How district councils are pioneering Government Backing for Franchising
Could franchising be the driver for a return to prosperity for the UK'economy? Four councils in County Durham are test-piloting a new initiative that could revolutionise the way the government supports new business start ups... through franchising
For decades the franchise industry has contributed an increasing proportion of the UK's GDP, shouldering a growing slice of UK employment and driving a soaring number of new business start ups. Yet this burgeoning £12.4 billion industry, which represents over 34,000 businesses operating in the UK, has received no direct support or encouragement from the government. The UK model of self-regulation, mainly through voluntary sign-ups to the British Franchise Association, has enabled the industry to grow ahead of the wider economy over the last decade and although a hands-off approach from the government has facilitated this expansion, much more could be done in order to promote British franchising to prospective entrepreneurs.
Could a greater acceptance of franchising in government circles be on the cards? A new initiative in the North East of England could signal something very exciting. As part of a new programme of support for local business set ups called Be Enterprising, four district councils in County Durham have launched Be Franchising - a commitment to getting more successful franchisees up and running in their area.
THE BE FRANCHISING PROGRAMME
The Be Enterprising programme, which represents total funding amounting to £18.7 million across a five year period (from 2006-2011), was awarded by the government's Local Enterprise Growth Initiative Fund to a joint bid by the Derwentside, Easington, Sedgefield and Wear Valley District Councils. Be Franchising has been developed by the councils as part of the overall implementation of the Be Enterprising programme in recognition of the added value franchise businesses provide to new entrepreneurs. Be Franchising Operations Director Paul Balmont explains: 'We recognise that franchising has a role to play in local enterprise - the survival rates are good thanks to the support of the franchisor and it provides a good route to get people into business.
'The conundrum we've had to solve in the North East is the expense of the licence fee - a lot of our residents don't have security behind them to raise investment capital. The purpose of the Be Franchising initiative is to help our residents to get past this barrier and set up a business.'
Be Franchising takes a much more hands-on approach to assisting would-be business owners than previous government efforts. As well as providing advice and legal assistance, the programme tailors initiatives such as the government's small business loans guarantee scheme to offer a full package of financial support to prospective franchisees. 'Because we go through the whole set up process with the applicant, we know if they'll make a great franchisee and we can fill in that funding gap by providing security for loans,' says Paul. 'We're taking appropriate people through the 'back door' to establish a package of financial support for their franchise.'
But in a revolutionary new initiative Be Franchising has gone beyond providing advice and assistance in obtaining funding. Paul explains: 'We wanted to be proactive about starting franchises and add real value through our own efforts. Through our investigations into franchising we developed a relationship with Mark Harvey of VIP Bin Cleaning who is very keen on our model. The outcome has been that the Be Franchising programme has secured the Regional Franchise for VIP Bin Cleaning in the North East. Rather than simply promoting the franchise we are going to launch and operate a pilot operation in Sedgefield Borough and then recruit and support residents across the North East region as sub-franchisees.'
THE VIP EXPERIENCE
The selection of VIP Bin Cleaning as the pioneering partner of this local council initiative is a result of a meeting of minds between the two parties at the research phase of the Be Franchising set up. The fact that the VIP Bin Cleaning service dovetails nicely with the services provided by the local councils is by design, but future partnerships through the Be Franchising programme are not limited by sector. 'The most important factors in selecting our franchisor partner are that it is a brand that is accredited by the British Franchise Association, has a track record of excellence and ethical treatment of franchisees, and suits our local client base,' says Paul. 'In addition we were impressed that it is an environmentally friendly service and that the company has won awards in the franchise sector. However, what was most important was VIP's commitment to what we are trying to do here in County Durham. There has already been a lot of interest in our area in taking up rounds with VIP Bin Cleaning.'
Mark Harvey, who as well as being Managing Director of VIP Bin Cleaning sits on the Board of Directors of the British Franchise Association, applauds the aims of the Be Franchising programme. 'There is a huge amount of people who don't look at franchising because they don't understand it or don't think they would qualify for it,' says Mark. 'Be Franchising has opened up a whole new market in terms of franchisees and it is our real ambition to prove this can work in the North East. We are proud to be part of a positive change and if we can get this right who's to say we can't roll it out across the country?'
For VIP Bin Cleaning Be Franchising is not only providing introductions to a new stream of prospective franchisees. 'The link up with Be Franchising does three things,' says Mark. 'Firstly, it is a huge recommendation of our company. We went through very stringent accreditation of our service, management structure and systems by the Be Franchising people. Secondly, the link up adds tremendous value to our brand and should propel awareness of us in the North East. Thirdly, there is a potentially huge market of council work for us in terms of bin cleaning and obviously the more well-known we are to councils nationwide the better positioned we are to fulfil that work.'
THE FUTURE FOR BE FRANCHISING
For the next 12 months the focus for the Be Franchising team and VIP Bin Cleaning is to achieve a successful pilot launch and have sub-franchisees up and running in County Durham. 'We are taking a practical and pragmatic approach to ensure that this is a sustainable initiative,' says Mark. 'We want to make sure the foundations are in place to fully train and support the first wave of franchisees under the Be Franchising programme so that they are launched correctly. The potential of this project is enormous for everyone involved.'
Further down the line, Be Franchising will look to form similar partnerships with other franchisors looking to develop the North Eastern region. 'Our ultimate aim is to work with a diverse range of franchisors,' says Paul. 'We aren't limiting ourselves to specific sectors, rather we are looking for franchisors that offer a business opportunity that has strong potential in the North East and that buy into what we are trying to do.'
While the Be Franchising initiative is still in its infancy, Paul reveals that parties within the government are interested and are following its progress. The hands-on approach taken by the Be Franchising team is unprecedented in the UK and its success could have huge implications for not only how franchising is perceived in the UK, but also in the future how the government approaches its role in stimulating business start up growth.
Reported by Stuart Anderson