Founders of franchising: Robert Burton - Auntie Anne's
Many of the famous US brands trading on UK the high streets today have been established through Master Franchise licences. Stuart Anderson interviews Robert Burton, who became a Master Franchisee for the second time when he took over pretzel chain Auntie Anne's last year
'After five years I moved on to a small finance broker, where I became Managing Director and took a 30 per cent stake in the company. I spent eight years arranging multi-million finance deals for hotels, ships and Boeing 747s and we became the largest syndicator of tax-based commercial and industrial property in that period. It was a very exciting time and I was dealing with some very big projects worth hundreds of millions of pounds.'
'The adventure is beginning again'
In 1988 a publicly quoted company bought the business and, while Robert was retained on a two year 'earn out', he began looking for a new avenue of business. 'It was then that I got to know the people at Thrifty Car & Van Rental in the US, who were looking for someone to take over the UK Master Franchise,' explains Robert. 'I put together a group of shareholders and went into a joint venture with Thrifty US to take over the UK operation in August 1991, which we moved forward and built into a well-known name in the UK car and van rental business.'
In fact, Robert took Thrifty from a fledgling operation with five franchisees to a national network of 80 franchisees, learning a lot about franchising along the way.
'When we took over at Thrifty it was the first time I had come across franchising, and what I liked was that I didn't have to set up a large organisation to expand,' he reflects. 'I could concentrate on bringing in the right people for the training and administration of the franchise network. Thrifty had been very successful in franchising itself in the US, so we replicated what they had done here, such as by setting up a fleet financing programme and a captive insurance system. For me this was probably my most challenging and exciting time in business - we had everything on the line, including my house, car and wife's car!'
Thrifty UK grew much quicker than Robert's expectations and was reporting profits of £2.5 million by the end of 1994. After selling the company, then buying back in, Robert finally left Thrifty in April last year after selling it on to a privately-owned car rental company. 'Running Thrifty had given me a huge amount of experience in running a business, making mistakes and rectifying them, and building a great network of franchisees,' he recalls. 'We were totally hands-on as a franchisor - while at other companies the MDs would stay cocooned in the head office I'd get out and among the franchisees, visiting four to five every month. By the time of the takeover I felt my job had been well and truly done.'
During the takeover negotiations Robert began to cast around for a new opportunity, his daughter's own boutique peaking his interest in the food service industry. 'I was keeping a fairly open mind, but when I learned that the Auntie Anne's Master Franchise was available the combination of a great product and a chance to get into franchising again made the opportunity stand out,' he explains. 'It had been established in the UK by two American businessmen who were keen to return to the US, so we put in an offer and the deal went through the very day we finalised the sale of Thrifty!'
Going through the development of a national franchise for the second time, Robert is confident he will retread the success he achieved at Thrifty, and is applying the lessons learned in his previous endeavour to get things right at Auntie Anne's. 'Early on at Thrifty we took on one or two franchisees that didn't turn out to be well suited, so we've learned to grow slower and get the right franchisees rather than be in the numbers game,' he reflects.
'Making sure the right people are joining you removes so many problems going forward, so we will meet with a candidate three or four times before they even get to the stage of filling out the application form - there's no science to it, it is an art to judge them from a subjective perspective and trust your instincts. Our new franchisee about to launch in Sheffield absolutely gave us a good feeling, whereas we met another guy who wanted to enter for the wrong reasons and we just politely walked away from him.
'The strength of franchising is that when the franchisees get up in the morning they are driven by their commitment to their own business, their pride and their ambition. It is the self-motivation that I like most about franchising. The weakness is that many might not have run their own business before, which is why we aim to work with providers such as FranAccounts who can help them properly manage the finance side.'
With three franchisees signed and a total of eight stores up and running, Auntie Anne's is looking to sign another six franchisees this year, then expand by one new franchisee per month. 'We're looking at the success of fast food brands like Subway and feel there's no reason why we can't replicate it,' says Robert. 'This is a business that we can see growing from its embryonic stages into something truly substantial, and for us it feels like the adventure is beginning again.'
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