James Caan says franchising should be encouraged

Having enjoyed success by franchising first hand, James Caan tells Fraser McKay about the many advantages of this means of expanding a business and how he plans to use the same method to grow his latest business venture.

Entrepreneur James Caan has become one of the most recognisable names in the business world, having gained success with his executive recruitment companies, a stint on BBC’s Dragons’ Den, as author of a series of popular business start-up guides and the James Caan’s Business Secrets App for Apple and Android smartphones.

“I’m delighted because the App has done a lot better than I had expected,” he smiles. “It has been downloaded 160,000 times and has given me an opportunity to give back to the business community. It helps entrepreneurs to evaluate the business, how to accelerate growth, find talent and use ecommerce to strengthen and enhance their business.”

This recognition is backed by a successful career spanning almost 30 years, from which he has acquired an enviable knowledge of how to successfully run businesses and how franchising provides the key to business growth.

James demonstrated this to great effect with executive recruitment company Humana International, which he founded in 1993. He subsequently franchised the business so that by the time he sold it six years later, it had 147 offices spanning 30 countries.

“Franchising is one of the most effective ways to develop a business,” explains James. “By using a tried and tested method, it gives privately-owned businesses a great way of distribution and business expansion, by being able to pool resources and capabilities and remain competitive.

“The overall principle of franchising is the art of replication. This requires a reasonable amount of investment in creating a well thought through framework, which enables a potential franchise owner to replicate a franchisor’s success.”

Back the right people

“Franchising is a win-win philosophy – the franchise owner can clearly win with their earnings and it is a win for the franchisor as means of development if their franchise owners are successful,” continues James.

“Key to franchising successfully is backing the right people. It is the individuals with the drive, passion and determination who will successfully grow a brand.

“For any business, communication is the most important aspect. The franchisor and franchise owner both have a vested interest in a successful franchise programme, they have a financial stake in the relationship with the mutual objective of achieving profitable results.

“In order to do this it is important to maintain positive relations between both parties using open and ongoing communication, providing and receiving feedback on a regular basis and meeting face-to-face on a regular basis.”

In 2002, James established his current business, London-based venture capital and investment company Hamilton Bradshaw, whose advisory division Hamilton Bradshaw Venture Partners, he is developing into a franchise opportunity.

“I am going through a massive expansion programme for Hamilton Bradshaw Venture Partners, where we have created a unique proposition, which has been developed to help accelerate strategic growth within the Small and Medium Enterprise sector, by attracting experienced business professionals to become business partners,” he says.

“During the first year we have signed 27 partners and attracted over 20 clients, who have brought to the proposition a collective turnover of £120 million a year. This has been possible by using the franchising methodology, resulting in Hamilton Bradshaw Venture Partners being one of the most successful launches in my career.”

In addition to Hamilton Bradshaw Venture Partners, James is also working with another business opportunity that could potentially be franchised, as well as holding discussions with several existing franchised businesses that are seeking to expand their operations throughout Europe.

James confirms that before looking at international expansion, a franchise needs to have built a solid platform in the UK, a philosophy he is following with Hamilton Bradshaw Venture Partners, whose international strategy he intends to launch within the next 24 months.

Overseas challenge

“Expanding abroad is challenging because, while a company may have the perfect proposition and methodology in its home market,” he says, “you have to be mindful of different governments’ legislations and employment laws and understand that franchising is perceived differently in different counties.”

As well as enjoying success with his own businesses, James has also been a great ambassador for the sector and has discussed franchising with the Government on a number of occasions.

“Any initiative that supports franchising and generates business should be supported – the Government is behind the principle of franchising,” states James. “Statistics show that start-ups from franchising are more successful and, by encouraging more businesses to franchise, they will help create jobs and stimulate the UK economy.

“With no specific franchising legislation in the UK and no need for registration or formal disclosure documents, this can make franchising in the UK easier for franchisors. The UK market still remains the first stepping stone for many US franchisors entering the European Market.”

Think outside the box

Increasing numbers of people who become franchise owners use skills that they have gained in a previous environment in a totally different industry, something that James believes should be encouraged.

“I am a great believer in transferable skills and that the business environment and economy changes every 10 years – there are businesses around today that were not about a decade ago,” he says.

“At Hamilton Bradshaw we do not look at the job title or sector; we look at the job itself and its components and see what similarities exist between the candidates’ experiences. You need to think outside the box.”

As franchising continues to gain popularity as a means for companies to expand, James predicts: “I strongly believe that franchising will continue grow.

“As the nation’s job market continues to struggle, this will open more corporate executives and managers to reinvent their careers. Many are considering franchise ownership as a career alternative previously, which will solve the lack of suitable franchise owners that had been the biggest complaint among franchisors.”

James Caan Business Secrets App is free to download from the App Store