first time in 12 years, results that are thought to be partially to blame for the shake-up.

Revenues also dropped 7% to $6.5bn last year, while net profits declined 15% to $4.7bn.

These figures are largely put down to a change in consumer buying patterns with many willing to pay more and wait longer for a product cooked to order. Brands such as Shake Shack and Five Guys are just two companies who have been making waves in the burger industry. The consumer shift to healthier options is also high on the agenda

and with it menu changes are expected.

After unveiling weak fourth-quarter results a few weeks ago, Mr Thompson said that McDonald’s “continues to face meaningful headwinds and that results are expected to remain pressured, particularly in the first half of the year”.

McDonald’s is currently trailing a buildyour-own burger scheme in the US and are incorporating technology such as ipads for ordering in a bid to win back custom, some stores are also exploring wireless charging.

Harry Ramsden’s wins Awards Shortlisting One of Harry Ramsden’s flagship outlets, the 417-seater store in Bournemouth, has been shortlisted in one of the most hotly contested categories at the annual Bournemouth Tourism Awards.

The store which can also lay claim to being the World’s Largest Fish and Chip restaurant will look to defend its crown after being named Restaurant of the Year at last year’s awards.

After a reshuffle in the categories, this year’s new look list of categories sees Harry Ramsden’s shortlisted in the Favourite Family restaurant category.

Over the years the world famous brand has seen something of a resurgence with firm plans to offer franchising and take their award winning fish and chips to the high streets of the UK. When asked about the history of the company and brand development, Joe Teixeira, CEO of Harry Ramsden’s said: “For over 85 years, Harry Ramsden’s has been proud to serve generations

6 | Food Franchise SPRING 2015

of families so to have reached this stage, I think, indicates that as a brand, we are not only popular with our traditional customer base, but we are winning a whole new generation of fans.

“To be recognised at the awards ceremony in this way is testament to the continued hard work of all our team.

“We are delighted to be finalists once again. There is nothing like enjoying Fish and Chips by the seaside with the family and as the nomination would imply, that experience is made even better when it is shared at Harry Ramsden’s.”

At the time of writing the winners of the 2015 Bournemouth Tourism Awards were due to be announced at a ceremony in the Bournemouth Pavilion on Friday 27 February.

Wrap It Up to expand outside the capital Wrap It Up, one of the fastest expanding food franchises is set to continue their extensive growth with a new site in Manchester.

The sandwich franchise which specialises in providing their customers with an extensive world menu has seen huge queues form outside their 12 London outlets and opening in Manchester is seen as a huge step forward.

Managing Director of the natural fast-food chain, Tayub Mushtaq spoke exclusively to Food Franchise magazine about plans for the business and said: “Consumers have never been more knowledgeable about the links between food and health “We offer a full world menu which means that customers can come back day after day to eat something different.

“Where else can you get a lamb roti on a Monday, a Mexican fajita on a Tuesday etc.

Our customers trust the brand and want to branch out and we must do that too.

“That is the reason that we are opening up in Manchester. It’s a vibrant city and we have used an extensive marketing campaign there, the uptake to this has been fantastic and we are confident that when the new customers come in they will become regulars.”

For those outside London you may have heard of the concept of Wrap it Up after it was pitched by Tayub on Dragons’ Den. On the show they received a positive response and those on the panel could really see a need for this type of restaurant. Ultimately no investment was made as the brand failed to convince the Dragons of their growth forecasts. This

has since been proved different with six company owned stores and six franchised stores turning out high profits in the expensive central London market.

Such is the popularity of the chain they are stealing customers from the likes of McDonald’s, KFC and Burger King, and have seen queues around the block at all 12 London sites.

Wrap It Up! is one of several new “healthy” fast food players that are offering customers hot wraps and salad boxes fresh to order in its stores, in front of the customer. Talking about the Dragon’s Den experience, Mr Mushtaq

said: “We have the potential to be the next Subway, we are going to be a global business and they will rue the day they missed out.”

Wrap It Up have already secured many deposits for franchises and plan to open a further 12 outlets in London this year.

A new commercial kitchen in Salford, could see them launch up to 100 new sites within 10 years, creating 500 jobs.

Mr Mushtaq added: “We are comfortably forecasting growth of 3050pc year-on-year for the next three years. Last year we saw our turnover rise 50% to £2.5m so the numbers are good.

Hotcha hire Senior Executive to oversee ambitious growth Owner and entrepreneur James Liang, has kept to his promise of turning Hotcha into the Domino’s Pizza of the Chinese takeaway sector with the hiring of one of the pizza chains senior members of staff.

The Bristol based company which specialises in Asian dishes has seen rapid growth over the years and has started a large scale internal recruitment drive in order to support their plans to increase franchising.

The brands most recent signing is Clive Mellor who was a former senior executive at Domino’s Pizza. His acceptance of the role is part of Hotcha’s national growth plan to open 100 franchised stores across the UK in the next five years.

Mellor has joined Hotcha’s management board as Operations Director after working in the hospitality sector for many years. His career has seen him hold down a number of senior positions with big brands including Little Chef, Burger King and Traveller’s Fare.

In his time with other businesses in the sector Mellor has overseen growth on a scale that Hotcha will hope to replicate and ultimately expand on.

In the new role he will be responsible for maintaining high trading standards across all aspects of the business and also help increase the frequency of store openings.

Talking about the latest appointment, James Liang told journalists: “This high level appointment signals our intentions to make Hotcha a leading national takeaway and restaurant brand in the next few years.”

Hotcha currently has nine stores in the South West of England, with expansion imminent.

SPRING 2015 Food Franchise | 7

News

round-up SUBWAY® celebrates its 2000th store opening Leading food franchise and sandwich store, Subway is celebrating the opening of its 2,000th store in the UK and Ireland.

The 2000th store opened last month in in the Jarman Leisure Park, Hemel Hempstead.

The milestone opening highlights the more than £200m investment that franchisees have contributed to their local economies as well as the provision of over 20,000 jobs in stores across the UK and Ireland.

As Quick Service Restaurant’s (QSR) become increasingly popular it’s no surprise that competition in the market is stiff, yet Subway have pressed on to become the leading food franchise brand in the UK. The last 12 months have seen the brands continued expansion in the UK and Ireland with over 260 stores opening in the last 12 months.

One of the largest areas of growth is the development of stores in non-traditional locations, such as on forecourt sites, within convenience stores, universities and hospitals. The latter has received much media attention lately with questions being raised over the partnership of QSRs or fast food outlets operating in medical facilities.

Greg Madigan, Area Development Manager for SUBWAY® UK and Ireland, commented on this issue saying: “We offer a healthy alternative and work closely with hospitals and our other nontraditional sites, we are often approached by them and also work

8 | Food Franchise SPRING 2015

closely with the local authorities.”

Talking about the growth of the market and the brand as a whole, Mr Madigan added: “The level of growth that the brand has experienced in the UK and Ireland is a fantastic achievement.

It reflects the entrepreneurial spirit of our franchisees and development agents, together with the power and support of the global brand.

“Opening the 2,000th store in Hemel Hempstead today is an exciting milestone for everyone involved, and I am very proud of their achievements. What’s more, we have a strong pipeline of stores opening throughout 2015 in a variety of locations from high street to popular non-traditional locations.”

Christopher Seymour, franchisee of the 2,000th store, commented: “It feels fantastic to have opened the 2,000th store.

It’s a great honour to be a part of such a big franchise, and I’m delighted that I’ve been able to contribute to its success.

I’ve worked with the brand for over 12 years now, Hemel Hempstead is my 12th store, and I have another three in the pipeline for this year.”

All 2000 stores in the UK are franchisee owned and there are more than 43,000 Subway stores in over 105 countries worldwide.

Pizza Franchise Papa John’s to Recruit in Scotland Leading pizza franchise, Papa John’s, has announced that they are recruiting franchisees north of the border as they aim to increase their coverage in Scotland.

Leading pizza franchise, Papa John’s, has announced that they are recruiting franchisees north of the border as they aim to increase their coverage in Scotland.

The company which has gone from strength to strength over the last few years, have taken the food franchising sector by storm and have recently launched their franchise incentive scheme for 2015.

In the scheme they are offering franchisees discounted royalty fees, a contribution towards marketing spend and free equipment development zones in Scotland in 2015.

Those franchisee who look at opening up the American brand in

Scotland and other key areas of the UK can expect instant rewards.

Talking to the press, Anthony Round, business development manager at Papa John’s UK said: “The Papa John’s franchise is growing rapidly in the UK and none more so than in Scotland,” “Therefore, we are aiming to attract more enthusiastic and business minded franchisees who are keen to open multiple Papa John’s stores in the region.

“With this in mind, we have come up with one of our most tempting franchise incentive packages yet. Designed specifically to help franchisees in the early stages of growing their businesses, the deal includes marketing support for all new store openings in the first six months with trading, free equipment and reduced royalty payments for 15 months including three months free.

“Combine our popular pizza made with the highest quality ingredients, with excellent customer service, rapid delivery times, a strong brand, comprehensive staff training plus some hard hitting marketing support and the franchise serves up a fantastic offer for those looking for a quality investment opportunity.”

Master franchising or opening multiple franchise units has become increasingly popular over the years with many investors wanting the protection of a brand yet the room to grow. This incentive is sure to be snapped up and Scotland looks likely to benefit from the brand who have performed so well in the rest of the UK.

Wok&Go complete shopping centre line-up York’s Vangarde Shopping Park has announced that it is now 100% occupied after high street noodle chain Wok & Go moved into its last vacant unit recently.

The business who have seen a number of units open in the last few months have long targeted York with one city centre location already. Due to the response of the first store they have responded to customer pressure and opened another, this time in one of the premium spots the area has to offer.

Speaking to journalists, Vangarde Shopping Park centre manager, Deb O’Donnell said: “Since opening in April last year, Vangarde has gone from strength to strength and we now have a wide range to give customers a number of high quality offerings to choose from.

“This Christmas confirmed the popularity of Vangarde as York’s top retail destination of choice. We experienced high levels of footfall due to the stores we have here and Wok & Go’s opening coincided well with this.

“We are delighted to be fully occupied and we are delighted to have Wok & Go at Vangarde as they continue to be a popular choice in York.”

Wok & Go Managing Director, Des Pheby was thrilled by the opening and said: “Our great location on Vangarde Shopping Park means we are the perfect place for a quick lunch when out shopping or passing by.

“The team has been working really hard to get everything just right over the last few months and it is incredible to think that we have opened two stores in York in just over 12 months.

“The city is a fantastic location for Wok & Go and has really embraced our ethos for high-quality and healthy food, freshly cooked in minutes.”

Wok & Go have performed remarkably well since they opened their first store in Chester in 2008 after Mr Pheby was inspired by oriental restaurants.

The chain now has stores in Chester, Liverpool, Birmingham, Leeds, Nottingham, Hull, Cambridge, Norwich, Cardiff and Brighton, as well as the two in York. They will also be opening a unit in Bangor in coming weeks, The opening of this store adds to Vangarde’s impressive restaurant offering, which includes a number of franchised units such as Giraffe and other chain brands Frankie and Benny’s and Nando’s.

SPRING 2015 Food Franchise | 9

News

round-up Esquires reward staff with Awards night One of the latest branches of Esquires Coffee in Durham has played host to the franchises annual awards ceremony in a bid to reward those in the business for their hard work.

The new-look store in the heart of the city, held the annual Franchisee Awards looking at the achievement of the brand over the last 12 months.

One of the big winners on the night was franchisee Mark Grainger who runs the Stockton Heath branch of the business.

During the ceremony he scooped the Franchisee of the Year award.

In the presentation a number of reason were given for Mark’s success and he was said to have demonstrated a high standard in all aspects of the franchise system and brand. Mark was also awarded the Shining Star Award for his consistent and excellent customer service.

Franchisee Steven Prime of Esquires Coventry took home the Community Spirit award for his dedication to charity and community involvement. Last year Steven embarked on a charity cycle down the west coast of America to raise money for Coffee

Kids, before sadly being knocked off his bike on the first day.

Other winners on the night included Franchisee Steve Patania of Esquires Doncaster Wheatley won the Gold Standard award. This was awarded to the operator who demonstrates a gold standard in terms of store appearance, cleanliness and display.

Ian and Necita of Esquires Middlesbrough were awarded with the special Tenure Award for their hard work and dedication over their 10 years as Esquires Coffee operators, whilst Dilip, Bharti and Raj Shah also were awarded with our special Tenure Award for their great work at Esquires Stevenage. Dilip was also given the Transformation Award for demonstrating the greatest improvement in sales from last year.

Esquires coffee of one of the most interesting franchise models currently available on the market, are opening a growing number of franchised units in the UK. The new look design of the stores has seen them win many awards themselves and an army of new fans.

Latest figures show food sector stronger than ever The latest stats from industry experts and business insight consultancy, Coffer Peach, shows that the UK food sector is continuing to grow and is in good health despite fears that lean Winter months would damage profits.

Results from the Coffer Peach Business Tracker show that the public has not been deterred by January’s cold snap and postChristmas slumps as like-for-like sales for restaurant and managed pub groups were up 1.4%.

It marks the 22nd month for consecutive like-for-like growth recorded by Coffer Peach, which notes a growth in consumer confidence.

Speaking to reporters about the results,

10 | Food Franchise SPRING 2015

Peter Martin, vice president of CGA Peach said: “Trading in the early part of the month suggested that winter months might have finished down on the same months last year, but a late surge in business saw the sector remain in positive growth.”

“The bad weather obviously had an impact, with sales only just ahead of the same period last year, but the positive sales momentum remains there.

“Pub group sales were essentially flat

for the month, up just 0.2%. However, restaurant groups, enjoyed a 4.1% likefor-like increase for the month, with particularly strong trading outside of London.”

The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 30 operating groups. Participants include Mitchells & Butlers, Pizza Hut and Pizza Express.

Muffin Break celebrates National Breakfast Week Muffin Break café-bakery stores nationwide joined in on National Breakfast Week celebrations to raise awareness of the importance of eating breakfast.

With more Brits than ever missing or skipping the most important meal of the day, Muffin Break encouraged breakfast dodgers to grab a nutritious breakfast whilst on the move.

Michael Arbuckle, Managing Director of Foodco UK said, “Figures show that a quarter of people are now skipping breakfast at least once a week, with one in 10 not eating breakfast at all.

We’ve also noticed that more people are buying breakfast whilst on the move, but it’s important that your grab and go breakfast is filling and healthy to ensure the best start to your day.

“Muffin Break offers a perfect solution for mobile munchers, with a team of early morning bakers preparing fresh Bran breakfast muffins each and every morning for those grabbing breakfast on the go.

“Their broad breakfast range includes a wide variety of muffins packed with lots of delicious combinations of fruits and seeds, but most importantly filled with great taste and freshness too.”

Mr Arbuckle then added: “There are very few places on the high street where you can pick up a coffee and also a muffin that has been baked with the finest ingredients and taken out of the oven that very morning, unless, like us, you are an early riser and make your own from scratch.”

The breakfast varieties are just part of an extensive range of over 200 muffin flavours at Muffin Break, all made freshly on site every single morning and can be found alongside the stores freshly made range of quiches, soups and sandwiches prepared for lunch time visitors.

Stars help BarSport open up in Derby One of the fastest growing franchises in the UK, BarSport have recently opened another venue this time in the centre of Derby.

The sports bar which houses an array of sporting memorabilia has seen a host of big names help them with their latest opening including Commonwealth light heavyweight champion boxer Ovill McKenzie.

The sports bar and grill, which has cost £500,000, has created 20 full-time and part-time jobs and will feature more than 30 television screens as well as a large

projector showing live sport.

It will offer regular music and entertainment during the week and weekends including DJs and will host themed nights.

Also present on the night was a familiar face as Derbyshire and England cricketer, Dominic Cork officially cut the ribbon. The legendary paceman was at the launch of the newest unit at the site of the former

Rhode Island Diner, in Queen Street and was met by fans from his time with the county.

The bar is being run by franchisee Akin Tahsin and his son-in-law Mustafa Uruncuoglu. Mr Tahsin said: “It is fantastic to be up and running and the feedback we have received so far has been great.

Dominic was highly impressed with what we had achieved at BarSport.”

SPRING 2015 Food Franchise | 11

News

round-up Domino’s pizza to trial smart watch app Domino’s Pizza one of the UK’s largest food franchises have recently announced that they will continue to embrace technology and pair it with their food.

According to the brand they have created a new app that can let order your Domino’s via a smartwatch.

In order to stay ahead of the competition the delivery company is maintaining their ethos and its obsession with being everywhere its consumers are. This latest move means that customers who have the technology are able to order on the go.

Domino’s has created the app for Pebble and Android smartwatch users, and amongst the new features the user ca place and track their order.

The only thing that the user must have is must a Pizza Profile with a saved EasyOrder or recent order on it and this can be replicated next time they choose to eat with the brand.

Kevin Vasconi, Domino’s Pizza chief information officer, said: “Pairing Domino’s with smartwatch technology couldn’t be more of a natural fit.

“We are constantly looking for ways to use technology to enhance our customers’ experience and provide them with more convenience.”

The development comes amid Mobile World Congress, where the new Pebble smartwatch was previewed and in line with Apple’s expected unveiling of its Apple Watch mid-March.

Tiger Bills head Down Under Torquay based restaurant group Tiger Bills are pleased to announce a master franchise agreement to take the brand to Australia and New Zealand.

The talks which have concluded over the last few weeks will see an ‘experience operator’ sign for the master franchise rights. This news means that in a short space of time the East meets West themed chain could be operating on four different continents.

The addition of a six figure sum will bolster the group’s international presence and if forecasts are correct there will by eight units in each country within the next five years.

Currently the business which specialises in Thai – Western cuisine has seen strong growth in the UK and Europe with a number of stores opening over the last twelve months. Thai food is also one of the emerging trends within the food-to-go industry and as a result many prospective franchisees are looking for involvement.

Those at the head of Tiger Bills are obviously very protective over the brand and they have a measured approach to signing

12 | Food Franchise SPRING 2015

their franchisor agreements. Talking about the group’s strategy, International Vice President for Tiger Bills Patrick Mauser said: “Tiger Bills is not in the business of ‘selling franchises’.

“It is our core belief to award franchises to the most suitable candidates and then offer uncompromising back-up support from site selection, to marketing, training and supply chain.

“We are currently in talks with potential Master Franchisees in China, Taiwan, Pakistan, Myanmar and the Philippines.

Further afield, we are also looking at Africa and have commenced European marketing activities.”

After the new deal had been signed, CEO for The Lifestyle Group, James Eyre commented: “We are extremely excited to be adding Australia and New Zealand to our ever-growing list of destinations around the world.

“We’re confident that the concept will work well in Australia, as other franchisees abroad have proven.”

INTERNATIONAL industry news

Time for Tacos as Taco Bell enter Japanese Market Japan has no shortage of US-style fast-food restaurants and over the years the consumers there have embraced the western style of eating buying everything from burgers to pizza.

One thing that many believe has been missing however is food of Mexican influence, items such as tacos, fajitas, burritos and quesadillas.

That is all about to change, however, as Taco Bell is planning to set up in the Asian country.

Restaurant chain operator Asrapport Dining Co. recently released a statement to the press saying that they had signed a franchise agreement with the Taco Bell owners, Yum Brands Inc. to open their restaurants in the country.

At present the only Taco Bells currently operating in Japan are located on restricted U.S. military bases but it appears about time that the nation can experience this growing brand.

A spokesperson for Asrapport, which operates restaurants in Japan already including the yakiniku restaurants which serve grilled meats to their customers, has said: “The move will help it expand our portfolio and introduce a new category of fast food into a market where it would meet great demand.”

There are currently a number of foreign restaurant chains

operating in Japan, such as McDonald’s and Subway, with others attempting to enter the market. As recently as February, New Yorkbased Shake Shack , said it would open several restaurants Japan.

Burger King pulled out of the market several years ago, only to return and recieve significant attention for its all-black hamburger offerings.

Asrapport didn’t say when the restaurants would open or how many there would be, but have seen their shares jump after the announcement, closing up 10% on the Tokyo Stock Exchange.

Founded in Downey, Calif. in the 1960s by Glen Bell, Taco Bell now has over 6,000 locations world-wide.

Thai takes Ireland by storm as Camile branch out Camile Thai Kitchen, the premium takeaway chain founded by Brody Sweeney, is expanding outside its native Dublin with plans to have a total of 25 branches across Ireland over the next three years.

Operating since Sweeney closed his original venture O’Briens Sandwich Bars in early 2010, Camile has been active in their franchise recruitment over the last few months and see their current model as an attractive proposition for an expanding audience.

The company currently has seven outlets in Dublin with three more under development there and now directors are now seeking franchisees for a number of key targets including Cork, Limerick and Galway.

Talking about the opportunities Sweeney said: “We’re looking for partners to expand the business in the key cities around Ireland, to help us build Camile into a national brand,” “There are great opportunities in the bigger urban centres like Cork, Limerick and Galway where consumers are hungry for innovative food concepts.”

Those wishing to invest in Camile will need to stump up €250,000 to open a new restaurant but there are many benefits with the best restaurants turning over in excess of €1m a year.

Sweeney added: “Managing the logistics of delivering a chefcooked fresh meal in under 30 minutes is the key to expanding.

“If we hit our targets over the next few years we can continue or expansion and create 180 full- and part-time jobs.”

SPRING 2015 Food Franchise | 13

INTERNATIONAL industry news

Top distributor strike Five Guys deal U.S. based distributor, Willow Run Foods Inc. has announced that they have stuck a five-year deal worth about $375 million with Five Guys Burgers and Fries.

U.S. based distributor, Willow Run Foods Inc. has announced that they have stuck a five-year deal worth about $375 million with Five Guys Burgers and Fries.

The fast food chain who have a large following in America, have decided to branch out by securing the services of an experienced logistics company as they continue their growth.

In recent months Five Guys have seen their operation move to the UK with a number of stores and it looks like they are securing up their business at home so that the continue their global expansion.

Starting on May 15, Willow Run will distribute to nearly 250 Five Guys restaurants throughout the U including the 73 locations they operate in New York.

Speaking to the press, Terry Wood, president and CEO of Willow Run, said the company will add about 50 employees, including professional truck drivers, warehouse personnel and various office positions, because of the deal with Five Guys.

“This is an account that we’ve been working on for many years,” Wood said.

“Everyone here is thrilled they decided to partner with us.”

This is the second significant agreement for Willow Run within the past five months. In late October 2014, Willow Run reached an eight year deal worth

$280million with Checkers Drive-In Restaurants Inc. Willow Run, is an employee-owned company specialising in the distribution of casual dining and fast-food systems, overall the business has about 390 employees and show annual sales approaching half a billion dollars.

The deal that has been ironed out will surely help grow Five Guys, a brand who

have recently been named as one of the biggest threats to McDonalds with their freshly made burgers and famous fries.

Out of its Kirkwood distribution center, Willow Run provides service to more than 480 Wendy’s restaurants, 325 Arby’s locations, 250 Popeyes and 150 Quiznos.

They are currently the distributor of the year for three of these national restaurant chains.

Shake Shack see huge revenue boost American burger concept Shake Shack has reported a 4.1% rise in same-store sales and a total revenue increase of 43.7% to the end of 2014.

The brand increased their income enormously last year and the latest set of results show the strength of the brand with total sales of £79.7m for the fiscal year end.

The total revenue, which includes Shake Shack sales and licensing revenue, increased 43.7% from £55.5m for the fiscal year 2013 and is largely due to the openings of 10 new Shake Shack units in the US Randy Garutti, chief executive officer of Shake Shack, said: “We are pleased with the strength of our fourth quarter results and excited to begin our journey as a public company. Our culture of Enlightened Hospitality has enabled Shake Shack to become a globally beloved brand where all of our stakeholders are rooting for our success.

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“We are witnessing a seismic shift in people’s understanding and expectations of food and, for the last decade, Shake Shack has helped lead the change in consumer behaviour through our fine casual approach.”

Shake Shack is expecting total revenue to be between $159m and $163m, same-store sales growth in the low single digits, at least 10 new US-based openings throughout the year and at least five international openings.

Shake Shack currently has one site in Covent Garden, with a second opening expected in the Westfield, Stratford. They are currently not offering franchises in the UK but such it the success of the brand who have put pressure join other burger brands, it is only a matter of time.

business profile

Papa John’s Customer to Open Five New Stores Leading pizza franchise, Papa John’s, has announced Abhishek Sachdeva has opened the Company’s latest franchised store in St Helens. Long term Papa John’s customer Abhishek and partner Kanika, have also signed up to open four further outlets in the North West within the next 18 months.

“I have always been impressed with Papa John’s from the other side of the counter and I was a regular customer in Swindon for several years,” explains Abhishek. “The product is superior; using only 100% fresh dough definitely gives a better flavour. I firmly believe in the brand and concept of ‘better ingredients, better pizza’, so the choice was simple.

“Our St Helens Papa John’s has a great city centre location which has attracted a high footfall right from the first day of opening,” continues former Shell forecourt franchisee Abhishek. “The customer response and feedback so far has been amazing and within one day we had 500 ‘likes’ on our facebook page!

“Setting up was made as straight forward as possible with help from Papa John’s staff and all the training provided was excellent,” confirms Abhishek. “Our staff got a head-start, accessing the

Company’s online learning system and this was followed up with ten days in-store with a Papa John’s dedicated trainer to ensure everyone was ready to serve up the best pizza in town on our opening day!

Papa John’s now has more than 280 stores in the UK. Most recent openings include: Peacehaven, Hove, Edinburgh, Nuneaton, Loughborough, Newcastle-Under-Lyme, Lowestoft, Lichfield, Harpenden and Hackney Wick.

Papa John’s has recently launched its new incentive scheme to help franchisees in the early stages of growing their businesses which includes discounted royalty fees, contribution towards marketing spend plus free equipment for new stores opening our the enterprise development zones of the Midlands, Wales, The North West, North East and Scotland. These great deals are all on the table for franchises opening in 2015, so first come first served!

“The Papa John’s franchise is growing rapidly in the UK,” confirms Anthony Round, business development manager, Papa John’s.

“We are aiming to attract more enthusiastic and business minded franchisees who are keen to open multiple Papa John’s stores. With this in-mind, we have come up with one of our most tempting franchise incentive packages yet. Designed specifically to help franchisees in the early stages of growing their businesses, the deal includes marketing support for all new store openings in the first six months of trading, free equipment and reduced royalty payments for 15 months including three months free.

For further information please visit: www.papajohns.co.uk/franchise call: 0844 567 0937 or e-mail: enquiries@papajohns.co.uk

SPRING 2015 Food Franchise | 15

Up and Coming Franchises

25 Up-andComing food and drink franchises Food franchising is on the rise in the UK and indeed throughout the world and there are two very distinct types of franchise available. First there are those controlled by big, established brands and then there are the independents that have been started up with a view to grow.

At Food Franchise magazine we are always looking at the market, at the current trends and at how the brands develop. With his in mind we have decided to look at 25 up and coming brands, explore their offering and understand their plans for the future.

In this list you may find that there are some names who you will have heard of and some that you may not. The bigger brands that appear here do so not on name but on merit. They are the brands that are constantly reviewing their product, ones that are looking to expand their franchising opportunities or are actively looking for people to join them.

The smaller brands that you find here are in the list because we believe that they have found a gap in the market or are moving with current trends to offer a product that will see them grow into and established brand.

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Harry Ramsden’s As one of the world’s most recognisable fish and chip brands, Harry Ramsden’s are certainly one to watch.

You could be forgiven for thinking that a brand of this size has much scope to grow but in fact 2015 could be their year. With an ambitious plan to recruit and roll out over 150 high street units, it could be that Harry Ramsden’s cash in on the £1.2 billion spent on the dish every year in the UK. Fish and chips is at the heart of the nation’s food-togo spending and more and more consumers are tired of getting a limp, lifeless piece of fish with poorly flavoured, soggy batter and soft, mushy chips. They want a quality product much like the one offered at Harry Ramsden’s.

By offering a consistent product throughout the high street, using their traditional methods and the freshest produce it is thought that the nostalgia of visiting their seaside eateries will be brought to life at any time of the week.

Plans for the business are to increase food service sales tenfold, develop the Harry’s at Home lines available in the supermarkets and to develop an international presence.

This is definitely one to look out for.

Update 1 The January diets may have come and gone but that doesn’t mean that we have to give up on our health.

Update1 is a unique franchise opportunity in that they offer a lifestyle rather than just a bistro/deli. With over 300 low carb and gluten free products in their range it is possible that you can complete your entire weekly shop with them. The health foods that they sell are endorsed by legendary tennis player Andre Agassi and the branding is strong.

This concept is one that is sure to grow as the public become more health conscious and is an exciting opportunity for those thinking of joining a franchise.

Up and Coming Franchises

Beer Dock This quirky concept came about on the back of franchisor, Chris McGarrigle, visiting his uncle in the U.S back in the late 70’s. He went to the beer Dock which was in reality a large warehouse in which you could buy alcohol.

BarSport BarSport, two worlds that go together, this concept is a unique one with the chance to own and run a modern pub with a hint of nostalgia throw in. The bars are adorned with sporting memorabilia and screens line the walls so that the public can eat drink and watch in a comfortable and relaxing environment.

At present the number of BarSport locations is still in single figures but growth over 2014 and early 2015 means they are on the rise. By the end of 2015 it may be that there are busy locations and you could be running one of them.

The concept was one which stuck with Chris and last year he decided to roll it out over here. The Beer Dock, a hybrid shopcum-bar, sell over 1000 bottles beers from around the world and have 6 draft lines all of which can be sold for consumption on or off the premises.

At present the business is actively looking for people who share a similar passion for their products and who is willing to learn.

The added benefit of joining a franchise like Beer Dock is that as they grow the rewards become even more fruitful. Added buying power and the ability to update their stock on a daily basis means that the business is adaptable and can move with consumer trends.

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Up and Coming Franchises

Pita Pit Pita Pit is fast becoming one of the most exciting brands in the food franchise industry. Stated in Canada in 1995 on a university campus the Mediterranean style pitas have proved highly popular.

Oggy Oggy Oggy Oggy the small, family run business based in the idyllic Cornish town of Penzance have been established for over twenty years and things are going from strength to strength. Such was the popularity of the product that the franchise began to roll out across the West Country and Southern England.

The opportunity is centred on selling the iconic, Cornish pasty, and comprises of more than twenty cafĂŠs and takeaways, offering a variety of traditional and speciality pasties, sausage rolls, pork pies, cakes, tea and coffee.

This is in part thanks to the ease and speed at which the pitas can be made and the fact the can be customised to any palette.

Prefering the pita style of bread in a market filled with wraps, rolls and sandwiched which really makes them stand out.

Since the first franchise opened in Manchester in 2013 things have grown rapidly with more following in Leeds and London. The capital has really embraced the brand with numerous opening and more planned.

The development schedule is to open 100 stores in the UK over the next 5 years so now could be time to invest.

The company is currently inviting franchisees to join their already as they expand throughout the UK. With Oggy Oggy there appears to be plenty of scope for franchisees to individualise their shops and sell an additional range of foods alongside the pastry products.

Tiger Bills Tiger Bills is currently offering a string of unique opportunities and is also the fastest growing Thai-Western dining concepts in the UK. In the last year they have opened up 8 sites across the UK and are continually looking to expand. Thai food is really on trend at the moment and is one of the most popular concepts in which to invest.

The East meets West theme means that there is something for everybody and the chain is proving hugely popular with families. The Torquay based group have recently signed international franchise deals and will be opening units up in Australia and New Zealand with a master franchisee.

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Mangobean Mangobean Coffee is an ambitious company which started off in 2007 selling their own branded coffee and equipment to cafes, coffee shops around London and the South East of England.

Through strong branding and the benefit of having a good product they have quickly built up a reputation of being a major player in the industry.

Their self-proclaimed ‘quirky style’ has made them popular very quickly and led them to winning major supply accounts for the likes of City Cruises London and Channel 5.

Up and Coming Franchises

Hotcha Having a takeaway from a Chinese restaurant is nothing unusual but where many customers are left unsatisfied by greasy, poorly presented, unauthentic dishes, things could not be different at Hotcha.

What makes Hotcha so unique is the uniformity of their food, by making sure they source the finest ingredients and have them all prepared at a central kitchen they are able to deliver the components of a great meal, fresh to every store, every morning.

The Bristol based business has gone from strength to strength over the years and their high quality approach to offering restaurant standard food to takeaway has served them well. Currently operating out of 10 stores in the South west of England, Hotcha have dreams of becoming the number one takeaway chain in the UK. In order to make this dream a reality they must actively recruit new franchisees and growth within this business is almost certain. All they ask from their potential franchisees is that they are professional, friendly, passionate and that they treat their customers well.

Tennessee Chicken In a market full of big brands you would be forgiven for thinking that the opportunities available for new franchisees were limited when it comes to fried chicken, but this couldn’t be further from the truth.

By supplying coffee and equipment to over 100 coffee shops and their products to other coffee shop franchisees, the natural progression seemed to be to franchise themselves.

When you look at a business like Mangobean it is very clear that they are a serious business that like to have fun and be creative. The numbers are good in terms of sales and footfall and they pride themselves on a completely new coffee shop concept.

Established brands such as Tennessee chicken have been serving their delicious range of crispy fried chicken to those in the South West for years and now is the time to expand. With three stores already and looking to add more to the portfolio this could be the perfect time to invest.

The team at Tennessee chicken are passionate and provide all of the tools and investor would need to open a successful, profitable, outlet.

SPRING 2015 Food Franchise | 19

Up and Coming Franchises

Chicken Shack In late 2013, 3 friends (Josh Simons, Steve Crawford and Ameer Kamel) realised their mutual love for Chicken. After scouring the globe for 6 months of research, during which time they ate enough Chicken to last a lifetime, they decided to open a small shop on Boscombe high street on the south coast of England.

Esquires Now we could write that the coffee market is a saturated one and that it is best to go alone rather than with a big brand but the reality is that the public are looking for quality and at Esquires that’s exactly what you get.

The design and rebranding has been a major selling point for the company and these look sure for expansion over the coming months. With their premium locations and a great tasting product this is the opportunity that the coffee industry and indeed the franchise industry has been waiting for.

One of the main selling points of joining an up and coming brand like Esquires is that there is a community feel about the group.

Franchisees meet up regularly and are ambassadors for bringing a great quality product to the masses. Don’t be surprised if you see one of these in your town or city soon.

The mission was to provide a completely different take on the traditional Chicken shop. With a secret ingredient rub, a 48 hour marinade and a 3 stage cooking process, the Chicken itself was developed with attention to minute detail. A selection of homemade sauces were concocted too, alongside some lovingly prepared side dishes.

Chicken Shack’s Signature Mama’s cookin’ had arrived in Boscombe, and took the town by storm, with its unique Southern Hospitality, Blues music and remarkable Chicken!

Within 1 year of Boscombe’s launch, Chicken Shack spread its wings with shop no.2 in Winton.

Shack 2 benefitted from a takeaway shop plus a Barn restaurant with capacity for 40 covers, as well as a Barn Yard decking area, perfect for the Summer months!

Recognised as one of the top 5 Chicken restaurant concepts in the UK by The Metro London newspaper, as well as being awarded a business award by Dragon’s Den star, Theo Paphitis, it’s safe to say the Chicken Shack story has begun to gather pace.

Quiznos Importing franchise models from other countries is all the rage at the moment and this may be in part due to the success of brands such as McDonalds and Starbucks.

Quiznos is another such venture and the ‘little sub shop’ that began over 30 years ago in Denver, Colorado is now building up a reputation in the UK. The sandwich market is a competitive one, you only have to look at the likes of Subway who have opened their 2000th UK store to see this.

In order to compete it is important that the brand has a strong set of values and a commitment to providing a set of qualities

20 | Food Franchise SPRING 2015

that can be mirrored in every outlet.

Quiznos believe that food should taste great and that they should use only the highest quality ingredients to help create your perfect lunch.

They use butcher-quality meats, allnatural cheeses, chef-designed signature sauces and toasted artisan bread. They also toast all of their sandwiches to give it that signature style and to bring out the flavours.

According to Quiznos they are dedicated to making ‘Mmmmm…One Sub, Soup, Salad at a time.

Up and Coming Franchises

Creams

Auntie Anne’s

Ice creams, shakes and smoothies are really on-tend at the moment and with more and more consumers looking to grab a refreshing drink to go, or meeting friends for a sweet treat, venues such as Creams are proving popular.

Auntie Anne’s is one of the many franchise opportunities that has made its way over for the US and is a welcome addition to the UK’s high streets.

The brand are looking for a rapid expansion as this type of food becomes part and parcel of buying habits.

More and more people are looking at skipping a main meal and heading straight for something sweet. This idea, much like traditional American diners is catching on and the alternative venture could be one to watch out for.

With the correct investors to take the brand forward, Creams could soon knock all the other ice cream parlours out of the water and control the UK market. This is a sweet proposition for any investor.

The business which started at a farmer’s market stand in 1988, mixes, twists, and bakes pretzels to ‘golden brown perfection’ all day long and in full view of their guests.

Offering franchisees a concept that not only has strong branding and a great product, this unique opportunity could see Auntie Anne’s with a strong national portfolio, becoming a household name much as it is overseas.

The ethos of the company is particularly impressive with founders Anne and Jonas Beiler purchasing their first stand to provide the income needed for their vision of providing free counselling services to families and couples in their community.

Building on their vision to give back, Auntie Anne’s is committed to serving others. In the past 10 years, Auntie Anne’s and their employees and franchisees, have donated millions to numerous local and national charitable organisations.

There are many who thought that the idea of serving pretzels was too niche for the UK market, but Auntie Anne’s have proved that if you get the branding right as well as your product you can achieve great things. Wide a global audience and a large marketing budget, word about this franchise opportunity will soon spread and they could be in a town near you.

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Up and Coming Franchises

Wrapchic Sandwiches of all varieties and with fillings and ingredients from different countries seem to be right on trend, so when Mahesh Raikar decided to give up his Fortune 500 jobs to open up to open up Wrapchic – The Indian Burrito Company, a gap in the lunchtime market was truly filled.

Mahesh’s passion for Indian & Mexican food coupled with a desire to bring Indian food in a 21st century format was just the beginning and now the brand has a vision to be ‘The most loved burrito company in the world’.

YoYo Noodle YoYo Noodle is all about offering a high quality meal with the freshest ingredients and as quick as possible. As you will have seen in previous editions of this magazine and in other feature the rise of Asianinspired food in the UK is noticeable.

More and more individuals are looking for a hot alternative to soup for their lunch and want to feel full especially if they have a busy working day. Consumers look for food-to-go that is affordable and that is from a reputable brand. YoYo Noodle fit the bill here and are expanding quickly.

The brand claim that they offer “great flavours, fine ingredients and that extra zing that make our noodles better than all the rest” something which those that have tried them would find hard to disagree with.

Their 3 step menu using a small number of ingredients delivers surprising choice with over 4000 unique combinations available.

Wrapchic has set out its stall in July 2012 with its first location in the heart of Birmingham City Centre offering Fresh, Healthy and Tasty Indian food in a vibrant friendly environment, since then the owners have offered franchises in Leicester, Coventry, Roehampton, Middlesex and Derby.

Currently the company have 9 stores in the UK with 3 more in the pipeline. There are also international talks going ahead and we feel that they could provide one of the fastest growing opportunities in the industry.

Camile started their franchise operations in Ireland and have seen a sharp rise in sales over the years. At present they operate a growing number of stores and are looking to expand further.

Camile

According to the company their unique blend of European methods and Asian flavours makes for a tasty end product. The name Camile comes from the French for perfection and many of the chefs that they have recruited have trained at the highest level meaning that they can offer the perfect dish from a menu filled with fresh ingredients.

Thai food to bring home – that’s the message that Camile like to push out and who can blame them. Aside from the obvious growth of the food-to-go sector the rise in popularity for authentic Thai food is also noticeable.

Starting their operation during the recession in 2010 the business has gone from strength to strength and is actively looking for passionate individuals to expand the brand.

YoYo noodle are one of the fastest growing brands on this list with numerous stores set to open in 2015. They also offer a number of master franchise packages as the brand looks to a worldwide expansion.

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Up and Coming Franchises

Flamin Chicken With over 25 years’ worth of experience in the fried chicken industry, and four generations in the catering sector the team behind Flamin Chicken have a wealth of experience and that shows with the launch of their franchising operation.

At present there are a handful of stores in the group and by offering their unique range of chicken with a signature blend of spices in a recipe that has been handed down from generations, the business is booming.

Flamin Chicken are actively looking for franchisees and are keen to work with people who are like-minded and willing to put in the hard work.

My Pixxa A small operation at the moment but one with the scope, concept and product to grow. My Pixxa offer fresh pizza slices out of two busy London stores.

Much like the Romans who used to carry their lunch around with them (hence the birth of the pizza slice) so are today’s workers and My Pixxa are filling a gap in the competitive lunch market.

With other brands on the high street looking at offering hot food or pizza slices to go it is clear that this market will grow.

The smallest brand to feature here could soon be on the rise and they are our dark horse for 2015. Don’t be surprised if there are 10 units buy the end of the year. Some say that variety is the spice of life, and in My Pixxa’s case, the slice of life.

With a number of units across the North West and Birmingham, all of which are performing well, this looks like an opportunity to get involved with.

Koshari Street Koshari Street is like no other on this list in that they specialist in healthy vegetarian products, served as street food and based around one dish, Koshari.

According to the company, Koshari is a naturally healthy dish of lentils rice and pasta cooked with a spicy tomato sauce, caramelised onion and chickpeas.

Originating in Egypt and brought to the UK

by Company Director Salah Khalil, this food has gone down a storm in recent years.

The brand is a vibrant one and with the passion to turn a single dish into a profitable franchise you would have to say that the business are looking for likeminded, enthusiastic investors.

A combination of other healthy soups, drinks and desserts means that Koshari Street are really expanding in the market at the right time. Healthy food could be the single largest growing trend this year and with that you’d be foolish now to look at their opportunities.

SPRING 2015 Food Franchise | 23

Up and Coming Franchises

Wok&Go Wok&Go is one of the fastest growing food franchises on this list, with international opportunities in the pipeline and a number of UK stores opening over the last few months the brand is growing.

The nation’s taste for Asian food has become increasingly apparent over the last 10 years and is a growing trend. Based on street food the noodle box is becoming one of the most on trend, food-to-go lunches in 2015.

More and more people are looking to branch away from the traditional sandwich and have something hot.

Something that has endeared the brand to the public is the fact that the product can be reheated, this means that some people choose to graze on it steadily and that it can be eaten around a busy schedule.

The versatility of the products means that customers can have their noodles just as they like them and cooked fresh in front on them by a specially trained chef, ensuring that they get just what they want whilst wastage is also kept low.

Here at Food Franchise we feel that this is very much one to watch and they could be coming to a high street near you in the near future.

Caffe Latte Caffè Latte is an upmarket coffee shop franchise offering an array of freshly made food hot or cold to our customers’ requirements, including gluten free products, cakes delicious coffees and cold drinks.

They believe in offering our customers good quality at affordable prices in comfortable surroundings with personality in each and every Caffè Latte.

They are the heart of the community and believe in that unrushed feeling. Their luxurious shopfits and designs are to make everyone feel welcome.

The menus they offer are tailored to all the different areas in the country as is the pricing structure.

Their franchise model in early 2012 and they claim to have 1 new franchisee joining them every week including a huge interest from overseas.

As a franchisor they are constantly looking for passion, organisation and to work well as a team player.

As with many in the franchising industry they off to help you in all aspects of setting up a business, finding the right premises together, assist on business funding if needed, shop-fitting and designers as well as training and support.

24 | Food Franchise SPRING 2015

Up and Coming Franchises

Steak and Shake Founded in 1934 by Gus Belt, a pioneer in the American restaurant business, who realised that the burger had caught the public’s fancy but reasoned that what was needed was a ‘Superlative Burger’. His formula was simple: provide the best quality burger in the business and cook it in sight of the customer. Nearly eight decades later, Steak ‘n Shake is one of the most recognised and loyal brands in the restaurant business with more than 114 million Steakburgers and over 66 million shakes served annually. The Steak ‘n Shake brand – and its famous Steakburgers, fries and shakes – still means freshness and quality.

The Steakburgers are made from 100% pure beef meat from the best producers. Our fresh-cut fries are made fresh and not frozen and the award-winning milkshakes are prepared by hand with real ice-cream. All of their food is prepared and cooked, to order, in sight of the customer. The food is ordered at the counter but brought at the customer’s table.

They are seeking individuals, partners & businesses, to be part of our successful international expansion programme, with a minimum of around £240,000 in liquid capital, to own and operate their first Steak ’n Shake outlet with a view to opening more.

Wrap It Up In a market that is full of opportunities the sandwich sector is one of the best places to look when considering a food franchise. As many will know there are big brands operating thousands of stores in the UK. Wrap It Up currently have 12 units, all in Central London, and are looking to branch out further. The quality of the ingredients and the demand means that this is a very attractive proposition.

After appearing on the BBC show, Dragon’s Den, the brand really began to make headway in a crowded market and have since established themselves as market leaders.

One of the key things to think about with Wrap It Up is that they have made their business work in the heart of the capital where rent and rates are high. If profits are possible in these locations, and they are then there is no reason that the concept can’t be rolled out elsewhere to equal or greater effect.

The team of Wrap It Up currently own half of the units and the rest are franchised, this concept allows them to oversee and protect the brand whilst being able to select their new partners. At present the business has secure deposits on 15 further site and look set to grow quickly towards the end of 2015. FF

SPRING 2015 Food Franchise | 25

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.

26 | Food Franchise SPRING 2015

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.

business profile

www.sherrards.com

SPRING 2015 Food Franchise | 27

Franchise Choices

Choosing the right food franchise The world of franchising can be something of a minefield and after deciding to take the plunge and invest in a franchise the first thing to do is to determine your sector. As you are reading this it will more than likely be that you know which sector you want to be in. Food.

The world of franchising can be something of a minefield and after deciding to take the plunge and invest in a franchise the first thing to do is to determine your sector. As you are reading this it will more than likely be that you know which sector you want to be in.

Food.

Food franchising as a whole has seen a rapid growth over the years with more

28 | Food Franchise SPRING 2015

and more realising the safety in the sector that people are always going to have to eat. Other niche franchises such as cleaning services, car valeting and chimney sweeping can all be easily replicated and are therefore not seeing either the growth or stability within franchising as a whole.

As mentioned in the Winter edition when it comes to food franchising consumer spending is up and there are tangible

returns to be made from running a business in this industry. Now is a very exciting g period for the market and with economic parity returning to the highs of the mid 2000’s, investing in such a business could yield a good ROI. We also touched on the fact that the UK marketplace is recovering from the global economic downturn, and many individuals are looking at ways to invest

Franchise Choices

their hard earned money. This means that competition is high as many people are trying to buy a business of this sort.

This increase in interest means that the franchisors are far more diligent in vetting potential investors.

About you The first thing to think about when choosing a food franchise is you as a candidate. You must consider the skills that you have and what you are good at doing as well as what you would like to do. There must be a consideration for your finances, your commitments to family life or a second job and also

whether or not you can pledge the considerable time that it takes to set up and run a business.

Food franchises as a whole will largely be consumer facing so if this is something that you are not comfortable with then this might not be your best option. When you opt for a food franchise or indeed any business you become an ambassador for that brand, if you are not happy with your choice this could have a detrimental effect on other franchisees who have invested. It is for this latter reason that the process of buying a franchise is a thorough one.

“When you opt for a food franchise or indeed any business you become an ambassador for that brand.�

Going into an industry or brand that you have previously worked in is often seen as a big plus and is one of the many things that a franchisor will consider before deciding if you are the right choice for them. It is important to remember that franchising is a two way process and both parties are putting something on the table whether it be the business or money.

Franchisors will also consider your background, so it is best to be transparent with any other business interests, and financial reasons why you may not be suitable or any family commitments that could harm the running of your business.

Three other things to think about when it comes to evaluating your position as a potential franchisee are: Fitting your needs – Making sure that the type of business that you are investing

SPRING 2015 Food Franchise | 29

Franchise Choices

in is suitable for your lifestyle is vital. If for example you were looking to operate a business in the evening then you may choose to a chain with an alcohol or evening licence. If you were looking to operate in the day as you had family commitment it may be that a sandwich or coffee franchise is suitable.

puts a burden of pressure on you before you have made the initial purchase.

The problem with ruling out this sort of commitment is that you will still want security. Make sure that you check to see if another operator will be able to open in your vicinity and if they have been given a geographical area.

Multiple sights – Many franchisors will offer you a geographical area for your business but you must be cautious as this may come with the caveat that you have to commit to opening a certain number of branches in a certain time period. This

Exit strategy – Leaving a business that you have put your own money into may seem like a strange thing to consider but you must be wary that the exit strategy for a franchisee is not always as easy as it sounds.

“Some areas of the market are often considered ‘saturated’ with coffee shops and sandwich shops but this doesn’t mean that there isn’t room. ” 30 | Food Franchise SPRING 2015

Researching the market Researching the market is another key factor when it comes to choosing a food franchise. You may have settled on the fact that the food and drink industry is the one within which you would like to operate but you must they decide on the product. Some areas of the market are often considered ‘saturated’ with coffee shops and sandwich shops but this doesn’t mean that there isn’t room. In fact the reason for this is because some of the biggest names in franchising are at the hem of operations that include hundreds or thousands of store and there for have a better brand presence. If you are not looking to join a big, established brand but want to compete then it pays to do your own brand comparison.

By looking at the growth forecasts of multiple companies, their revenue, any

Franchise Choices

information that may be available on the stock exchange and their plans for the future, you may be able to find a business that is suitable for you.

Growing or new brands often use active marketing strategies such as advertising in magazines and online, they will use these spaces to highlight their opportunities and pass on further information. This is a clear indication that they are planning growth and willing to talk. Many other franchises will be represented at trade shows and by visiting these stands you can pick up information packs and speak to those directly involved in the franchise process.

Researching the opportunity When you finally settle on a franchise that you would like to join and be part of then you must look in depth at the opportunity that they present. This

process is the due diligence stage of becoming a franchisee and requires you to look at the support that you will receive from the brand as well as the daily running of a store and what it takes.

It is ask a chance to assess the control you will haver, the people you will be working with and any ongoing fees that may be charged. You can also go and speak to the people who have done what you are trying to achieve, the current franchisees.

One note on the final point is that franchisors will often point you in the direction of case studies or give you the details of those in the industry who have a similar story to you. This is a useful tool but it could also be part of a sales strategy. In this instance it is advisable that you try and make contact with another franchisee directly. Doing this could be time consuming as they have businesses to run but in the end you may get a better service and answers.

Researching the franchisor When it comes to researching the business it may also to pay to look at the franchisor. By asking questions relating to their experience, background and their input in the business development you will break beyond the obvious passion they have for selling the business. Many franchisors will be easy to read when faced with difficult questions, you will be able to gauge their belief in the product and the opportunity with which they present.

As a prospective franchisee you will be expected to question whether or not the franchise in question have turned down or lost any prospective franchisees, they may not choose to answer the question but it may give you a few clues to the offering.

For smaller, less established franchises, doing your research in this area is vital.

SPRING 2015 Food Franchise | 31

Franchise Choices

Are you buying a product or brand from somebody who can drive it forward and do they have the experience in place to develop products.

Financing the franchise Obviously financing a food franchise or indeed any business comes down to two things, cost and credit. One of the first things to do is to discover what you can afford. Make you budget based on the amount of capital you have and the amount you can raise. Following this it is often advised that you invest to 80%, meaning you have a 20% contingency for any hidden costs that may be incurred.

Once you have the total amount that you can invest there are many directories available which break down the individual franchise cost of different businesses.

The levels of investment that these directories show and range greatly from

32 | Food Franchise SPRING 2015

smaller amounts, that you may already have available, to larger amounts that you may need to raise capital for.

Assessing and understanding, from the start of your process, what you can afford to invest and how much you would be prepared to borrow is vital. It is crucial that you also remember to consider working capital requirements. In the initial stages of the business it may not be turning a profit so further investment from the aforementioned 20% contingency may be required. One of the best starting points may be to evaluate your net worth.

Paying close attention to the predicted returns that the franchise will generate for you is very important, you must ensure that those figures are based on verified, historical trading figures of existing outlets and make sure the business can support your lifestyle if these figures are accurate.

Hiring Professionals There are a host of professional advisors accredited by various governing bodies and these advisors are a must for anybody going into setting up or buying a franchise. Making sure that you have a team of consultants, accountants, solicitors, and banks who specialise in the various part of franchising will put you in a worry free mind-set and should make the investment a smooth one.

These people or organisations are invaluable in making sure that you are taking the right steps and don’t miss any vital information. This is particularly useful when it comes to reviewing the franchise agreement or any other contracts.

When it’s your money and your career on the line then it is essential then making the correct, if you have any doubts, then you haven’t done enough research – try not to make one. FF

Franchise Choices

OVER 250 Food Franchise opportunities available in the UK

AVERAGE of

Industry worth

£2.9bn per year and rising

new Food Franchise opportunities opening every year

73% Coffee shops account for the largest part of the UK market followed by sandwich outlets and pizza units

90% of all food franchisees consider a second site within 18 months of opening the first

of businesses in the Food Franchising sector consider their turnover to be high or very high

Subway 2000 Stores COSTA 1821 Domino’s Pizza 880 STARBUCKS 824 MCDONALD’S 770

*Natwest franchise survey

SPRING 2015 Food Franchise | 33

ONE to watch

One to Watch WRAP IT UP In the one to watch feature we usually focus on a small independent business with ambitious plans and interesting future targets. This month however we look at a brand who are already making waves on the UK food scene and are growing at a rate of knots. Wrap It Up. Wrap It Up’s self-proclaimed mission is to make gourmet wraps and fresh salads in front of the customer, all of which are inspired by food from around the world.

They also say that they’re revolutionising fast food by putting wraps on the map as a tasty, healthy alternative. Judging by the menu and the queues outside the shops, they’re doing it.

34 | Food Franchise SPRING 2015

One of the key things to think about when opening a new business is getting your brand and your offering right, especially if you are starting your operation in the heart of central London. Wrap It Up have done this by looking at current market trends and incorporating a variety of foods and flavours from around the world into their wraps.

Some experts in the food and drink industry have suggested that the fastfood arena is at breaking point with so much choice available, this means that delivering a quality, consistent product that can be versatile and healthy is vital.

McDonalds and Subway continue to dominate the landscape of food

ONE to watch

franchising many would argue that they lead the way, however in the last 10 years there have been a number of brands and exciting new concepts enter the playing field, all offering a fresh take on overseas cuisines.

Founders Faisal Haque and Afnan Bashir are two such businessmen who have seen a gap in the market and introduced a concept. Their early endeavours may have been responsible for introducing the humble tortilla wrap to the British fast-food market, but it is another man that has turned it into such an intriguing business proposition, Tayub Mushtaq.

The business is currently headed up by Managing Director, Mushtaq, who was incidentally the brands first franchisee, taking over the Liverpool Street site in 2006.

When he became the firm’s first franchisee in 2010 after turning around the fortunes of its flagship store he

“When he became the firm’s first franchisee in 2010 after turning around the fortunes of its flagship store he instantly saw the scope for the business. ” instantly saw the scope for the business.

Soon enough he was overseeing four franchised outlets and Haque and Bashir decided to let Mushtaq drive the brand forward.

“They came up with the idea of putting together a combination of global products under one roof, which are served and prepared fresh for each and every customer.”

Mushtaq explains that the idea of a world gourmet wrap business originally came from the adventures of the co-founders, saying: “Faisal and Afnan came up with the idea through travelling the world, seeing the different forms of street food, how it is served and the ingredients that are used,”

After taking the helm and turning around the fortunes of the store, he began to grow his own interests by recording record profits in all of his franchise locations. It was at this stage along with the founders of the business, Haque and Bashir, that he appeared on the popular TV show, Dragons Den.

SPRING 2015 Food Franchise | 35

ONE to watch

Whist on the show, the team from Wrap It Up pitched professionally and offered the Dragon’s 11% of the business for £500,000, such was their belief in the scale of the brand. The Dragon’s declined the chance to come on board, questioning the valuation but it could be a move that they live to regret, with the businesses now operating 12 sites, offering franchises and looking at huge growth following the build of a new development kitchen.

Following their appearance on the show, where the potential investors acknowledged that they were filling a gap in a competitive market, Tayub said: “This was the best PR we have ever had.”

But added that they would be missing out, saying: “We have the potential to be the next Subway, we are going to be a global business.”

“We’ve managed to expand and stayed true to our original philosophy of sourcing only fresh natural ingredients to bring our customers authentic world food at an affordable price.

36 | Food Franchise SPRING 2015

“We do feel that our concept and the product goes hand-inhand and can compete with the likes of Subway, Burger King, and McDonalds. ” “Our focus is firmly on authenticity, we employ chefs from around the world to keep our food true to its origins and we work hard to find the best suppliers meaning we offer a high quality product that can be served in all of our units.

“We have 12 stores and all of these are in London and we plan to grow bigger with our first store outside the capital, opening in Manchester in the coming weeks. We also have the acquisition and redevelopment of a large commercial kitchen, this is a huge project that has seen substantial investment.”

Last year the turnover for the business rocketed 50% to £2.5m and those in charge are ‘comfortably forecasting growth of 30-50% year-on-year until 2018. Wrap It Up have seen lines outside their stores as the public look for healthy

alternative to other lunch offerings. Tayub said: “Consumers have never been more knowledgeable about the links between food and health.”

Asked about the future and whether the interest was there Tayub said: “The interest is certainly there with almost 15 new franchisees already having paid their deposits.

“We do feel that our concept and the product goes hand-in-hand and can compete with the likes of Subway, Burger King, and McDonalds.

“Wraps are the next big thing.”

It appears as though these are all the assurances you need so all that’s left to say is… All hail the wrap! FF

LEGAL

Buying a Franchise

The Legal Process Franchise lawyers Manzoor Ishani and Leigh Head of Sherrards Solicitors guide you through 10 steps when buying a food franchise.

After selecting a franchise, there are a number of matters you should address before you open for business.

This article gives you some of the required steps and the order in which they should be taken to help you complete the transaction more efficiently in terms of costs and your time and effort.

1. Decide whether you want to be involved in a service or retail business.

2. Decide what you can afford and search what is available within your price range.

accountant will help with profit projections and a business plan to support any bank loan application.

7. At this stage, you will probably be asked to sign the franchise agreement, but let your solicitor advise on the timing of your signature which should be conditional on your securing satisfactory premises and a bank loan.

8. Where retail premises are involved, start talking to your franchisor about the details of converting the premises into a franchised outlet.

3. Get as much detail from the franchisor as possible. Where the franchisor provides financial illustrations, study these to satisfy yourself that the income in those illustrations satisfies your needs and requirements. Bear in mind that these are illustrations and may be optimistic.

9. By this time, your bank should have responded to your loan application and you might be able to finalise the lease for the premises. Do not commit until you have your bank’s agreement to the loan and you have signed the franchise agreement.

4. If you think you will need a loan, contact your bank to discuss whether the bank will lend you the money you may require.

10. Once you have acquired the premises, proceed to convert the premises into a franchised outlet and to training with the franchisor.

5. Arrange for an experienced franchise solicitor to review the franchise agreement.

6. If you and your solicitor are satisfied with the agreement, ask your accountant for advice on the financial detail. By this time, you should know the type of premises you will occupy or your “territory”. Your

From stage 5, the sequence of events up to when you are ready to open for business will vary depending upon the nature of the franchise.

A time will come when you have to make

three significant commitments to three different parties: 1. t o the franchisor by signing a franchise agreement or an agreement to purchase; 2. t o your landlord by signing a lease or an agreement to take a lease of the premises (or in the case of a mobile franchise, signing a lease, hire purchase or purchase agreement for a vehicle); and 3. to the bank for the loan.

Aim to synchronise these three transactions so that you undertake these commitments simultaneously.

Congratulations, you are now ready to start running your own food franchise! FF

Leigh Head is a partner in Sherrards Solicitors’ Company Commercial department and leads the firm’s Franchise Team.

The firm advises franchisors and franchisees in a multitude of sectors. A number of wellknown brand names in the food franchise sector count on Sherrards for timely, business focused legal advice including Dominos, Southern Fried Chicken, Café Fratelli, Esquires Coffee and Muffin Break.

For further information, please contact Leigh Head on 01727 832830, e-mail lbh@sherrards.com or visit www.sherrards.com

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Accountancy

Focus on VAT in Food and Catering The experts from McPherson’s Chartered Accountants take a look at VAT in the food and catering sector and give you a few ideas on how best to keep an eye on your taxes OVERVIEW VAT is a major cost to businesses and affects your competitiveness in the food and catering market. It is important to understand how VAT must be charged, on which products, in each different circumstance. However, before we go into specific detail, you may wish to consider your general VAT situation. For example, you may benefit from joining the Flat Rate Scheme.

38 | Food Franchise SPRING 2015

What is the Flat Rate Scheme?

Assuming you are registered for VAT, your VAT is worked out as the difference between what you charge your customers and what you pay on your purchases.

However, with the Flat Rate Scheme you pay a fixed rate of VAT to HMRC and keep the difference between what you charge your customers and pay to HMRC. You cannot reclaim the VAT on your purchases except for certain capital assets over £2,000. For catering services including

restaurants and takeaways, the flat rate is 12.5%. For wholesaling food, 7.5%. Your accountant can undertake a feasibility analysis to see whether it is a good option for your business.

Who is eligible for the Flat Rate Scheme?

To join the scheme, your taxable turnover must be less than £150,000 (this is the total of everything sold that isn’t VAT exempt).

Accountancy

How to I apply?

Applications are through HMRC. Your accountant can advise and assist with the application process.

The Basic VAT rules for Food ‘Basic’ food is zero rated, for example meat, milk and bread.

So when does food become more than basic?

If all potato-based products are standard rated, wouldn’t you just assume that all crisps are also standard-rated? Not necessarily – if it is decided that the finished product is potato based, it is standard rated. However, rice and maize products such as prawn crackers and Doritos are zero-rated. Each case needs to be considered individually. There was a case where Pringles claimed that only 40% of their product was potato-based.

However, the Court of Appeal ruled that the proportion was not critical and Pringles were actually a potato-based product.

How do we define catering for the purposes of VAT? The general rule is that if your business is classed as catering, it cannot take the zero rate. Catering involves a supply of food with an accompanying supply of services (the provision of table service, cutlery, of premises or facilities, and so on) so may include restaurants, cafes, outside catering for dinner parties, weddings, conferences and other functions. However, some supplies of food and drink do not include the service element of catering, for example, cold takeaway food sold in retail premises, for example a cold sandwich or cold milk are zero-rated.

Are your supplies in the course of Catering?

• Is it within the ordinary meaning of catering?

• Is it for on-premises consumption?

• Is it hot take away food?

If the answer is yes at any stage, your supplies are standard rated.

How do your premises affect the VAT you must charge?

If you supply food on a premises, to be consumed on the premises, whether it is hot or cold, then it is always classed as catering and will be standard-rated,

Although people may buy it whilst hot, they do not always eat it hot and it is said to be ‘on its way’ to being eaten cold. Therefore bread, being a zero-rated product, is zero rated if sold for consumption away from the premises even if just freshly baked.

How do you work out the VAT when you have a mixture of hot and cold food?

This depends on how it is packaged.

For example, a hot burger in a cold bun is considered as a package and would therefore be standard rated. However, if this was sold with a zero-rated cold drink

“VAT is a major cost to businesses and affects your competitiveness in the food and catering market.” whatever it is. If you supply hot takeaway food, it is also classed as catering. However, if you supply cold food to be consumed away from the premises, it may be zerorated depending on whether that food item falls into the zero-rated category.

If the temperature of the food is so important, how is ‘hot’ defined?

For the purpose of VAT, hot is anything that is served above the surrounding air temperature that is intended to be consumed whilst hot. A good example here is a pizza takeaway. They are providing hot food that people enjoy eating hot.

However, there are, as always, exceptions!

Bread is often freshly baked in store.

e.g. a milk shake, you would need to work out the tax separately for the milk shake and the burger and bun.

What supplies are not in the course of catering for VAT purposes?

• Retail supplies of cold take-away food e.g. pre-packed sandwich from supermarket • Retail supplies of groceries • Supplies of food that require significant further preparation by the customer • Delivered sandwiches and other items of food and drink to buildings in order to sell them, but without an official contract to do this. Eligible items can be zerorated but beware of the hot pasties! FF

Need more help?

This feature aims to give some informal hints and tips. McPhersons Chartered Accountants and McPhersons Financial Solutions 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

SPRING 2015 Food Franchise | 39

Franchise FINANCE

The Hidden Costs

of Food Franchising

The concept of franchising and in particular food franchising seems a simple one. You first go to the industry that you would like to operate and establish your budget, you compare the pros and cons of the various franchise models and you buy one.

But as with all business decisions things are not that easy.

In the world of franchising, franchisors are protective over their brands and because of that, the contracts can be littered with hidden costs.

Below are the most important things to look out for when you are signing a franchise agreement and some of the hidden charges that could be lurking in the contract.

Franchise fee – This is your initial lump sum, paid to purchase the franchise be warned

40 | Food Franchise SPRING 2015

however this may not be the advertised price. Many franchisors advertise the rate card price needed to secure the right to trade under a brand name the cost of securing a building and having it fitted out is a costly extra. Unit size and location

are the most important things to consider when making an investment in a franchise, a large unit in a busy city centre could cost in excess of £100,000 - £250,000 to have completed.

“In the world of franchising, franchisors are protective over their brands and because of that, the contracts can be littered with hidden costs.”

Franchise FINANCE

Royalty payments – This is your regular payments to the franchisor for the privilege of using the brand name and systems to do business. This can also come under the umbrella of a marketing or service fee. The fee that you have to pay to the franchisor on a monthly or annual basis is to ensure that you get the continued support of the brand and the more people that franchise with a company the more that you are likely to get back. With larger budgets any brand can grow rapidly so make sure that you account for this payment.

Time taken from work – Although this may not be a payment as such it is a fee that you may inadvertently have to take on the chin. To make sure that you are right for a franchisor they may ask that you go on a course to learn their way of doing things.

In the past there have been rumours that companies such as McDonalds ask for 3 months of training before opening a store.

This will be a long period without an income and the same can be said if you are waiting for a shop to be fitted. Many people go into franchising as a career change and so they may have given up work and therefore income to take the role. This is a much forgotten about financial pressure.

Training and Conferences – It’s quite likely that you’ll have to attend quarterly or annual conferences with your franchisor.

If they charge for these, you may want to confirm that they are charged at cost only and that there is no charge for the franchisors time involvement. Within this hidden cost you must add in and travel and accommodation costs and the possibility of paying someone to oversee your business.

Product sales – If you buy and sell products that requires you to buy stock exclusively provided by the franchisor, then it is possible for them to add a margin to make profit before you sell. In this way, the franchisor is acting as your exclusive wholesaler and can profit from the arrangement. This type of hidden cost is most notably seen in coffee or alcohol franchises. Pub groups selling beer and acting as the middle man means that your initial price of stock is pushed up and that to make a healthy profit you will have to pass on the prices to your customer.

Updates and improvements to systems – Since you have to operate to the standards defined by the franchise, they may be legally allowed to make you invest in new systems or services that they create for the franchise. In the food franchising sector of the market more and more brands are using technology to let the end user order their food on. This could be as an app or online service or could be touch screen monitors in store. If you are forced to take these then you could find the fees added on in the monthly subscription fees, a move that can be can be very lucrative for them.

“Since you have to operate to the standards defined by the franchise, they may be legally allowed to make you invest in new systems” Property rent – As mentioned earlier it may be that the price of buying a building is too high. If this is the case and your franchisor buys your building, before renting it back to you, they are operating in the property market while you’re trading as a franchisee. By operating in this way they are essentially covering their property mortgage payments with the rent you pay.

This is another way of tying the franchisee into the business as they will indivertibly invested in a much larger project than they thought.

Giving your time away for free – You might not realise it, but when a franchisor asks you to help another franchisor and does not offer to pay you for it, they’re charging you a “membership tax”. Because you’re successful you’re expected to go help out other franchisors for free. Make sure that any support you’ll be expected to give to other franchisees is paid or supported in other ways, rather than just being a cheap source of training and support to the franchisor. Make sure that the advice that you give is worth something and that your store reaps the benefits.

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BE INSPIRED

Be Inspired As you may be aware this feature looks to tell the story of someone in the industry who is making or has made a significant contribution to food franchising. When it comes to this editions individual, the story of Domino’s Pizza franchisee Lisa Tobias could hardly be more inspirational.

Hailing from Newton Mearns near Glasgow, Lisa, 33 spent many of her formative years as a gymnast where she represented Scotland at a national level.

Always interested in sport, Lisa grew up

42 | Food Franchise SPRING 2015

with aspirations to be a PE teacher when she left school but gave up on the dream after learning that her part time employers, Domino’s Pizza, were offering franchising.

Lisa left university after just six months and turned her attention to a full time job with the pizza giant, working hard to secure a manager’s position, where she won the prestigious Manager of the Year award.

BE INSPIRED

Five years later, at the age of just 23 she secured a bank loan and opened her first store in Kilmarnock, success followed and he business empire began to grow, after starting her project in the midst of a recession she boasted impressive growth and returns. A second store followed (Ayr) and before long she had jumped to five, adding Clydebank, Govan and Irvine. As her portfolio grew so did the number of awards.

In 2008 she won the Acorn Award which recognises outstanding achievements of catering professionals under the age of 30, as well as a bronze Franchisee of the Year Award from the BFA. Two years later Encouraging Women into Franchising (EWIF) crowned her Woman Franchisee of the Year 2010 and at the age of 26 she beat Domino’s franchisors from around the world to land the Gold Franny.

The growth has continued and at present Lisa has 9 Domino’s stores which is a very impressive operation for someone in her early thirties, you’d have to agree.

But it doesn’t end there.

Aside from the day-to-day business duties of running nine franchises for one of the largest franchise models in the world, Lisa is also a mother of two and is in full training for the Olympics in 2016.

After having her children and with the business performing well, Lisa decided to take up gymnastics again where her training led to a chance encounter with a personal trainer named Gordon Hill.

Lisa tells a tale of him boasting what strength she had for her size (5ft tall and 47kg), something she put down to her early gymnastics career and listened with

My next goal is to compete at the Olympics in Rio. I’m going to try my hand at Olympic weightlifting as soon as I get back.

interest and trepidation as he suggested she should start lifting weights.

Pretty early on it was clear that she was immensely powerful and the realisation hit home when she lifted a greater combined weight in the squat, bench press and deadlift than the current UK champion for her weight class. Lisa’s focus changed and whist balancing work and family life she also dedicated herself to seven days a week in the gym and professional powerlifting.

In late 2014 she travelled to Moldova and the capital city of Chisinau where she broke the world record for her division, lifting 5kg more than the previous best in 2004.

In total over the three events she lifted 262.5kg and with it lifted the title of world powerlifting champion (47.5kg class).

After the event Lisa was quoted as saying: “I’ve discovered a talent that I never knew I had and I’m putting it to use.

“My next goal is to compete at the Olympics in Rio. I’m going to try my hand at Olympic weightlifting as soon as I get back.

“The same levels of strength are required, but the techniques are different and I am going to try to learn them.

“I’m under 5ft and seven stone, to break the world record I had to lift over three times my body weight, I suppose it does seem funny to some people.”

Lisa really is a true inspiration in the world of food franchising and with plans to continue growing her business empire, land Olympic gold and balance family life, dreams really do come true. FF

SPRING 2015 Food Franchise | 43

franchise viewpoint

employing the right people With employment law changing on a regular basis and the ever increasing list of work benefits being given to employees, business owners really need to keep their eye on the ball, says Subway franchisee Ian Dawes

As the owner of three Subway® stores I often find myself dealing with employment issues on a daily basis, much to my frustration. I love my employees – they’re a great bunch of people but they all have their own complex needs and differences. Whilst I obviously can’t talk about them individually I can tell you that we often have to deal with problems that can really surprise and perplex even the most seasoned business owner.

When I first started my business I thought employment issues were something I could deal with. However, the minute I took over my first shop I had to deal with staff who all wanted to tell me how I should run the place and how they are used to doing things a certain way. I obviously disagreed with them.

Very quickly I discovered that I needed professional help as I just wasn’t well equipped enough for this potential minefield heading my way. I had several potential avenues to go down – mentoring from an inclusive service provider such as Bibby, Nat West or my local chamber of trade; a private HR firm such as Peninsula or maybe a local consultant.

I made sure I did my research to see what these companies offer and how good they

44 | Food Franchise SPRING 2015

were starting with the mentoring. These firms normally offer a ‘one size fits all’ type of service that provides a 24hr hotline and templates for disciplinaries as well as additional paid-for training courses.

However, to me these didn’t seem a great way of doing things as every business owner has individual needs. Next I looked at those large corporate entities that are known throughout the world as top service providers. Personally they just seemed too far away and too big for me and my small shop with ten staff.

Very quickly I discovered that I needed professional help as I just wasn’t well equipped enough for this potential minefield heading my way.

Whilst it might seem that Subway® is in the business of selling sandwiches, it’s also fair to say that it’s in the people business as well.

Each store serves hundreds of customers every day – real people, with real lives and my staff are the face of my store interacting

with those people. It seemed to me that I needed a real person to help me run my business so I looked for a HR consultant that was based near my store.

I was lucky enough to start working with a lady called Joanne Vose from Red Elephant HR, based in Leeds, who has given me support, training, encouragement and assurance throughout my career of people management. We meet in-store on a regular basis and discuss how we can take a proactive look at HR rather than a costly reactive approach, saving me money in the long term. Whilst this approach might not meet everyone’s needs I really want to stress the importance of working with someone who wants to do business face to face and work with you providing a service tailored to your needs.

So whether you are a small or large company, a new start up or have been around for years, don’t just copy what everyone else does, look around and see if you can find someone who can help you and not just themselves.

Editor’s note: All written content is the personal view and opinion of Ian Dawes and does not necessarily reflect those of Subway® and its affiliates. All content is correct at time of going to press. FF

FOOD REVIEW

…AND SO TO – FRANCHISING Franchising has evolved over many, many years and successful franchisor operations are governed by the success of franchisees.

Indeed, it is very possible – following through with the success – that several venues and locations can be managed by the same franchisee.

Franchising operations expanded, rapidly, following World War II. Today, franchising sees numerous brands in a lot of sectors and covers many businesses. There is a whole wealth of knowledge and advice to be found, from organising market research, through to the various stages of business development. Catering, retailing, plus property and land services, are all areas of opportunity, to name just some.

Franchise exhibitions take place at several venues throughout the UK regularly and are very worthwhile looking out for. Many of these events have complimentary seminar programmes, where numerous aspects can be learned about for various sectors, including food and drink opportunities, of course.

Real franchising stories are very interesting and experts can give valued guidance on choosing the right franchise you may

be searching for. Start-up, bringing a business to fruition and optimisation, are amongst many of the aspects covered at these events, during seminar sessions. The chance to meet managers, from a great number of franchised brands, is an opportunity not to be missed.

Previously, I located the multi award-winning Cherry Tree Company – a franchise business for specialist produce preserves.

I was most impressed with their business plans and the products.

I look forward to locating other franchise companies, particularly connected with food and beverages, including restaurants and eateries, in the future and learning about their products and how they have achieved success, in today’s world of business. www.franchiseinfo.co.uk. FF

SPRING 2015 Food Franchise | 45

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Business advice

Independent start up Business

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Franchise Business

Some would say there has never been a better time to start your own food related business; I suspect that those people don’t know much about the realities and risks of starting a food related business. That doesn’t mean I don’t think this is a good time to start, but that the ‘time’ part should be the least of your concerns, says Nathan Siekierski of Jaspers Catering Franchise

The truth is starting your own business is like any great journey, very tough and requiring far more time, energy, skill and cash than first expected. It is no wonder that in 2013 when there were 370,000 new business launches in the UK, that there were also a tragic 250,000 closures – that’s a lot of dreams started and ended.

but this bit alone, the property bit, can immediately hamstring a new business owner. By over paying on rent, negotiating the lease poorly, being trapped in a 25 year lease or ending up responsible for a roof falling in; these can and often do kill a business start-up, often without them even realising it at the start.

This process will continue as people take their ideas and embark, un-prepared, starting their own food related business until something fundamental changes in the economy. This, by the way, is almost certainly not going to happen, as businesses failing and closing is simply part of the economic cycle. That is no consolation if you are on the verge of starting your own business as the risks will be very high.

Throw in suppliers, staff, set up, logistics, product, development, tech, IT… and you have a lot of potential risks. Some of which will ALWAYS hurt an independent food business before they even get around to marketing, sales, customer management, customer retention… ARGHHHH!!! No wonder so many fail – so what is the intelligent way to reduce those risks and yet still get the benefits of owning your own food business?

So, here are SOME of the things you will have to be responsible for as a start-up.

Get ready… Location, property size, type, business use, lease, rent, rates, insurance, legalities… OK, I’m not going to go on,

Well, this will come as no surprise but franchising is the perfect place for you investigate; it’s the equivalent of starting your own business without being alone.

Even better, things like the property

examples earlier should be dealt with by a credible franchisor in conjunction with you to ensure those risks are mitigated. This is why franchising failures are so much lower than independent start-ups.

The way I see it is you have nothing to lose by contacting half a dozen food franchise operations and asking them to send you details. You can then arrange to sit with them and see what they have to offer you, how they will change your life and help reduce risks to the very minimum. In the end taking one week to do this when you are talking about fulfilling your dream of owning your own business, will be the best investment of your time you have ever made.

Start exploring the world of food franchising, there are more opportunities to own your own food business in franchising than you will ever believe.

Good Luck with whatever your choose to do.

SPRING 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.

When it comes to food franchises, each franchisee has a responsibility not only for their part of the business but they also have an unwritten duty to the other franchisees too. If one part of the franchising mechanism goes wrong then it can have

48 | Food Franchise SPRING 2015

detrimental effects on the rest of the group or brand. One way to monitor the way a franchise is performing is to look at the stock market. Many of the big brands will be represented here and as such the share price can be used as not only a comparative

tool but as a guide. The information that you can gather from the markets is vast, you can look into the share dealings of directors, the planned growth of a company, banking forecasts, predictions and a foresight for the future.

market WATCH

Wendy’s WEN

+26.2% Sonic SONC

+20.1% Domino’s DOM

+16.34% Papa John’s PZZA

+9.7% Yum Brands YUM

+6.8% McDonalds MCD

+6.2% Marstons MARS

+3.5% Dunkin Brands DNKN

+0.7%

Krispy Kreme KKD

-0.2%

Hot/Not 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.

Sonic (SONC) – The US drive through restaurants have seen a resurgence of late with many customers flocking back after a slight lull. The brand have seen ambitions growth come to fruition and their share price over the last quarter has risen nicely for investors. Starting at around $27.21 share rose to $32.76 at the end of the period. This represents a healthy 20.1% surge and will leave a sweet taste in the mouths of many.

Wendy’s (WEN) – In this issue it is Wendy’s who have shown huge growth and are our hottest stock. The brand have seen their price rise 26.2% over the last three months and now sit at $11.05 per share. Up from £8.71 in December.

Domino’s Pizza Group plc (DOM) – It is no secret that this stock is one of the hottest on the market at present and with investors queuing up to grab a slice of the US firm it is little surprise that their price has rocketed. The group have opened plenty of store, have juggled their delivery option and embraced technology.

Starting January at 665.5p, the group posted a good set of quarterly figures and were further boosted by a strong UK performance, largely thanks to improved economic figures on the whole. The result sees (DOM) starting this financial year at around 774.50p, representing a huge 16.34% gain.

Papa John’s International Inc (PZZA) – Just like market rivals Domino’s (DOM) Papa John’s (PZZA) has seen their share price soar meaning that now could be the perfect time to invest in businesses of this type. At the time of writing (PZZA) is one of the best performing stocks on this list seeing its price rise from $56.39 to around $61.78, a 9.7% increase.

McDonalds Corporation (MCD) – Back in early January McDonalds were trading at around $92.84 and representing a 1.7% loss over the winter months. The fast food giant have since posted some positive results and with the appointments on the board and the filling of major positions things look back on track. McDonalds have risen from $90.62 to around the $96.26 mark, meaning a 6.2% rise.

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. They have performed well across the board and have seen a nice rise for their investors. Starting the period at $72.83 shares in (YUM) have moved rose sharply to $77.84 representing a 6.8% gain.

Marston’s plc (MARS) –Over the last three months Marston’s have weathered the storm that the beer tie brought and show a 3.5% gain on their market price. In January they were trading around 142p and there is a renewed sense of optimism with this share. Over the last few weeks trading has surged towards the 148.9p mark, a healthy rise.

Dunkin Brands Group Inc (DNKN) – The company behind Dunkin Donuts and Baskin Robins has been trading at a steady pace this year and were looking to post strong, annual figures until well into the last quarter. A rise from $46.75 to $47.10 this quarter that they have shown a 0.7% rise since early January.

Krispy Kreme (KKD) – Krispy Kreme Doughnuts are the only faller on our list this year and find themselves at the foot of the chart. It’s not all doom and gloom however as trading has been solid and much of the fall can be offset by the fact that they are seeing an increased market presence. With January and February comes fitness kicks and sadly Krispy Kreme’s products are not top of the agenda, I expect them to bounce back and to rise in the next few months. They are currently at $19.01 down from $19.05.

This leave them with a drop of 0.2%.

SPRING 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

IFE Excel, London 22nd-25th March 2015

2015 sees the return of the biennial International Food Exhibition (IFE).

Food Federation, the Craft Guild of Chefs and Food & Drink Federation.

Running for more than 30 years, IFE is back bigger and more innovative than ever before. The show will draw an estimated 30,000 professionals from across the industry spanning today’s dynamic retail, foodservice and manufacturing markets.

Boasting 80 high profile speakers and chefs, the exhibition will also encompass a large number of live culinary demonstrations on The Skillery with award winning chefs Hayden Groves, Damian Wawrzyniak, Mark Greenway and Alan Bird, to name but a few. While live business seminars will offer visitors the chance to gain industry insight from some of the most respected names in food and drink.

The exciting show programme for IFE 2015 includes new and inspirational elements, such as The Artisan Food Market and the Gourmet Drinker, featuring the best alcoholic drinks available from smaller producers. The event also welcomes the return and support of the show’s prominent partners such as the British Frozen

Waste Works Excel, London 22nd-25th March 2015

Waste-Works launches this year and is the only waste and resource event dedicated to the food and drink industry and will take place alongside IFE, the leading UK food and drink event, and Pro2Pac, the UK’s only packaging event designed exclusively for the food and drink sector.

Corby Ganesh, event director at Fresh Montgomery, the show organiser, said: “We are launching Waste-Works to provide the food and drink industry with the knowledge and solutions to continue the progress already being made in reducing waste.”

WRAP (Waste and Resources Action Programme) estimates that the UK food and drink manufacturing sector could save about 720,000 tonnes, equating to £404 million per annum, by implementing operational improvements and becoming more resource efficient, primarily in the areas of food and packaging.

Make a date for your diary with the Caffe Culture which returns to London’s Olympia on the 13th and 14th May.

caffè culture Olympia, London 13th-14th May 2015

50 | Food Franchise SPRING 2015

The show remains the only event in the UK dedicated to the cafe industry which will introduce you to the suppliers of those all-important products to set you apart and drive customers through your doors.

Register to attend by visiting IFE’s new look website www.ife.co.uk and follow the action on Twitter @IFEexhibition using the #ife15.

Mr Ganesh continues: “Whilst many of the industry’s major players are already actively tackling the issue with impressive results, this is just the tip of the iceberg. There are thousands of small to medium food businesses in the UK that have a genuine interest in reducing the waste they produce and improving efficiency, but don’t know where to start.

“They are looking for the information, ideas and inspiration to reduce their costs and increase their profits. Waste-Works will cater to this by providing them with an outstanding programme of real-life examples and case studies from the leading businesses and brands in the industry, along with suppliers explaining the latest developments and innovations.”

For more event information, visit www. waste-works.com. To keep up with the latest developments, follow the event on Twitter @ WasteWorks.

Learn how to improve your coffee making skills in our barista training demos and attend our free seminar sessions, including a panel discussion on how to successfully deliver a quality coffee and tea offering when it’s not your core business.

Secure your free ticket today by visiting www.caffecultureshow.com/book

SPRING 2015 Food Franchise | 51

Don’t invest in any business or franchise until you have spoken to Jasper’s Catering Franchise Ltd Does the business or franchise you are looking at give you?  





£30,000 worth of FREE stock £1,000,000 (yep one million pounds) worth of prospective appointments in year one 9 months trading without paying Management Service Fees 5 revenue streams in a resilient market place

 



66% gross profit margins Your own exclusively mapped business territory of around 13,000 prospective customers (we know who will order from you) An award-winning Business Management System to manage your franchise







Social Media platforms built & managed for you (including content production) for year one Nectar points for every penny you spend with our key suppliers The chance to build REAL business that doesn’t just rely on you

Even if you’re not thinking of starting a food franchise, we are confident that a meeting with us will give you an new, high level of expectation and clarity into the world of franchising.

52 | Food Franchise SPRING 2015

www.Jaspers-Franchise.co.uk 0121 622 2043 beyourownboss@jaspersonline.co.uk www.facebook.com/jaspersfranchiseltd www.twitter.com/jaspersfran