Franchises

Brassedoff

minxy-x wrote: »

Thanks

Hi, If all has worked OK, I have answered next to your questions, cheers

Ok, I see where you are coming from. I will be honest and say I am staggered at that price for that type of operation. I assume you are purchasing the whole car roller mechanism?


Firstly, pull your arms and feet in. Hold on until you have had the chance to visit the Franchise exhibition at the NEC. Thanks will look into this also. You would do well to also subscribe to the Franchise magazines; https://www.franchiseworld.co.uk ; https://www.businessfranchise.com; and https://www.whatfranchisemagazine.co.uk/

Do you know what type of franchise you want? Car wash
Your budget? £90,000 now personal cash in bank Time frame? Unsure if you mean to open which would be ASAP, or how long lease, would look at options. Look through the trade mags and make sure you visit the trade show at the NEC before you spend a single penny. It will open your eyes on other operations that might give you other avenues.

I have a client who is a multimillionaire, she started off as a trainee manager at the largest fast food franchise. She took on a failing (in their eyes) McDonalds. Unless you have the £400+K the other route is to parachute in as a trainee manager, moving over a year into Store Management, then you get a subsidy and even finance from them.


I usually start by saying look at the franchise.
Look at the failure rate before anything else. What info would you be looking for re this? Sorry Im unsure
[COLOR="rgb(65, 105, 225)"]The reason for that is the one mentioned above only has one UK failure in 35 years if UK trading. Against others that regularly turnover, but only get franchises on the basis of how good their buy back is. Basically when you purchase a.
I am saying to look at the location, if its a Emo style rolling car wash, or the Waves style hand car wash, you have to consider is it a virgin site? If not how often has a franchisee failed at that location and what is the buy back cost. If you are unsure what that means, I will say you need to read up as it is long and lengthy. Or you put in £50K, fail, they force sale it back for 1/10th of allied cost so £1,000 for every £10,000 back. Some loss for a business you have only half control of [/COLOR]

Drilling down to it, the difference between your franchise and regular business is what? (in your case).
Im unsure exactly what you mean by this, Im going to answer what I think you mean, if I have gone off on a different tangent sorry. Do you mean why franchise and not open on own? If yes, because too hard to secure sites. OK, you set up a business as a car wash, if you build the site, machinery, chemicals, branding and literature (plus a few other things missed), then take that away from the cost of the business in a box. A franchise has a value based on the recognition of the brand. A McDonalds, Burger King, Subway, right down to Avon. Setting up a burger "restaurant" is far harder than setting up a car detailing franchise. So you have to consider that.

as others have pointed out, you pay £60K for a car wash. You compete with someone who opens one almost anywhere. Or, the weather. You will no doubt take more cash in the summer than winter. Yet others may not be weather dependent.

Does that help?

minxy-x

paddyrg wrote: »

Ah! From a previous comment I thought you meant the franchisor had one car wash and was looking to expand! Big difference!

I guess it'll come down to how many vehicles you can do, how much people well pay in your area, and whether some guys setting up at the end of the road illegally on wasteland is real competition or an annoyance!

If you're under the supermarket brand, are there extra constraints upon you? The supermarkets are not known for their benevolence (ask any farmer/supplier), so it can be quite easy to lose money on each job but be contacted into it. They can be dreadful bullies. On the plus side, the franchisor would shield you from that somewhat, but be conscious of it when you're investigating the small print, maybe.

It was probably me not explaining well originally.

The area we are looking in currently only has one static hand wash we can see (both on line and whilst looking at the area in person).
Its on an awkward site (can only fit a few cars in and then the area is jammed, would have to move cars to get finished ones out, no area to wait or put finished cars, no shopping area or any thing to do so customer would have to wait for car, not a busy through road its tucked out of the way etc).
There is also 2 mobile valets which cover the county.

I believe re supermarket only ref to supermarket I believe is that you must abide by their H&S policy whilst on site, and have insurance to their requirements. But its early days and researching all options currently.


Thanks

minxy-x

paulwf wrote: »

The business model you describe would be of concern to me as the franchisor is not in control of the brand, and the main reason you buy into a franchise is because of the brand name (not the only reason but it is very important).

I would want to see a cast iron contract in place between the supermarket and franchisor lasting at least 10 years. I can see the supermarket contracting to another franchisor and you being left in the lurch, what happens then? All very complicated and you'd need a very good commercial solicitor to look into all the possible scenarios.

Buying power can work both ways...you might get a group deal but you will probably be tied into buying specific products from a specific supplier so you can't shop around. I don't know the industry but I can't see consumables being a big part of your overall costs anyway (unlike in the food industry where getting a good price on ingredients is vital).

You will be at the mercy of the supermarket and petrol station for your footfall, what happens if trade drops off because the petrol price is too high or another supermarket opens? Naturally any business on a high street depends on the shops around it to generate footfall but you'll have all your eggs in one basket.

Lots to think about basically.

The supermarket did change to one franchisor (current one), they did this and wanted to keep the current franchisses in place.
Obviously there is no guarantee this couldn't happen again with a different outcome.

40% of customers use a supermarket petrol station and not the same supermarket for its regular shop (so I have been advised).
It has all of the big 4 within a 6 mile radius, all big stores.

It wouldn't be just the supermarket in question we would be hoping to provide a service to, we will also be working to get customers from other local businesses etc.

Thanks

minxy-x

Brassedoff wrote: »

Ok, I see where you are coming from. I will be honest and say I am staggered at that price for that type of operation. I assume you are purchasing the whole car roller mechanism?


Firstly, pull your arms and feet in. Hold on until you have had the chance to visit the Franchise exhibition at the NEC. Thanks will look into this also. You would do well to also subscribe to the Franchise magazines; https://www.franchiseworld.co.uk ; https://www.businessfranchise.com; and https://www.whatfranchisemagazine.co.uk/

Do you know what type of franchise you want? Car wash
Your budget? £90,000 now personal cash in bank Time frame? Unsure if you mean to open which would be ASAP, or how long lease, would look at options. Look through the trade mags and make sure you visit the trade show at the NEC before you spend a single penny. It will open your eyes on other operations that might give you other avenues.

I have a client who is a multimillionaire, she started off as a trainee manager at the largest fast food franchise. She took on a failing (in their eyes) McDonalds. Unless you have the £400+K the other route is to parachute in as a trainee manager, moving over a year into Store Management, then you get a subsidy and even finance from them.


I usually start by saying look at the franchise.
Look at the failure rate before anything else. What info would you be looking for re this? Sorry Im unsure
[COLOR="rgb(65, 105, 225)"]The reason for that is the one mentioned above only has one UK failure in 35 years if UK trading. Against others that regularly turnover, but only get franchises on the basis of how good their buy back is. Basically when you purchase a.
I am saying to look at the location, if its a Emo style rolling car wash, or the Waves style hand car wash, you have to consider is it a virgin site? If not how often has a franchisee failed at that location and what is the buy back cost. If you are unsure what that means, I will say you need to read up as it is long and lengthy. Or you put in £50K, fail, they force sale it back for 1/10th of allied cost so £1,000 for every £10,000 back. Some loss for a business you have only half control of [/COLOR]

Drilling down to it, the difference between your franchise and regular business is what? (in your case).
Im unsure exactly what you mean by this, Im going to answer what I think you mean, if I have gone off on a different tangent sorry. Do you mean why franchise and not open on own? If yes, because too hard to secure sites. OK, you set up a business as a car wash, if you build the site, machinery, chemicals, branding and literature (plus a few other things missed), then take that away from the cost of the business in a box. A franchise has a value based on the recognition of the brand. A McDonalds, Burger King, Subway, right down to Avon. Setting up a burger "restaurant" is far harder than setting up a car detailing franchise. So you have to consider that.

as others have pointed out, you pay £60K for a car wash. You compete with someone who opens one almost anywhere. Or, the weather. You will no doubt take more cash in the summer than winter. Yet others may not be weather dependent.

Does that help?

Sorry, that isnt the price of any of the franchises we have been looking at, that is the money we have.

Waves is one of the companies we have been looking into.

Thank you for all your other info.

Brassedoff

You have to decide whether you want to take a punt as I see it.

davehills

The only reason I can see for buying a franchise it to be able to use the name and identity of a recognisable brand.

Have you heard of the franchise you are intending to buy? Ask your friends, families and people you meet to name the top three brands in this business area. If they don't name the franchise you are thinking of buying then forget it!

minxy-x

Brassedoff wrote: »

You have to decide whether you want to take a punt as I see it.

Indeed!
Thanks for all your advice!

minxy-x

davehills wrote: »

The only reason I can see for buying a franchise it to be able to use the name and identity of a recognisable brand.

Have you heard of the franchise you are intending to buy? Ask your friends, families and people you meet to name the top three brands in this business area. If they don't name the franchise you are thinking of buying then forget it!

Have I, yes, but my husband works and has worked within the area for many years, so I am not a fair representative.

They do not have any franchises in the area we live, they are all independents.

Another reason and the one which has now led us to looking into franchises, is Councils are just not interested at the moment in working with us, to enable us to open an independent (have been trying a while). They have too many opening legally and illegally, in many areas.
Businesses also are choosing to work with one company who is then franchising.

paulwf

minxy-x wrote: »

The supermarket did change to one franchisor (current one), they did this and wanted to keep the current franchisses in place.


Thanks

Have you got a draft copy of the franchise agreement? Have you asked the question about what happens in this scenario?

You will have a contract with the franchisor. When the supermarket pulled the plug on one franchisor that means the franchisees are left high and dry with a voided franchise agreement. The new franchisor can come along and perhaps demand a new setup fee, new ongoing fee and require new systems and equipment at your cost. Ask to speak to some franchisees who went through that transition to find out what actually happened. The transition might have been smooth but you do need to find out, if the supermarket has switched once they might well do it again.

uptomyeyeballs

davehills wrote: »

The only reason I can see for buying a franchise it to be able to use the name and identity of a recognisable brand.

Have you heard of the franchise you are intending to buy? Ask your friends, families and people you meet to name the top three brands in this business area. If they don't name the franchise you are thinking of buying then forget it!

You need to know what it's called so you can do your research and due diligence. If it's a good business model then a franchise can be a goldmine. If you're buying a franchise business of another franchisee then you should hit the ground running as you'll also be buying a client list and have a decent set of accounts to scrutinise before you take the plunge.

However, the golden rule still applies - if it's too good to be true, then it's probably a pup. Take care.