WHY I WISH I’D BOUGHT A FRANCHISE

Simon Lord shares lessons learned from over 30 years of owning an independent small business

At the end of last year, my wife Lorraine and I sold Franchise New Zealand media – a business which we had founded, grown and loved for over 30 years. It was never a large enterprise, but it was successful and profitable, it won national business awards and built an international reputation, and we like to think that it has made a big contribution to the understanding and growth of franchising in this country.

And yet, as we step back, there’s a part of me that is reminded of the many times when I’ve said to myself, ‘I wish I’d bought a franchise!’

That might sound weird. After all, when we began, we were in the best possible place to start our own business. We both had a lot of franchising and management experience, and we had support from key players in the sector who wanted us to succeed. We weren’t even starting from scratch – I had edited the first few issues of the magazine before we bought it. To top it all, Lorraine had spent years developing systems, training and supporting other people to run franchised businesses.

And yet it was still hard. Very hard.

Making the decision

At the time the opportunity to buy Franchise New Zealand came up, we had a 20 month-old son and a new-born daughter. The original publisher was about to collapse and I was going to be made redundant. We had been in New Zealand less than three years. Starting a business was a risky decision and we had to take out a sizeable mortgage to fund it. Although some elements were in place, there was no-one to show us what to do. We had to work out for ourselves how to run a whole independent business.

How different it would have been if we had bought a franchise. We’d have had a franchisor to explain things to us; indicative figures from other franchisees to look at and help set expectations and make bank funding easier to obtain; and specialists and field managers who knew about precisely this business to advise us. Instead, we were going in blind – and we were acutely aware of the risks, having heard all about the high failure rates of independent small businesses. From our UK experience, we knew that good franchises had much higher survival rates.

Getting set up

Ours would be a home-based business, and we had to set it up from scratch. This was 1992, and we didn’t own a computer, or have a business line, let alone a mobile phone. Thanks to an incompetent British removal company, we didn’t even have a desk, although we did have legs for one. We compromised by attaching them to an old door. We had to work out, source and acquire everything from scratch – as cheaply as possible.

Compare that to buying a franchise. Not only will you get a list of the equipment you need, but you’ll often get specific makes and models and, in some cases, training from the supplier. If you need premises, there will be help with site selection, lease negotiation, signage and fit-out. The same applies to vehicles, lawnmowers, coffee machines … whatever you need, the franchisor will have worked out the right tool for the job, and usually have negotiated a discount, too.

Then there’s technology and a whole raft of software for everything from accounts to email to social media marketing. Setting all these up (and having to deal with the often uncontactable organisations behind them) takes an age. And if you need finance, equipment leases and working capital, that’s more complexity. Having a franchise team to help saves a lot of time and trouble during the inevitably stressful period when you’re setting up your business. They will help get you on the right track – and then keep you there.

Getting started

Having all the right equipment and software in place is one thing –learning to run your new business with it is another. I had been in marketing and franchising for years, but I had never sold advertising in my life and now that was going to be how I provided for my family. Whatever happened was going to be up to us and only us. It was exciting, but it was also terrifying.

Would it have been less terrifying if we’d bought a franchise? Possibly not, but we’d have had someone to hold our hand through the whole process and tell us that everyone went through this stage.

We’d have had someone training us in all the little everyday tasks and the big decisions that would make a difference. We would have had manuals to refer to every time we forgot how to do something, or needed to do something for the first time. There would have been systems in place, systems that had already been used by other franchisees who had gone through exactly what we were going through now. And other people – franchisees as well as the franchise team – to talk to, share our feelings with, and reassure us. As independent business owners, we were on our own.

The value of support

In the early days, excitement and adrenaline carried us through. We enjoyed tremendous goodwill from New Zealand’s young franchise sector, and gave back as we met others trying to grow. The feeling of running our business gave us huge energy and enabled us to survive the long days and the short nights. While Lorraine loved being a stay-at-home mum, she also enjoyed working a couple of days a week as we grew. But, after two years of this, I was exhausted and burned out.

The biggest mistake I made was not seeing that we needed help and not believing that we could afford to employ someone. If we had bought a franchise, I suspect that we would have taken someone on from day one – or, at least, after the first year. A franchise field manager would have seen our struggles and guided us. They would also have known which of the many tasks we were doing could most easily be handed over to someone new. There would have been documented systems, and help with employment processes, payroll systems and compliance procedures (even more complex today than it was back then).

As it was, we had to discover or work out all these things for ourselves. Mind you, when we did take on our first employee, we chose well – Sally Knight has been with Franchise New Zealand for over 25 years and is now General Manager.

Over time, we have seen massive changes in technology, media, the economy, the market and almost every aspect of life. Every time we needed new software (or software changes were forced on us), every time we needed new equipment or a new supplier, every time we needed advice about staffing or marketing or adopting new media, it took days or weeks to sort out. And every hour you have to spend on unproductive admin tasks is time you’re not spending on growing the business, making sales or servicing customers.

That’s why franchising works so well – you have a franchise team working all this out for you and providing the answers. That’s what you pay franchise fees for.

Challenge is constant

Although we soon got to grips with the regular routine of running our own business, we found the biggest challenges became how and when to respond to changing circumstances such as success, economic upheaval, personal circumstances, new competitors or other factors.

When should you expand? When should you consolidate? When should you upgrade? When should you outsource? Where are the opportunities? What are the threats? These are questions that come up all the time.

As an independent business owner, you have to make all these decisions by yourself, using information from a sample size of one. But as a franchisee, you can draw on the experience of tens, maybe hundreds of other franchisees throughout New Zealand and even overseas to help you decide what action to take and when. And you’ll have solid data upon which to base your decisions, taken from other businesses very similar to your own. That not only makes it easier to make good decisions at the right time – it also reduces the stress of having to make them.

Feeling connected

One of the things that you don’t really appreciate unless you start up your own small business is how alone you can feel. Nothing happens unless you make it happen. No-one can know exactly what challenges you face. No-one knows the pressures you are under.

We built our own support networks, of course, and we have had a lot of support from family, friends, suppliers and advisors at crucial times that we can never repay. But we have also been fortunate enough to be part of the whole franchise community.

There’s an old saying about franchising which is often regarded as a cliché, but it’s true: in business for yourself, but not by yourself. A key benefit of buying a franchise is that you are part of a wider group sharing the same experiences and issues. That really came home to me during the first Covid lockdowns, as we talked to franchisors around the country about what their franchisees were experiencing and how they were being supported. The weekly video calls organised by the Franchise Association made us really appreciate the friendship, the collaboration, the co-operation and sharing of information that is so much a part of franchising.

Covid demonstrated that community at its best as franchisors, franchisees and service providers all banded together to support and help each other at a time when nobody knew what the future held.

In the early days of Franchise New Zealand, we came up with our slogan: ‘Putting People in Business’. One of our many overseas friends described it as the perfect definition of what the franchise business model is all about. Good franchisors are good with people, and know how to lead, motivate and inspire trust. They also care – and it shows.

When the time came to sell

Every business owner needs an exit plan – in fact, many advisors will tell you to think about your exit plan before you even start. Well, 30 years ago, we had no idea what the future would hold. But eventually we started thinking about it. We took advice, planned ahead and worked to have Franchise New Zealand ready to go to market at the end of the financial year in March 2020.

The timing was perfect – perfectly awful. Lockdown hit, and within weeks we weren’t sure that we would even have a business, let alone one worth selling. Fortunately, with the support of our clients and sponsors, and a lot of hard work by our small team, we survived, adopting new technology and seeing our online activity massively boosted.

In some ways, that was reward for the effort we’d put into developing our website (launched as far back as 1997) and digital magazine (2008) long before they were popular concepts. Lockdowns also helped us embrace remote working and make the company even more attractive to buyers. But riding out the pandemic and rebuilding required a lot of strategic planning, cost management, research, investment, learning and flexibility. There’s no doubt it would have been much easier with a franchise team behind us.

When it came to finding a buyer, that would have been easier with a franchise, too. We’d never sold a business before. We had to work out what we had to sell; find a broker; create a business information memorandum; prepare accounts and budgets; update operations manuals; and much, much more – even before finding potential buyers and starting to answer the myriad questions that were thrown at us. After selling, we had to manage the transition of contracts and relationships, and help recruit and train new people.

Franchisees have help with all these aspects, and, because they are selling a known brand, finding a buyer is simpler. A franchise makes training and transition easier, too – the whole point of a franchise is that it is designed to be taught to others from the very start.

Last words

As Lorraine and I step back, we’re proud of the contribution we’ve made to franchising and to the lives of so many people and businesses throughout New Zealand. We’re proud of the legacy that we are passing on to the new team, now led by our long-term colleague and friend Sally Knight.

We’re incredibly grateful for the help and support we have received from so many people in franchising over the years, and especially grateful to our own loyal team and suppliers past and present. We have been humbled by the many messages we’ve received since selling the business.

And we are glad to have supported ourselves and our family, and to have achieved the financial security everyone dreams of when starting their own business.

It’s fair to say that all businesses take a lot of hard work, whether they are franchises or not, and ours was no different. But, I promise you, having the help and support of a good franchisor behind you ensures that your efforts will go into what works, rather than having to work everything out for yourself. And that is why, over the years, there have been moments when I’ve quite genuinely said to myself:

‘I wish I’d bought a franchise!’