'Self motivation is really the key'

A decade on from establishing the UK operations of Expense Reduction Analysts (ERA), John Allison has overseen the development of a 140-strong network of franchised consultants helping companies to "release hidden profits" by managing their costs. Credited as the man who pioneered franchising within the global ERA network (now established in 23 countries across North and South America, Europe, Asia and Australasia).

ERA was founded in the USA in 1983, and operated for 10 years before it embarked upon franchising in its home country, by which time John had already bought the rights to operate the business in Australia and New Zealand and begun franchising the concept. "I started my career in the IT sector in the UK, and worked for major manufacturers across the globe over 10 years," he reveals.

"By the age of 30 I'd emigrated to Australia, but the IT sector wasn't as developed as in Europe so I started my own consultancy business. Ultimately that grew into one of the largest franchise consultancy groups in Australia, which I ran in partnership for over a decade. In the latter half of that period we began taking an interest in or acquiring outright a number of franchise groups, including ERA in 1991."

John and his team spent two years preparing the ERA system for the Australian market, including developing an intranet system. "This was back before most companies had email," remarks John. "We grew rapidly over the next five years acquiring a huge range of corporate clients in the commercial and public sectors. By 1995 ERA had begun running training courses in Europe, and the head office requested access to our intellectual property and franchising methodologies. This led me to acquire the Master Franchise rights for the UK and oversee the transition. I initially relocated to the UK for two years, after which I planned to put a Managing Director in place and go back to Australia. However, once I realised the true size of the UK market I sold my interest in Australia and stayed on."

Prior to John's return to the UK, ERA had been running training courses in its concept for local operators. "ERA had basically operated as a training establishment in the UK, in fact a number of the smaller competitors around at that time had been trained by the people who'd held the ERA UK rights before me," reflects John. "However, they had been trained in a pretty crude version of the business. We spent a year demonstrating our business model in the UK and 'anglicising' the marketing materials, which also gave us an opportunity to leverage off the relationships we had with clients in Australia whose parent companies were based in the UK. Once we had proven the success of the ERA concept, we signed up our first seven franchisees and began their training in May 1997. Four of those individuals have just signed up for another 10 year 'sentence', so we must be doing something right!"

The ERA franchise opportunity immediately experienced high interest from UK investors who, as John explains, "saw us as one of the only professional white collar opportunities available at time."

He continues: "There was not the plethora of training, recruitment or real estate companies that exist in franchising today, which gave us an advantage in finding the right people. The role of the ERA franchisee is multi-faceted - each has the task of securing clients, liaising with finance directors, running projects, analysing costs and negotiating with suppliers. In the beginning we looked for people with general capabilities in all of these functions, but as we've grown we've learned that clients require specialist knowledge and to develop that expertise within our company we've recruited fewer generalists and more specialists.

"Whether clients want to look at the costs of chemicals, packaging, cleaning, insurance or a huge range of other areas, we have franchisees that focus almost exclusively on that area. This has meant that we encourage a great degree of cooperation between franchisees as projects get larger. If a franchisee signs a client up for a number of different projects, they might handle one or two themselves and pull in other franchisees to work in their special areas. This considerably increases the depth to which we are able to drill into a client's expenses."

The complexities of the ERA services and specialisation of its franchisees has led to the company developing an unorthodox method of granting its franchisees client exclusivity. "Because we attract so much referral business it doesn't suit our business model to award exclusive territories. We have decided the best way to approach franchising this business is for the franchisee to be able to totally manage the work provided to a company and all its branches nationwide, so we have developed a central database which records every company a franchisee talks to and every project they work on. This allows franchisees to build their own territory through the parameters of their own expertise, rather than geographically.

"If you look at conventional franchise groups, the schematic of franchising can be represented as a wheel, with the franchisor acting as the hub and the franchisees connected centrally. At ERA our schematic would look more like a complex molecular structure: the head office is in there somewhere and is just as big as the hub in terms of the support we provide, but all the franchisees are in contact and working together across different projects."

John feels that, through franchising, the Australia and UK ERA networks have led the global development of ERA. "ERA International hasn't been slow to recognise the advantage of franchising as a result of what we've done," he reflects.

"We're not unhappy to share our developments with the international group, which have led to ERA maintaining high standards across its international offices. "I think if we brought in managed staff there wouldn't be the same enthusiasm in the network. Self motivation is really the key - having someone who's made an investment in obtaining the ERA franchise does mean they have real motivation to make a success of the business."