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Tye Tye is offline
Entrepreneur
Join Date: Apr 2008
Posts: 28
Expansion Problems.....

Back in March I decided to set up another branch of my pet sitting and dog walking business in an adjacent town. I set out the terms in an email so that right from the start the lady who was going to run it knew what was expected. In a nutshell she would be self employeed paying me a commission of her takings (she has no initial out lay at all). In return I would provide uniform, insurance, advertising, business cards, website etc and she would use my 'brand'.

The whole process has taken several months as I've had to get her police checked, references etc. She has accompanied me on a day out to get an idea of what the job entails and it's gone very well and she has been keen to get started. I provided her with the mock up of her business cards so she could check the details were correct and she confirmed they were so ordered 1000. I approached the solicitor and he drew the 'franchise' agreement up. I sent this onto her so she could peruse it (seek her own legal advice if needed) and then bring it over to me to sign so we can finally get started.

Anyway, fast forward to Thursday when she came to (or so I thought) return the contract and pick up all her things to get started (uniform, jacket, business cards etc). It was at this point that she tells me she is having doubts and wants more time to think about it. She is querying the % of commission I will be taking for one thing and asked if she could start it on a trial basis. The thing is that as a pet sitter you are either there or you aren't - I don't want to spend money advertising for her to decide a months in that she wants out - it will reflect badly on my brand. I don't want to appear a here today gone tomorrow type fly-by-night. The other bug bear is that she hasn't got transportation as she initially said - she was going to get a moped but this hasn't worked out and is now on about using a bicycle - for one I don't think presents a very proffessional image and I'm not sure how practical this is - its a very rural area and realistic jobs could be 10 miles apart.

The point is that I was very shocked to hear how she is feeling as I thought we were well past that point and to be honest it has shaken my confidence in her full stop. Someone who is querying all this at this late stage is making me wonder if she is the best person for the job. I have emailed her and asked if she wants to proceed. I would be interested to know what's your thoughts - am I over-reacting or would you continue if she says she has decided she wants to do it after all?

Thanks for reading if you got this far!!
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Belinda Belinda is offline
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Join Date: Apr 2003
Location: Staffordshire
Posts: 655
Move on. A franchise is their own business, you are there to support them not wipe noses. I think she could be more work than you need and as you say do more harm than good to your business.

I'm surprised at the 'No initial outlay', IMO if you charge nothing then you are only attracting people that have nothing better to do, won't value what you are offering them and won't be 100% committed. I think this is the problem, if you charged a fee as most franchises do then you possible would get the type of person you are looking for.

HTH, all the best

Belinda

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Tye Tye is offline
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Join Date: Apr 2008
Posts: 28
Thanks Belinda

She is gone and I have moved on! I must admit I feel relieved. I am now wondering if I should give up thinking about expanding this like and just concentrate on running my own business.

I know I used the word franchise but its like a 'mini-franchise' not a proper one so I haven't felt I could charge an up front fee. Also as I've been trading less than a year myself and so haven't got a history of finacial details that I am guessing franchises would want to see. After looking at other franchises, they offer so much to new starters ie they have many years experience, a liveried vehicle, offer training days at head office, marketing experts on hand, specific software to utilise etc I can't compete with that. They also charge close to £20K to set up.

Tye
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openmind's Avatar openmind openmind is offline
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Then don't try and compete directly with their offering. As Belinda said, charge a small start up fee and get rid of the time wasters.

I don't think you should give up as it's an idea that could be easily franchised, you just have to get the basics right so franchisees know exactly what is expected of them...

Keep at it I say!
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TheJoshM TheJoshM is offline
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Join Date: Mar 2006
Location: Gloucestershire
Posts: 554
Hi Tye,

I don't quite understand why you're doing it as a franchise?

Why not just employ someone to do it? If you have more than 1 person doing jobs, say 2 or 3, then you'd be better positioned to cover jobs if one of the other employees left.

It seems like you've taken on all the risk, such as developing a brand, marketing the business and getting clients, but won't be taking a fair proportion of the rewards.

In a "regular" franchise the franchisee would pay an initial fee and an ongoing annual fee normally based on turnover or profits.
However the franchisee would be responsible for marketing the business in the locality, selling the services and building relationships with clients and the general development of their own business.

If the franchisee has nothing invested in the business then there really isn't any incentive for them to stay with the business... in fact once they've started working with the clients you've provided for them I can't see why they won't just leave your franchise arrangement and work with the clients directly?

This problem will be compounded by the fact that you're not offering a national or global brand as part of the franchise.

Just a few thoughts for you there!

All the best,
Josh
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Tye Tye is offline
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Join Date: Apr 2008
Posts: 28
Thanks for your comments Phil and Josh.

I can't have them as an employee. They will be responsible for sourcing their own clients, taking the phonecalls and going to meet the clients. All this requires motivation that only comes with being self employed. Also the nature of the work is that it takes a decent time to get established and build up a client base - I can't afford to employ someone as it will take many months of hard slog to get customers on board. I personally won't have anything at all to do with their customers at all or their day to day running of the business. All this just doesn't fit with them being an 'employee'.

There is a non-compete clause in the contract to prevent them from just leaving and taking my customers (although I don't know how hard this is to enforce in reality). I was going to take 25% commission from them so I thought that that was fair as I am putting all the risk and money in as you say.

Have I got it all wrong? I have had the advice and support of my accountant, solicitor and business links adviser who all backed it?

Tye
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Belinda Belinda is offline
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Join Date: Apr 2003
Location: Staffordshire
Posts: 655
Another option would be to have them 'employed' as commission only so they are still responsible to find the business but all payments are made to you being head office and you pay them an agreed commission based on their earnings.

It sounds like you are kind of in the middle, you want to go franchise but don't think you are big enough or established enough. On the other hand you don't want to go down the route of employing loads of staff outside your area.

I think you need to decide which way suits you and the business and work towards that. IMO it sounds like franchise is the way to go but I still think commission only could be a structure under the franchise.

Out of interest how far away is the adjacent town the lady was going to cover?

Cheers,
Belinda
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Tye Tye is offline
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Join Date: Apr 2008
Posts: 28
Thanks Belinda

Yes you have hit the nail on the head - I don't feel established enough to become a franchise. If they are employed on commission only do you still have to pay holiday and sick pay? This is another reason why I didn't want them to be an employee - they also really need to deal with their own customers, I am chocker running my own business so I can't take on running their schedules too.

The lady lived 15 miles away from me and was going to cover roughly a 10 mile radious from where she lived. I'd assigned a point whereby my domain would end and hers would start.
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Belinda Belinda is offline
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Join Date: Apr 2003
Location: Staffordshire
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Hi Tye,

I don't know for certain about the holiday and sick pay but I believe you do not, you only pay commission on money earned so if they don't earn they don't get paid but I will clarify that tomorrow with someone I am meeting with.

You said "I am chocker running my own business so I can't take on running their schedules too." This tells me you are speding all your time working IN your business and not much if any time working ON your business. If you want to progress to be able to franchise the business then you will need to step back at some point and have someone else do the work OR work harder / longer hours to take it to the next level.

One business that came to my mind that is nothing to do with dog walking / minding but I thought you could model some of the franchise structure they use is http://www.my-mag-uk.com/ They offer a pack to set up in your area but also offer support afterwards, its also one franchise I know that does not advertise for the group in terms of business growth, each franchisee does their own advertising in their own area.

This may help to give you some direction and what you need to do to get there. Unlike My Mag you will need to have a national brand with advetising to promote the brand but IMO it would be national only, local advertising would be down to each franchisee to grow their business within their area.

Have you visited the franchise show? It might give you ideas to see how other franchises are structured.

HTH
Belinda
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Tye Tye is offline
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Join Date: Apr 2008
Posts: 28
Thanks again! I'll check out the link, at fist glance it looks interesting :-)
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