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SURVEY:

PROFESSIONAL SERVICES
FOR FRANCHISING
IN THE U.K.

Professor John Stanworth


David Purdy

INTERNATIONAL FRANCHISE RESEARCH CENTRE

SPECIAL STUDIES SERIES No.16


JANUARY 2001

PUBLISHED BY THE FUTURE OF WORK RESEARCH GROUP


ISBN 0 9539845 1 6
THE INTERNATIONAL FRANCHISE International Journal (MCB University
Press). Additionally, Franchise Growth And
RESEARCH CENTRE (IFRC) 1993-2007
Failure In The U.S. And The U.K.: A
University of Westminster, London, UK.
Troubled Dreamworld Revisited received the
Best International Paper Award in 1997,
"The International Franchise Research
again from the Society of Franchising. This
Centre (IFRC) is committed to
paper was later published in Franchising
improving the understanding of
Research: An International Journal.
franchising. This is achieved by the
publication of impartial research and
Close links were fostered with universities in
by the encouragement of informed
Rome and Pisa (Italy), Haute Alsace
debate."
(France) and Boston, Minneapolis and
Texas (USA), with a view to research
Franchising operates in a dynamic environ-
collaboration. Professor Pat Kaufmann of
ment, with new issues and challenges
Atlanta, Georgia, addressed our inaugural
emerging, including: globalisation, coping
annual strategy seminar, in 1994. Overseas
with competition, disclosure, industry
speakers in subsequent years included
regulation, managing relations with
Cheryl Babcock, Director of the Franchising
franchisee associations, franchisee
Institute, University of St. Thomas,
recruitment & market saturation.
Minneapolis (1995), Professor Rajiv Dant,
University of Boston (1996), Professor
Against this backdrop, the IFRC was
Francine Lafontaine, University of Michigan
established in 1993 by Professor John
(1997), Professor Claude Nègre, University
Stanworth (Director of the Future of Work
of Haute Alsace (1997), Colin McCosker,
Research Group at the University of
University of Southern Queensland (1998),
Westminster), supported by Brian Smith (ex-
Professor Frank Hoy, University of Texas at
BFA Chairman, franchisee, franchisor and
El Paso (1998), Professor Jack Nevin,
author), and Chair of its Steering Group.
University of Wisconsin-Madison (1999),
Professor Tom Wotruba, San Diego State
FOUNDER MEMBERS
University (1999), Professor Bruce Walker,
University of Missouri, (2000), and,
Founder members and sponsors included:
Professor Wilke English, University of Mary
Barclays Bank, the British Franchise
Hardin-Baylor (2000).
Association (BFA), Dyno-Rod, Franchise
Development Services Ltd., Lloyds Bank
IFRC members were active supporters of the
(now Lloyds Group), Mail Boxes Etc.,
International Society of Franchising, and
Midland Bank (now HSBC), Prontaprint,
hosted the ISoF 2005 conference in London.
Rosemary Conley Diet & Fitness Clubs,
Royal Bank of Scotland, The Swinton Group,
The IFRC ceased its research activities in
and Wragge & Co.
2007, when John Stanworth took retirement.
PUBLICATIONS
Web versions of IFRC Special Studies
Series Papers 1993-2001 (listed overleaf)
Their support enabled the IFRC to publish a
number of reports, including its Special
Many of the earlier papers have been re-set,
Studies Series Papers, journal articles,
to allow a successful conversion to Acrobat,
book chapters and conference papers.
and are now available online.
Two IFRC papers received three awards
John Stanworth, Emeritus Professor,
over a period of 12 months (1996-97). The
University of Westminster
first being Business Format Franchising:
http://www.westminster.ac.uk/schools/
Innovation & Creativity or Replication &
business
Conformity ?, which received the Best
International Paper Award in 1996, from the
David Purdy, Visiting Fellow,
Society of Franchising. This paper also
Kingston University
received the Outstanding Paper of 1996
http://business.kingston.ac.uk/sbrc
award from Franchising Research: An
December 2010

International Franchise Research Centre Special Studies Series Papers 1-16 Web Versions 2010 p.1
LIABILITY DISCLAIMER 10 London: A Capital City For Franchisee
Recruitment, (Mills, Stanworth &
The information and analysis in each report Purdy), 1997
is offered in good faith. However, neither the
publishers, the project sponsors, nor the 11 The Effectiveness of Franchise
author/s, accept any liability for losses or Exhibitions in the United Kingdom,
damages which could arise for those who (Chapman, Mills & Stanworth), 1997
choose to act upon the information or
analysis contained herein. 12 Franchising: Breaking Into European
Union Markets, (Stirland, Stanworth,
IFRC Special Studies Papers 1993-2001 Purdy & Brodie), 1998

Web versions published online December 13 Succeeding As A Franchisor,


2010, via http://www.scribd.com/: (Stanworth & Purdy, published jointly
with Business Link London Central),
1 The Blenheim/University of 1998
Westminster Franchise Survey:
Spring 1993, (Stanworth & Purdy), 14 Direct Selling: Its Location in a
1993 Franchise Typology, (Brodie &
Stanworth), 1999
2 Improving Small Business Survival
Rates via Franchising: The Role of the 15 Unravelling the Evidence on
Banks in Europe, (Stanworth & Stern), Franchise System Survivability,
1993 (Stanworth, Purdy, English &
Willems), 1999
3 Targeting Potential Franchisees:
Industry Sector Backgrounds and 16 Survey: Professional Services For
Declared Areas of Interest, (Purdy & Franchising In The U.K., (Stanworth &
Stanworth), 1994 Purdy), 2001

4 The Impact of Franchising on the


Development Prospects of Small &
Medium-sized Enterprises (SMEs) in
Europe, (Stanworth & Purdy), 1994

5 The Blenheim/University of
Westminster Franchise Survey: A
Comparison of UK and US Data,
(Stanworth, Kaufmann & Purdy), 1995

6 Developing a Diagnostic
Questionnaire as an Aid to Franchisee
Selection, (Stanworth), 1995

7 Franchising as a Source of
Technology-transfer to Developing
Economies, (Stanworth, Price, Porter,
Swabe & Gold), 1995

8 Aspects of Franchisee Recruitment,


(Macmillan), 1996

9 Business Format Franchising:


Innovation & Creativity or Replication
& Conformity ?, (Stanworth, Price,
Purdy, Zafiris & Gandolfo), 1996

International Franchise Research Centre Special Studies Series Papers 1-16 Web Versions 2010 p.2
FOREWORD EXECUTIVE SUMMARY

The advice given to the franchise industry by The franchise industry in the UK finds itself, at
the Franchise Department of the Royal Bank the beginning of the new millennium, in a
of Scotland has always been clear - use the buoyant condition, having grown in maturity
services of professionals who understand and professionalism during the 1990s,
franchising. In other words, professionals who following its initial emergence as a force to be
have a proven track record in providing reckoned with during the 1980s.
guidance to the franchise community. Where
better to find this experience than in the It is notable that the franchise sector
Affiliate Members of the British Franchise possesses sufficient economic muscle to have
association. ensured the development of a professional
infrastructure. The current research, the first
The franchise industry is fortunate to have a of its kind, set out to investigate the extent to
governing body in the British Franchise which franchise-specific professional services
Association that is absolutely committed to were being used in the UK, and franchisors'
promoting ethical Business Format assessments of them.
Franchising. This survey highlights the clear
benefits of being a member of the British The sector has an active and vibrant trade
Franchise Association; not only through the association in the British Franchise
advice and guidance it is able to provide but Association (BFA) that gives the industry
also because of the comprehensive list of profile and helps to establish good practice.
affiliated franchise professionals it has as Although the majority of franchise systems do
members. not belong to the BFA, the largest slice of the
industry in terms of business volume is almost
The survey looks at the views of franchisors certainly in membership. For instance, this
who are both members and non-members of current research showed that the majority of
the British Franchise Association, on the systems over 10 years old and with more than
professional services available for franchising 50 outlets were members. In contrast, the
in the UK. It seeks to establish the benefit of majority of systems 2 years old or less and
taking advice from lawyers, consultants, with 5 outlets or less were not members.
accountants and banks and particularly those Nearly 1-in-3 franchisors contacted the BFA
who are affiliated to the British Franchise prior to launch. The same proportion on non-
Association. members also contacted them again after
launch, compared with twice that number of
The Royal Bank of Scotland has operated a members. There was evidence to suggest that
dedicated Franchise Department since 1984 those who joined the BFA when they were
and is committed to ethical Business Format eligible had already shown a prior orientation
Franchising. It is an Affiliate Member of the towards the use of professional services.
BFA and has experienced Franchise
Managers across the UK who provide advice The specialist franchise units present in the
to franchisors and franchisees on the general clearing banks represent another institutional
principles of franchising. The RBS also has a plank of the sector. Such units are typically
UK network of Franchise Business Managers located within or adjacent to the banks' small
who are dedicated to looking after the banking business sections. Looking at the interface
requirements of our franchise customers. between franchise companies and their
specialist bank lenders, the links were strong
Nigel Thurlow and the banks well-rated by their franchisor
National Franchise Manager clients. Few, if any, franchise companies do
Royal Bank of Scotland not need an alliance with a bank. Our results
indicated that there were 3 banks that had
deep roots in the franchise sector, followed by
2 others that committed fewer resources and
had smaller market shares.

Franchisors were asked whether, when


recruiting franchisees, they guided them

International Franchise Research Centre - Special Studies Series Paper No.16 1


towards seeking advice from lawyers, particular, recommended prospective
accountants, bank managers and the BFA. franchisees to consult with lawyers, bank
There was a strong recurring difference here managers and accountants. Most BFA-
between BFA-members and non-members, member companies also recommended
amounting to what might be considered 'good that the BFA be contacted.
practice' amongst BFA-members. There was
a greater emphasis amongst BFA-members ■ Main benefits of BFA membership -
on potential franchisees seeking sound When asked the main benefits of BFA
advice. Our findings concerning use of membership, the 3 factors emerging most
franchise lawyers and consultants indicate strongly were (in order): 'To help sell
that franchisors who were BFA members were franchises'; 'Access to BFA network' and
definitely more likely to have used BFA- 'Specialist Advice'.
affiliated lawyers and consultants when
getting their franchises launched. ■ Assistance with franchisee business
plans - Over 90% of all franchisor
Whilst there are accountants of note operating respondents assisted prospective
in the field of franchising, it has not usually franchisees with the market research and
been felt that the accounting profession financial data required to construct a
needed to develop a franchise-specific strand business plan.
of substance. Rather, generic accounting
skills have been considered usually sufficient ■ Screening of prospective franchisees -
to meet the needs of the franchise industry for Ninety per cent of franchisors claimed to
advice and guidance on the financial front. exclude from consideration those
prospective franchisees they thought
Franchisors who were BFA members were 3 would have difficulty raising bank finance.
times as likely as non-members to be
influenced to attend a franchise exhibition by ■ BFA-sponsored franchise exhibitions -
the fact that the exhibition was BFA- Franchisors who were BFA members were
sponsored. 3 times as likely as non-members to be
influenced to attend a franchise exhibition
PRINCIPAL FINDINGS by the fact that the exhibition was BFA-
sponsored.
■ Maturity of BFA members - The profiles
of BFA-member and non-member ■ Use of BFA-affiliated magazines and
franchise companies appear to differ quite newspapers - When asked if they used a
sharply with the larger and more mature BFA-affiliated magazine/newspaper when
companies being more likely to be in advertising for new franchisees, the most
membership. typical response was 'Sometimes',
followed be 'Never' and then 'Always'.
■ Use of BFA-affiliated lawyers - BFA-
member companies were substantially ■ Assessment of the clearing banks -
more likely than their non-member Franchisor ratings of the services offered
counterparts to have used a BFA-affiliated by the central franchise teams of the major
lawyer to prepare their franchise contract. franchise banks were generally good.
Similar behaviour is being replicated Where franchisors had direct knowledge of
concerning advice on EU Block Exemption a specific bank team, they typically rated
legislation changes. them 'Good' or, failing that, 'Reasonable'.
'Poor' ratings were relatively rare though
■ BFA advice and information - Ninety-five the balance of ratings varied with the
per cent of BFA-members rated the BFA banks concerned.
as either 'very helpful' (53%) or
'moderately helpful' (42%). This
assessment still held up at 68% overall
even for non-members.

■ Advice to prospective franchisees -


Most franchisors, BFA-members in

2 International Franchise Research Centre - Special Studies Series Paper No.16


INTRODUCTION previous report, Breaking Into European
Union (EU) Markets, 1998).
The aim of this research was to ascertain:
We estimated our relevant population as
■ the nature of professional advice sought by being around 450 UK systems, from which we
UK franchisors received 138 usable responses (133
responses arrived within 3 weeks of the initial
■ whether the needs of franchisors were mailing). This equates to a response rate of
satisfied by their professional advisers over 30% - a common response rate for
franchise research conducted in the UK, and
■ how franchisors rated the services considered good by the standards of business
provided by professional advisers research generally. A small number of
returned questionnaires were excluded from
■ the extent to which franchisors required/ the analyses where key data - such as
encouraged prospective franchisees to number of franchise outlets or the franchise
take independent advice system name - had not been supplied.

ANALYSIS
METHODOLOGY
The analyses presented here contrast British
A mailed questionnaire was distributed to Franchise Association (BFA) members
nearly 580 franchise companies in February against non-members, primarily to gauge the
2000, using an address list supplied by extent to which BFA membership successfully
Franchise World and based upon their UK influences franchise systems in connection
franchise directory. Our earlier research had with 'good practice'.
indicted that, of around 700 businesses, which
answer to the description of a franchise The most recent BFA/NatWest survey of UK
company in the UK, around 200 are very franchising, published in March 2000,
small systems in their infancy, and thus identified 642 franchise systems. And, at
unlikely, it would seem, to become involved in around the time when their survey was
research such as ours (as noted in our undertaken, towards the end of 1999, it was

Fig 1 - Respondents' Number Of U.K. Franchise Outlets

44% 36%

26% 45%
23% 40%
26% 20% 35%
30% Proportion
12% 25% of Sample/
Sub-sample
12% 20%
17% (BFA Membership
51 or more 15% Status)
21-50 10%
5%
11-20
0%

6-10
ALL (138)
0-5 Franchise outlets Non-members
(65)
BFA Members
(73)

International Franchise Research Centre - Special Studies Series Paper No.16 3


Fig 2 - Years Since First U.K. Franchisee Was Recruited

41% 33%

45%
23% 19% 40%
32% 25% 35%
30% Proportion
25% of Sample/
29% 23%
Sub-sample
20%
(BFA Membership
19% 15%
Status)
11 years or more 10%
18% 5%
6-10
0%

3-5
ALL

0-2 years Non-members

BFA Members

estimated that the BFA had a total of 173 Franchising Experience: Number Of Years
franchise system members (Franchise World, Since First UK Franchisee Was Recruited
November/December 1999). The survey
response of 138 franchisors comprised 73 One in three of the sample recruited their first
BFA members and 65 non-members. franchisee more than 10 years ago (i.e. before
1990, Figure 2). Only 37% of the BFA
Size Of Systems: Number Of members recruited their first franchisee within
UK Franchised Outlets the past 5 years, compared to over 60% of the
non-members.
Nearly 60% of respondents had over 20
franchise outlets (Figure 1). This rose to 70% Franchisee Contracts: Lawyers & Value
for BFA-members, but fell to less than 50% for For Money
non-members. This suggests that BFA
members comprise a greater proportion of 89% of respondents assessed the lawyers
mature and experienced systems than their who prepared their standard franchisee
non-member counterparts. contract as 'good' or 'reasonable' value for
money (Figure 3). There were no major
Certain membership criteria - e.g. full differences between BFA-members and non-
membership, requiring a minimum of 4 members, apart from a slight bias towards
franchisees - deliberately screen out the perceptions of 'poor' value for money amongst
smallest (and youngest) systems. Additionally, the non-members.
criteria for other grades - e.g. provisional
membership, which requires emerging Contracts Prepared By BFA-Affiliated
systems to use 'accredited professional Lawyers
advisors' - will also rule out systems that do
not have the finance or the inclination to use Two-thirds of respondents reported having
such advisors, again, perhaps tending to used a BFA-affiliated lawyer, with 82% of
exclude smaller systems. BFA-members doing so, but less than half of
non-members (Figure 4). If it is reasonable to
assume that the value-for-money rating of the
typical BFA-affiliated lawyer would be higher

4 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 3 - 'Value For Money' Rating Of The Lawyer Preparing
Standard Franchisee Contract

41%
48%

50%
45%
40%
35%
Proportion
30% of Sample/
25% Sub-sample
9% 20% (BFA Membership
14%
15% Status)
Good value for money
10%
5%
Reasonable value for money 6% 1% 0%

Poor value for money


ALL

Other Non-members

BFA Members

than that of their non-affiliated counterparts,


then this may explain the 'poor' rating bias
apparent amongst non-members, observed in
the previous figure.

Fig 4 - Was The Franchise Contract Prepared By A BFA-Affiliated


Lawyer ?

66%
82% 90%
80%

48% 70%
60% Proportion
50% of Sample/
28% Sub-sample
40%
(BFA Membership
30% Status)
20%

7% 10%
Yes
0%

No
ALL

Don't know Non-members

BFA Members

International Franchise Research Centre - Special Studies Series Paper No.16 5


Fig 5 - Did More Than One BFA-Affiliated Lawyer
Tender For The Work ?

18%
70%

70%

60%

50%
Proportion
40% of Sample/
Sub-sample
30% (BFA Membership
20% Status)

9% 10%
Don't know
0%

No
ALL

Yes Non-members

BFA Members

Competitive Tenders From BFA-Affiliated said that they did not (Figure 5). There was
Lawyers little difference between BFA-members and
non-members.
Seeking competitive quotations (from BFA-
affiliated lawyers) would appear to be
relatively uncommon: 70% of the respondents

Fig 6 - Reasons For Using A Non-BFA-Affiliated Lawyer

8%
58%

70%

60%

50%
Proportion
40% of Q6 = 'No'/
Sub-sample
29% 30%
(BFA Membership
5% 20% Status)
No data
10%
Other (please state)
0%

Don't know
ALL

Just as good Non-members

BFA Members

6 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 7 - Intention To Use A BFA-Affiliated Lawyer Concerning
EU Block Exemption Changes

57%
69%
70%

45% 60%

50%
Proportion
24% 40% of Sample/
Sub-sample
30% (BFA Membership
20% Status)
17%
10%
Yes
0%

No
ALL

Don't know Non-members

BFA Members

Reasons For Using Non-BFA-Affiliated EU Block Exemption Changes: Advice


Lawyers
In view of impending changes to the
58% of the franchisors using non-BFA- European Union rules concerning 'block
affiliated lawyers to prepare their franchise exemption' administration at the time of the
contract (38 respondents) stated that there survey (from June 2000 a new ruling for
were 'other' reasons than those offered in the vertical agreements replaced earlier block
questionnaire (Figure 6). In addition, 29% felt exemptions for franchise agreements),
that non-BFA-affiliated lawyers were 'just as respondents were asked whether they
good' as BFA-affiliated ones, and no-one intended using a BFA-affiliated lawyer to
thought that the non-affiliated lawyers were advise on any changes required to their
'cheaper'. The 'other' reasons cited included: franchise agreement. Nearly 70% of BFA-
members said that they would, compared to
BFA Members: only 45% of the non-members (Figure 7).

● Responsibility of company legal Use Of A Specialist Franchise Consultant


department Prior To Franchise Launch
● Knew lawyer
● Used parent company lawyer Perhaps surprisingly, BFA-members appeared
slightly less likely to have used a specialist
Non-members: franchise consultant prior to the launch of the
franchise in the UK than non-members
● Used company lawyer (Figure 8). However, the composition of the
● Known expert in franchising field BFA-members comprised a greater proportion
● Used family lawyer of longer-established systems and there were
● International contract (standard) a number of 'Don't knows' amongst the older
● Local & current solicitor systems, presumably where the respondents
● Local lawyer with commercial expertise had joined the business post-launch. An
● Recommended additional analysis revealed a wider use of
● Used by the company for other business specialist franchise consultants amongst BFA-
● Didn't use a lawyer members in the two 0-5 and 51+ outlet size

International Franchise Research Centre - Special Studies Series Paper No.16 7


Fig 8 - Was A Specialist Franchise Consultant Used
Before Launching The Franchise In The U.K. ?

43% 60%
49%

48% 50%
51%
40% Proportion
of Sample/
30% Sub-sample
(BFA Membership
20% Status)

7% 10%
Yes
0%

No
ALL

Don't know Non-members

BFA Members

bands (i.e. smallest and largest) compared to franchises establishing themselves in the UK,
non-members. whereby it was felt that the organisation was
of a reasonable size and already possessed
Another explanation for firms not using the necessary expertise.
consultants could be the case of foreign

Fig 9 - 'Value For Money' Rating Of


Specialist Franchise Consultants If Used

53%

60%

50%

31% 40% Proportion


of Q10 = 'Yes'/
30% Sub-sample
(BFA Membership
20% Status)
15%
10%
Good value for money
0%

Reasonable value for money


ALL

Poor value for money Non-members

BFA Members

8 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 10 - BFA Affiliation Status Of
Specialist Franchise Consultants If Used

70%
79%
80%
60%
70%

60%

50% Proportion
of Q10 = 'Yes'/
22% 40% Sub-sample
30%
30% (BFA Membership
Status)
20%

7% 10%
14%
Yes - Consultant affiliated
0%

No
ALL

Don't know Non-members

BFA Members

Specialist Franchise Consultants & BFA Members:


Value For Money
● Consultant was previously with a BFA-
Respondents using the services of a specialist affiliated firm
franchise consultant before launching their ● Personnel contact
franchise in the UK were also asked to rate
them in terms of value for money (59 Non-members:
franchisors). Overall, 84% found them to be
'good' or 'reasonable' value for money ● Recommendation
(Figure 9). There was little difference ● Specialist technical knowledge
between the BFA-member and non-member
sub-samples. Banks - Named Contacts Within The
Central Franchise Departments
Specialist Franchise Consultants &
BFA-Affiliation Status Respondents were asked to identify where
they had a named contact at one or more of
The same respondents were asked to indicate the following BFA-affiliated banks:
whether or not the consultants were BFA-
affiliated. Accordingly, BFA-members were ● Barclays
more likely (79%) to have used BFA-affiliated ● HSBC
consultants than the non-members (60%, ● Lloyds TSB
Figure 10). ● NatWest
● Royal Bank of Scotland
Reasons For Using Non-BFA-affiliated
Consultants However, the specific response options
hereafter have been changed to retain
The resultant sub-sample size here was too anonymity, that is, by designating them Bank
small (12 franchisors) to warrant a detailed 1, Bank 2, etc. and totally unconnected to
analysis or the inclusion of a figure here, other alphabetic sequence.
than to note the 'Other' reasons cited:
There are two banks - Bank 1 (73%) and

International Franchise Research Centre - Special Studies Series Paper No.16 9


Fig 11 - Bank/s Where Respondents Have A Named Contact
Within The Central Franchise Department

90% 73%
86% 68%

80% 100%
54% 90%
51% 80%
69%
70%
49% Proportion
60% of Sample/
60%
Bank 1 50% Sub-sample
40% (BFA Membership
Bank 2
30% Status)
Bank 3 20%
23% 12% 10%
Bank 4
0%
Bank 5
ALL
None of the above
Non-members

BFA Members

Bank 2 (68%) - that lead the rest in terms of Visits From Local Branches
personal contact (Figure 11).
Around half of the respondents received no
Additionally, the suspected targeting of BFA- local visits from any of the named banks,
members, as opposed to non-members, by all whether or not they were BFA members
of the BFA-affiliated banks is evident, perhaps (Figure 13). In comparison to the low level of
most noticeably in the case of Bank 3. Nearly activity by their central franchise team, Bank 5
a quarter of the non-member franchises were appeared to be relying upon their local
without a named contact at any of the central network to maintain contact with franchisors.
franchise teams listed. There was also some evidence here that
Bank 4 was using their local network to make
Banks - Visits By The Central Franchise contact with non-BFA-members.
Departments

Overall, the ranking of the banks here was


identical to the previous question - Bank 1
came first (56%) and Bank 5 last, but even
further behind (17%, Figure 12). Again, the
targeting of BFA-members is apparent, with
Bank 1 visiting the greatest number of BFA-
members (72%).

10 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 12 - Respondents Having Received A Visit From
Central Franchise Departments During The Past Year

72% 56%

56% 44%
63% 80%
40% 70%

60%
30% Proportion
41% 45% 50%
of Sample/
Bank 1 26% 40% Sub-sample
30% (BFA Membership
Bank 2
Status)
17% 20%
Bank 3
10% 10%
Bank 4 21% 0%
None of the above
ALL
Bank 5
Non-members

BFA Members

Fig 13 - Respondents Having Received A Visit


From The Local Branch During The Past Year

48%

50%
23%
45%
20% 40%
23% 35%
Proportion
30% of Sample/
12%
None of the above 25% Sub-sample
11% 20% (BFA Membership
Bank 5
15% Status)
Bank 1 14% 14% 9% 10%
5%
Bank 3
0%
Bank 2
ALL
Bank 4
Non-members

BFA Members

International Franchise Research Centre - Special Studies Series Paper No.16 11


Fig 14 - Preferences For Visits From Banks:
Central Franchise Teams vs. Local Branches

80%
90% 100%
68% 90%
80%
70%
Proportion
60%
of Sample/
50% Sub-sample
40% (BFA Membership
14%
30% Status)
20%
6% 10%
Central franchise team
0%

Local branch
ALL

No data Non-members

BFA Members

Preferences For Visits From Banks Additional size analyses of the responses
here suggest that all of the BFA-affiliated
Franchisors expressed a strong preference for banks except Bank 4 may have attempted to
visits by members of (specialist) central target growth prospects amongst non-BFA-
franchise teams as opposed to local branches members, that is, those franchisors having 21-
(Figure 14). This was particularly the case 50 franchise outlets.
with BFA-members (90%).
Extent of Finance Schemes
Specific Bank Finance Schemes With Different Banks
For Franchisees
The data in Figure 15 was re-analysed to
The data shows a marked contrast between indicate the extent to which respondents have
BFA-members and non-members, with 71% schemes at more than one bank (Figure 16).
of non-members having no schemes at all Multiple schemes are rather more in evidence
(Figure 15). However, it is understood that amongst BFA-members than non-members.
the responses overstate bank estimates for
the number of specific schemes in existence, Clearly, some franchise systems will be
perhaps boosted in the survey where viewed as sounder bets than others by the
respondents feel that a recommendation to banking community, and whilst a bank may
use a given bank constitutes a formal well deny liability that the existence of a
scheme. specific franchisee finance scheme with a
given franchisor conveys any 'seal of
In any case, and taking the prospective approval', it is arguable that the existence of
franchisee's standpoint - especially one in schemes with more than one bank may offer a
need of external finance - BFA members as a helpful pointer to prospective franchisees
group would appear to offer a markedly better when assessing a franchise system.
chance of raising bank finance, all things
being equal, than the population of non-BFA
franchisors. This could be a major selling
point in favour of BFA membership.

12 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 15 - Respondents With Specific Bank Finance Schemes
To Fund Franchisees

71%
55%

80%
41%
38% 29% 70%

37% 27% 60%


37% 23% Proportion
50%
of Sample/
None/No data 40% Sub-sample
15%
Bank 2 26% 30% (BFA Membership
13% Status)
Bank 1
22% 20%
Bank 3
10%
Bank 5 1% 0%
Bank 4
ALL
Another bank
Non-members
BFA Members

Fig 16 - Respondents Having Finance Schemes


At One Or More Banks

71%
55%

80%
41%
70%
17% 60%
Proportion
11% 50%
of Sample/
No schemes 40% Sub-sample
8%
1 finance scheme 30% (BFA Membership
2 3% Status)
20%
6%
3
10%
11%
4 1% 0%
5
ALL
6
Non-members
BFA
Members

International Franchise Research Centre - Special Studies Series Paper No.16 13


Fig 17 - Would It Be Useful To Introduce
A Bank Finance Scheme For Franchisees ?

57% 52%

44% 60%

50%
22%
40% Proportion
of Q18 'None'/
18% 30% Sub-sample
(BFA Membership
20%
Status)
Yes
8% 10%
No
0%

Don't know
ALL

No data Non-members

BFA Members

Respondents Without A Specific Bank adrift of the leaders in BFA circles.


Finance Scheme & Desirability Of
Introducing One Respondents Not Referring Banks &
Reason For Non-Referrals
Those respondents without a specific bank
finance scheme for franchisees (67 The main reason was a preference for
franchisors) were asked whether or not it neutrality (36% of 22 respondents), followed
would be useful to introduce one. As by an inability to discriminate between the
mentioned previously, 71% of the non-BFA- various banks (27%, Figure 19). The 'other'
members were without a scheme (compared reasons were:
to 41% of BFA-members), and this group was
more receptive than the other to the idea of BFA Members:
establishing one (Figure 17). One possibility
is that the non-members without finance ● Local charges & tariffs vary - tend to
schemes feel that it would be easier to recruit recommend lowest cost/best service
franchisees if they had such a scheme in
place. Non-members:

Bank Recommendations To ● Doesn't arise


New Franchisees ● They [franchisees] prefer to use their own
bank
The targeting of BFA-members - by all of the ● They do not support us
BFA-affiliated banks - is evident again, and ● We do not franchise to individuals
most noticeably in the case of Bank 3, ● We don't franchise in the UK
whereby 67% of BFA-members were happy to
recommend the bank, but only 17% of non-
members were (Figure 18). This could be the
pay-back for long-running collaboration with
the BFA.

Bank 4 and Bank 5 appear to be somewhat

14 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 18 - Banks Recommended To New Franchisees When Asked

77% 64%

64% 53%
67%
80%
44%
70%
38%
46% 60%
35% Proportion
50%
41% of Sample/
Bank 1 40% Sub-sample
Bank 2 30% (BFA Membership
Bank 3 13% Status)
20%
Bank 4
10%
6%
Bank 5
0%
None of the above
10%
ALL
Another bank
Non-members
BFA
Members

Fig 19 - Reasons For Not Referring Any Bank to Franchisees

27% 36%
40%
5% 35%

5% 30%
No data 27%
25%
Other Proportion of
20% Q20 'None/Blank'
Responses
Other (please state) 15%

10%
Prefer neutrality
5%

0%
Nothing to choose

ALL

International Franchise Research Centre - Special Studies Series Paper No.16 15


Fig 20 - Assessment Of The Central Franchise Teams
For Each Of The BFA-Affiliated Banks

48%
46%

37% 50%
45%
35%
40%
35%
16% 29%
30%
Proportion
25%
of Sample
17% 20%
15%
Bank 1 10%
Bank 3 10% 5%
17% 0%
Bank 2
Don't Know/No
Bank 4
Good data
Bank 5
Reasonable

Poor

Assessment Of The Central Franchise Most Significant Benefits


Teams (BFA-Affiliated Banks) Of BFA Membership

The assessments have been ranked in The accompanying analysis has been based
descending order on the 'good' rating for each on the 73 respondents who identified
bank. Highest is Bank 1 with 48% (+ themselves as BFA members. They were
'reasonable', 16% = 64%, Figure 20). asked to rank in order of importance the three
Combining the 'good' and 'reasonable' most significant benefits that membership of
responses, would rank the Bank 2 equal with the BFA offers their franchise system. The
64% (35% + 29%). ranking for the most significant 'first choice'
benefits of BFA membership finding widest
Banks 4 and 5 fare worst with the highest appeal was (see also Figure 21):
proportions of 'Don't knows', suggesting lower
market awareness. Worst placed in the 1 - To help sell franchises (34%)
marketplace is Bank 5, combining the highest 2 - Access to BFA Network (32%)
proportion of 'poor' responses (17%), the 3 - Specialist advice from BFA (16%)
lowest 'good's (10%) and almost 50% 'Don't
knows'. Interestingly, the second and third choices
were always a combination of the above
Summary of the banks' position: Taking all of options. The first choice 'other' options
the relevant assessments into consideration, it suggested by respondents were:
is suggested that the supply side of the
market for influencing franchisors - as First Choice: 'Other' Benefits
perceived by the franchisors themselves - can
be split into two groups: - Business credibility
- Cheaper rates at exhibitions
Leaders: Banks 1, 2 & 3 - Credibility
- Credibility to our company
Others: Banks 4 & 5 - Necessary for credibility
- Recognition
- The Association

16 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 21 - Most Significant First Choice Benefits Of BFA Membership
(BFA Members Only)

34%

32% 29%
29%
35%

30%
16% 25%

20% Proportion
To help sell franchises of Sub-sample
10% 15% (BFA Members)
Access to BFA Network
Specialist advice from BFA 10%
6%
Other (please state) 5%
Other 3% 0%
No data
3rd most
Social aspect significant
2nd most
significant benefit
Most
significant benefit
benefit

International Franchise Research Centre - Special Studies Series Paper No.16 17


Fig 22 - Timing Of Advice/Information Sought From The BFA

70%

64% 48% 60%


13%
22% 50%
Proportion
40% of Sample/
29% 30% Sub-sample
30%
(BFA Membership
20% Status)
>No data<
10%
No contact
0%

AFTER franchise launch


ALL

PRIOR to franchise launch Non-members

BFA Members

Advice & Information From The BFA making contact (74%).

Respondents were asked if they had sought BFA-Affiliated Magazines/Newspapers


advice/information from the BFA at any time When Recruiting New Franchisees
either before or after launching the franchise.
Overall, the franchisors appeared to have A sizeable majority of members (60%) claim
recognised a need for advice and/or to use BFA-affiliated print media 'sometimes'
information after the launch (48%, Figure 22), when recruiting franchisees, and 46% of non-
but the responses are appreciably influenced members likewise (Figure 24). The president
by the BFA-members who may have been of the BFA might be inclined to call the latter
taking advantage of their rights as members 'free-loading', but it could represent a measure
(64%, as opposed to only 29% of non- of favourable influence that the BFA and its
members). membership holds for this group of non-
members.
BFA Contacts & Assessment
Of Advice/Information Supplied

The analysis is based on the 90 franchisors


who indicated that they had made contact with
the BFA either before or after the launch of
their system. Regarding BFA-members, 95%
rated the organisation as either 'very
helpful' (53%) or 'moderately helpful' (42%),
indicating a strong correlation between
membership and helpfulness (Figure 23).
Unsurprisingly, this fell to a creditable 68%
(16.1% + 51.6%, respectively) for non-
members. From this may be inferred an
organisational priority for supporting
members, whilst still providing a helpful
service to three out of four non-members

18 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 23 - Assessment Of BFA Advice/Information Received

40% 60%
53%
46%
50%

42% 40% Proportion


of Q25 'Contacts'/
30% Sub-sample
(BFA Membership
26% 20% Status)
12%
10%
Very helpful
0%

Moderately helpful
5% ALL

A waste of time Non-members

BFA Members

Fig 24 - Use Of BFA-Affiliated Magazine/Newspaper


When Advertising For New Franchisees

54%
8%
70%
60%
46% 60%

50%
Proportion
27% 40% of Sample/
Sub-sample
30%
(BFA Membership
20% Status)
Always
11% 10%
19%
Sometimes
0%

Never
ALL

No data Non-members

BFA Members

International Franchise Research Centre - Special Studies Series Paper No.16 19


Fig 25 - Franchise Exhibitions: Is BFA Sponsorship
Influential When Deciding To Exhibit ?

69% 42%
62% 70%
51%
60%

50%
Proportion
20% 40% of Sample/
Sub-sample
34% 30% (BFA Membership
20% Status)

7% 10%
Yes
0%

No
ALL

No data Non-members

BFA Members

Attraction Of BFA-Sponsored Exhibitions the BFA.

Compared to the use of BFA-affiliated print Throughout all of the analyses here (Figures
media, a similar proportion of members (62%) 26, 27, 28 and 29), there was a recurring
were influenced where the BFA sponsors a difference between BFA-members and non-
franchise exhibition, but only one in five non- members: a bias towards what could be
members feel likewise (20%, Figure 25). considered 'good practice' amongst BFA-
Indeed, 69% of non-members say they were members. That is, a greater emphasis on
not influenced. seeking sound advice about an important
commercial decision, particularly where the
However, the cost of hiring just a stand at an prospective franchisee could be at a
exhibition, at around £2,000-£5,000 or more disadvantage due to a lack of skilled expertise
is just the tip of an iceberg, and other allied or prior experience.
expenditure such as stand and printing costs,
personnel time, and so on, make exhibition A prospective franchisee finds him/herself
attendance a major investment issue appraising what is often a major investment
compared to print advertising. decision - total outlays exceeding £10,000 are
not at all uncommon - and well-informed,
Thus the BFA influence is not that strong impartial advice could be critical to a
towards non-members in the context of successful outcome. And in the case of
exhibitions. professional advisors, particularly lawyers,
accountants, and the banks, it is arguable that
Prospective Franchisees & the client's interests should automatically
Recommendations To Seek come first.
Independent Professional Advice
The highest level of 'insistence' amongst BFA-
Respondents were asked, when recruiting members occurs in the case of legal advice
new franchisees, whether they insisted or (51%), followed by financial advice
recommended that prospective candidates (accountants and banks, both 34%).
should seek independent professional advice
from a lawyer, an accountant, a bank and Again, taking the prospective franchisee's

20 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 26 - Policy On Guiding Prospective Franchisees
To Seek Independent Professional Advice From A LAWYER

43%
53%
60%
51%
50%
49%
40% Proportion
of Sample/
30% Sub-sample
(BFA Membership
20% Status)

10%
4%
Insist
0%

Recommend
ALL

Neither Non-members

BFA Members

standpoint, and especially those most tendency to steer people towards impartial
exposed to making a poor franchise decision advice - than the population of non-BFA
(i.e. least experienced/skilled), then BFA franchisors.
members as a group would appear to offer a
sounder target group - because of a greater

Fig 27 - Policy On Guiding Prospective Franchisees


To Seek Independent Professional Advice From An ACCOUNTANT

11%
59%

60%

50%

40% Proportion
of Sample/
28% 30% Sub-sample
(BFA Membership
20% Status)
34%
20%
10%
Neither
0%

Recommend
ALL

Insist Non-members

BFA Members

International Franchise Research Centre - Special Studies Series Paper No.16 21


Fig 28 - Policy On Guiding Prospective Franchisees
To Seek Independent Professional Advice From A BANK

54%
13% 60%

50%

40% Proportion
of Sample/
30% Sub-sample
25% (BFA Membership
20% Status)
33%
10%
15%
Neither
0%

Recommend
ALL

Insist Non-members

BFA Members

Fig 29 - Policy On Guiding Prospective Franchisees


To Seek Independent Professional Advice From The BFA

26% 60%
38%
53% 50%
32%
40% Proportion
15% 25% of Sample/
30% Sub-sample
(BFA Membership
20%
Status)
No data
8% 10%
4%
Neither
0%

Recommend
7% ALL

Insist Non-members

BFA Members

22 International Franchise Research Centre - Special Studies Series Paper No.16


Fig 30 - Prospective Franchisees: Do Respondents Exclude Those
Who Clearly Will Have Difficulty In Raising Bank Finance ?

90%
100%
86%
93% 80%

Proportion
60% of Sample/
Sub-sample
40% (BFA Membership
Status)
20%
10%
0%
14%

Yes
ALL
7%
Non-members
No

BFA Members

Prospective Franchisees: Excluding which could suggest that the banks like to see
Weak Bank Lending Prospects franchisors at least provide some support for
franchisees and their business plans (Q18),
A high proportion of both BFA and non-BFA and, 5 were 'never' users of BFA print media
members adopt a screening process of some (Q27). Nevertheless, not all could be
sort to eliminate under-financed franchisees, described as 'fringe' operators, as one of the
slightly more so in the case of BFA-members respondents in this group is a drinks
(Figure 30). conglomerate.

New Franchisees: CONCLUSIONS


Assistance With Business Plans
The franchise industry in Britain finds itself, at
Respondents were given three main options, the beginning of the new millennium, in a
enquiring as to whether or not they provided: buoyant condition, having grown in maturity
a) practically all the market research/financial and professionalism during the 1990s, follow-
data that the franchisee will need for the ing its initial emergence as a force to be
business plan, b) basic market research/ reckoned with during the 1980s.
financial data, or, c) no data at all - i.e. it's up
to the franchisee to prepare the relevant It has an active and vibrant trade association
information. in the BFA which gives the industry profile and
helps to establish good practice. It is notable
There was little real difference between BFA that the franchise sector possesses sufficient
and non-BFA members, with around half in economic muscle to have ensured the
each case indicating that they supplied development of a professional infrastructure.
'practically all the market research/financial Most notable here has been the development
data' (Figure 31). of specialised franchise units within the
major clearing banks, usually located within
The 6 non-BFA members who supplied 'no or adjacent to the banks' small business
data' to franchisees (9%) had a couple of sections. Next has been the development of
interesting characteristics in common: a) all specialists within the legal profession.
were without specific bank finance schemes, Finally the emergence of a body of

International Franchise Research Centre - Special Studies Series Paper No.16 23


Fig 31 - Extent Of Assistance With Business Plan For New Franchisees

50%

48% 60%
52%
44%
50%
42%
47%
40% Proportion
of Sample/
30% Sub-sample
(BFA Membership
20% Status)

10%
4%
Provide all data
9% 0%

Provide basic data


ALL

Provide no data Non-members

BFA Members

management consultants comprised the essentially two sub-samples of fairly equal


third major prong of the sector's professional size. This proved highly appropriate since we
infrastructure. Whilst there are also were looking at two often different
accountants of note operating in the field of populations, albeit with areas of overlap.
franchising, it has not usually been felt that
the accounting profession needed to develop Looking at the interface between franchise
a franchise-specific strand of substance. companies and their specialist bank lenders,
Rather, generic accounting skills have been the links were strong and the banks well-rated
considered usually sufficient to meet the by their franchisor clients. Few, if any,
needs of the franchise industry for advice and franchise companies do not need an alliance
guidance on the financial front. with a bank. Our results indicated that the
banks of which the respondents had
The current research, the first of its kind, set strongest first hand knowledge were Banks
out to investigate the extent to which 1 & 2 , followed by Bank 3, with Banks 4 & 5
franchise-specific professional services were lagging weakly behind. This can probably be
being used in the UK and franchisors taken as an indication of respective market
assessments of them. Since the BFA can shares. Looking at user ratings, Bank 1 came
probably be regarded as the focal specialist top followed by Banks 2 & 3 with near
institution in the field of franchising, and since identical 'good' ratings. However, Bank 2 had
we needed to break down our data in order to higher 'reasonable' scores than Bank 3. It
unlock detail and differences, we adopted the should be noted that the absolute 'good' and
variable of BFA membership as a key to the 'reasonable' scores accorded to banks in
majority of our analyses. In the event, this Question 22 would be considerably higher
appears to have been particularly appropriate had the analyses excluded the 'Don't Know/
since our sample of respondents was divided No Data' categories comprised of franchisors
approximately 50/50 in terms of BFA who had not used the bank/s in question.
members and non-members. Had this division
been more skewed and the sample more Looking at which banks franchisors
homogeneous, then obviously this separating recommended to new franchisees, the
variable would have been less appropriate. In same pattern was reproduced with Bank 1 top
the event, we treated our overall sample as followed by Banks 2 & 3 almost equal second

24 International Franchise Research Centre - Special Studies Series Paper No.16


amongst BFA members with Banks 1 & 2
coming through strongly (in that order)
amongst BFA non-members. 37-38% of BFA
members claimed to have specific franchise
funding schemes with Banks 1, 2 & 3 though
these claims would appear to overstate the
number of such schemes in existence. BFA
members were far more likely than their non-
member counterparts to have close links with
banks' central finance departments, as
opposed to local, though both strongly
preferred contacts with central departments.

Apart from the specialist franchise units


present in the clearing banks, the British
Franchise Association (BFA) was the other
institutional plank of the sector. Although
the majority of franchise systems do not
belong to the BFA, the largest slice of the
industry in terms of business volume is almost
certainly in membership. For instance, this
current research showed that the majority of
systems over 10 years old and with more than
50 outlets were members. In contrast, the
majority of systems with 5 outlets or less were
not members. Nearly 1-in-3 franchisors
contacted the BFA prior to launch. The same
proportion of non-members also contacted
them again after launch, compared with twice
that number of members. A sizeable majority
of both groups rated the advice and
information they received from the BFA
either 'very helpful' (53% of BFA-members) or
'moderately helpful' (42% of members).

Franchisors who were BFA members were 3


times as likely as non-members to be
influenced to attend a franchise exhibition by
the fact that the exhibition was BFA-
sponsored.

Our findings concerning use of franchise


lawyers indicate that franchisors who were
BFA members were definitely more likely to
have used BFA-affiliated lawyers when getting
their franchises launched and, furthermore,
are definitely more likely to insist on their new
franchisees taking advice from banks,
lawyers, specialist consultants and the BFA.
Thus, there was evidence to suggest that
those who joined the BFA when they were
eligible had already shown a prior orientation
towards the use of professional services.

International Franchise Research Centre - Special Studies Series Paper No.16 25


26 International Franchise Research Centre - Special Studies Series Paper No.16
PROFESSIONAL SERVICES
FOR FRANCHISING IN THE U.K.
To be completed, if at all possible, by the person responsible for the selection of advisory services
Most responses require only a single ✓ CONFIDENTIAL

BACKGROUND 7 Did more than one BFA-affiliated lawyer tender for


the work ?
N.B. Q1 & Q2: If you prefer, please append a business Yes .......................................................... ❏A
card instead of answering these two questions
No............................................................ ❏B
Don’t know ............................................... ❏C
1 Franchise system name (largest only, if more than
one):
___________________________________
8 If you used a non-BFA-affiliated lawyer, what was
the main reason ? (Just ONE ✓ )
Cheaper ................................................... ❏A
2 Your Job Title:
Just as good............................................. ❏B
Don’t know ............................................... ❏C
___________________________________
Other (please state) ❏D
3 Total number of franchised outlets in the U.K. for ___________________________________
the above system:
0-5 Franchise outlets ................................ ❏A 9 EU Block Exemption - In the light of imminent
6-10.......................................................... ❏B changes to the EU rules, do you intend using a
BFA-affiliated lawyer to advise you on any
11-20........................................................ ❏C changes required to your franchise agreement ?
21-50........................................................ ❏D Yes .......................................................... ❏A
51 or more................................................ ❏E No............................................................ ❏B
Don’t know ............................................... ❏C
4 Years since first U.K. franchisee was recruited for
the above system:
0-2 years .....................(1998 to date) ....... ❏A CONSULTANTS
3-5...............................(1995-97).............. ❏B
6-10.............................(1990-94).............. ❏C
11 years or more..........(Before 1990)........ ❏D
10 Did you use the services of a specialist franchise
consultant before launching your franchise in the
U.K. ?
Yes .......................................................... ❏A
LAWYERS No............................................................ ❏B
Don’t know ............................................... ❏C
5 How do you rate the input/assistance of the
If ‘Yes’, please answer Q11: (otherwise go straight to Q14)
lawyer that prepared your standard
franchisee contract ? (Just ONE ✓ )
Good value for money............................... ❏A 11 How do you rate their input/assistance ?
(Just ONE ✓ )
Reasonable value for money..................... ❏B
Poor value for money................................ ❏C Good value for money .............................. ❏A
Reasonable value for money .................... ❏B
6 Was your franchise contract prepared by a British Poor value for money ............................... ❏C
Franchise Association (BFA)-affiliated lawyer ?
Yes........................................................... ❏A 12 Was this a BFA-affiliated consultant ?
No ............................................................ ❏B
Don’t know................................................ ❏C Yes .......................................................... ❏A
No............................................................ ❏B
Don’t know ............................................... ❏C
If ‘No’, please answer Q13: (otherwise go straight to Q14)

1 Please continue overleaf ...


13 If you used non-BFA-affiliated consultants, what 18 At which of the following banks do you have a
was the main reason ? (Just ONE ✓ ) specific finance scheme to fund your franchisees:
✓ Against all that apply)
(✓
Cheaper.................................................... ❏A
Just as good............................................. ❏B Barclays................................................... ❏A
Don’t know................................................ ❏C HSBC....................................................... ❏B
Other (please state) ❏D Lloyds TSB .............................................. ❏C
NatWest ................................................... ❏D
___________________________________ Royal Bank of Scotland ............................ ❏E
Another bank............................................ ❏F
None of the above .................................... ❏G
THE BANKS
If ‘None’, please answer Q19: (otherwise go straight to Q20)
Note that Questions 14-15 relate to contact with, or visits
from, the central franchise teams from BFA-affiliated
banks to discuss solely your franchise concept and
19 If you do NOT have a franchisee finance scheme
would it be useful to introduce one ?
network. The questions do not relate to routine
contact/visits from your own local bankers with whom Yes .......................................................... ❏A
you will no doubt have regular contact, and who may or No............................................................ ❏B
may not be included in the BFA-affiliated banks listed. Don’t know ............................................... ❏C

14 At which of the following banks do you have a


20 Which of the following banks do you recommend
named contact within the central franchise to new franchisees, if they ask your advice:
department ? (✓✓ Against all that apply) ✓ Against all that apply)
(✓
Barclays ................................................... ❏A Barclays................................................... ❏A
HSBC....................................................... ❏B HSBC....................................................... ❏B
Lloyds TSB............................................... ❏C Lloyds TSB .............................................. ❏C
NatWest ................................................... ❏D NatWest ................................................... ❏D
Royal Bank of Scotland............................. ❏E Royal Bank of Scotland ............................ ❏E
None of the above .................................... ❏F Another bank............................................ ❏F
None of the above .................................... ❏G
15 During the past year, from which of the following
banks have you received a visit from a member of If ‘None’, please answer Q21: (otherwise go straight to Q22)
✓ Against all
the central franchise department ? (✓
that apply)
Barclays ................................................... ❏A
21 If you avoid referrals to banks, what is the main
reason ? (Just ONE ✓ )
HSBC....................................................... ❏B
There is nothing to choose between them . ❏A
Lloyds TSB............................................... ❏C
Dissatisfaction with a bank previously....... ❏B
NatWest ................................................... ❏D
Prefer to be neutral in case of problems.... ❏C
Royal Bank of Scotland............................. ❏E
Other (please state) ❏D
None of the above .................................... ❏F
___________________________________
16 During the past year, from which of the following
banks have you received a visit from a
representative of the local branch ?
22 Assessment of the BFA-affiliated banks - Please
rate overall the central franchise teams for each of
✓ Against all that apply)
(✓ the following banks: (Just ONE ✓ per bank)
Barclays ................................................... ❏A
HSBC....................................................... ❏B Reason- Don’t
Poor able Good know
Lloyds TSB............................................... ❏C
NatWest ................................................... ❏D Barclays ❏ ❏ ❏ ❏ A
Royal Bank of Scotland............................. ❏E
None of the above .................................... ❏F HSBC ❏ ❏ ❏ ❏ B

Lloyds TSB ❏ ❏ ❏ ❏ C

17 Preferences for visits from banks generally - NatWest ❏ ❏ ❏ ❏ D


Which you prefer ? (Just ONE ✓ )
Royal Bank ❏ ❏ ❏ ❏ E
A visit from the central franchise team ...... ❏A of Scotland 1 2 3 4
A visit from the local branch...................... ❏B

2 Please continue overleaf ...


THE BRITISH FRANCHISE GENERAL ASPECTS
ASSOCIATION (BFA)
29 When recruiting new franchisees, do you insist or
recommend that they seek independent
23 Is your franchise system a member of the British professional advice from:
Franchise Association (BFA) ? (Just ONE ✓ per source)
Recom-
Yes........................................................... ❏A Insist mend Neither
No............................................................. ❏B
If ‘Yes’, please answer Q24 (if ‘No’, go to Q25) Lawyer .................................. ❏ ❏ ❏ A

Accountant............................ ❏ ❏ ❏ B

24 Please rank in order of importance, the three Bank ..................................... ❏ ❏ ❏ C


most significant benefits that membership of the
BFA offers your franchise system: BFA ...................................... ❏ ❏ ❏ D

(1/2/3; 1 = most important) 1 2 3

Access to a network of people


experienced in franchising ........................ i ___ A
Helps to sell franchises ............................. i ___ B 30 In recruiting new franchisees, do you include in
Specialist advice from BFA ....................... i ___ C your vetting process a mechanism to filter out
Social aspect of BFA membership............. i ___ D those who clearly will have difficulty in raising
bank finance (e.g. they have no money
Other (please state) i ___ E contribution of their own) ?

___________________________________
Yes .......................................................... ❏A
No............................................................ ❏B
25 Did you seek advice/information from the BFA:
✓ Against all that apply)
(✓
Prior to launching the franchise ................. ❏A
31 Which one of the following most closely
describes your assistance with a business plan
Subsequent to launching the franchise ...... ❏B for new franchisees: (Just ONE ✓ )
We have had no contact with the BFA ....... ❏C Provide practically all the market
research/financial data that the franchisee
If ‘No contact’, please skip Q26 and go to Q27 will need for the business plan..................
❏A
Provide basic market research/
26 If you contacted the BFA, how would you rate the financial data............................................ ❏B
advice/ information provided overall:
(Just ONE ✓ ) Provide no data at all - it's up to the
franchisee to prepare the relevant
Very helpful............................................... ❏A information ...............................................
Moderately helpful..................................... ❏B ❏C
A waste of time ......................................... ❏C

27 When advertising to recruit new franchisees, do


you use a BFA-affiliated magazine/newspaper:
Thankyou for your co-operation. Please return the completed
(Just ONE ✓ )
questionnaire using the accompanying pre-paid envelope, or
Always...................................................... ❏A via post, to:
Sometimes................................................ ❏B Professor John Stanworth
Never........................................................ ❏C International Franchise Research Centre
BMSS, University of Westminster
35, Marylebone Road, London. NW1 5LS
28 When your system is considering booking a
stand at a franchise exhibition, is the fact that the
exhibition is BFA-sponsored an influential factor
in your decision to attend ?
Yes........................................................... ❏A
No............................................................. ❏B

© University of Westminster, 2000


Franchisor Survey, Survey 2000.DOC, 18/1/2000

3
AUTHORS INTERNATIONAL FRANCHISE RESEARCH
CENTRE
Professor John Stanworth is director of the
International Franchise Research Centre The International Franchise Research Centre
and has been engaged in research into (IFRC) is committed to improving the
franchising since the mid-1970's. He also understanding of franchising. This is achieved
leads the Future of Work Research Group, by the publication of impartial research and by
based at the University of Westminster, which the encouragement of informed debate.
has a record of specialist research in
Teleworking, Small Business Development ACKNOWLEDGEMENTS
and Human Resource Management. Studies
have been undertaken for many clients, The International Franchise Research Centre
including the Department of Trade & Industry, is pleased to acknowledge The Royal Bank of
The Department for Education, The Economic Scotland in sponsoring the research, analysis
& Social Research Council and various and presentation of this report.
commercial organisations.
The database of franchise systems used for
David Purdy is a researcher supporting the questionnaire mailing was obtained from
Future of Work Research Group and its Franchise World.
interest in franchising. He has also specialised
in small business research since 1985, and Finally, we wish also to acknowledge the
publications include authorship of 'Risk support of the participating firms, without
Capital for Small Firms', commissioned by the whom the survey would not have been
Small Business Research Trust. He has also possible.
co-authored studies investigating Small
Business Management Development and
Teleworking.

30 International Franchise Research Centre - Special Studies Series Paper No.16

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