Perspective
I bought a Pit Stop franchise
and I’ve never looked back Franchise opportunities nationwide. Call Les 027 222 7487 for a chat. Visit www.pitstop.co.nz/franchising
Recently-retired Dean Madsen shares experiences gained from over 20 years in franchise banking
LESSONS I
’ve recently finished up at Westpac New Zealand after 40 years, spending more than half that time specialising as a franchise banker. But I wasn’t allowed to escape that easily – the editor asked me to reflect on what I’ve learned about franchising. Here are some thoughts I hope you might find useful. My first introduction to franchising came about in the late 1980s when I met a fellow Westpac employee, Pat Everest. Pat was New Zealand’s first specialist franchise banker, and as we chatted over a coffee, he explained that his role was looking solely after franchise businesses – in particular, major brands like McDonald’s, KFC and others. I was immediately fascinated, and visited my local bookstore in Newmarket where I purchased an Australian franchise magazine (it was so long ago, over 30 years, that Franchise New Zealand didn’t even exist!). I soon discovered there was a lot more to franchising than I had thought, with many brands that I was familiar with, but had never realised were franchises. I also learned some good reasons why franchising was growing so fast. The value of a franchise can be attributed to the strength of the brand, as well as the collaborative buying power of being part of a larger group. I discovered that franchises often had either a technological edge or a process and systems edge over their competitors that allowed them to expand and go on to dominate their specific markets – just look at McDonald’s, which is synonymous with fast service and product consistency, or Pizza Hut and Domino’s, which were delivering meals long before UberEats. Another key benefit for a franchise chain was that it could grow more quickly using franchisees’ capital to open more stores or operations. Speed of growth can be an important factor when you are trying to gain market share or dominance. Having worked with a lot of businesses over the years, I could see how all these advantages added up. And, later, when I joined the specialist franchise team at Westpac myself, I was able to help others make use of them – both franchisors and franchisees.
When knowledge plus experience equals success As a banker, I found one of the major benefits of franchising was the ability it gave us to fund a new start-up business off the forecasts, based on the strength of the benchmarking information provided to the bank about the performance of other franchisees in the same brand. I recall funding an Eagle Boys pizza franchisee in Wellington. He had applied for finance through his usual bank, which had declined him on the basis that he would never be able to sell the forecast number of pizzas in a week. Luckily, the potential franchisee was determined, and contacted me. We spoke on the phone and he sent through his business plan and projections. I was already aware of Eagle Boys’ growth strategy, and knew that when
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Franchise New Zealand
Winter 2022
Year 31 Issue 02
