FRANCHISING
The time to
franchise? With much of hospitality having been put into unwanted turmoil as a result of the response to the pandemic, some of the most successful high street franchised pizza brands understandably offer renewed appeal, but what do would-be franchisees need to consider first? Maurice Abboudi shares his thoughts…
Does franchising currently offer a more secure business model for operators in pizza delivery and takeaway right now, and if so, why? Pizza delivery is one of the most competitive sectors in our industry. The barriers to entry are very low – you can pick up a second-hand dough mixer, a pizza prep table and oven for a modest sum of money and start a business very quickly. So why invest in a franchise? A reputable franchise will do their best to ensure your success. If you succeed, they succeed. They will do their utmost to get site selection, capital expenditure and training right so you have all the foundations for success. They will give you ongoing support. They will audit you to ensure standards are high. The established franchisors have a proven system. They have the experience of multiple sites; experience in different locations with different demographics so are able to tweak pricing, menu, offers and marketing to suit your location. They have economies of scale to help you achieve your food cost margins. They know the number of people you need during the busy and quiet times so you can hit your labour cost targets. That is the benefit you will get from an established franchisor. On the other hand, there are franchisors who are just after selling as many franchises as possible. They don’t have the corporate infrastructure to support franchisees. They will take their royalties and marketing fees and offer very little in return. It is very much a question of buyer beware. If you have a really superb, differentiated product, know your market and have some experience in the sector, then starting your own business could be a great investment. Make sure you really do have something special as it is super-competitive, especially in the pizza delivery sector with all the aggregators (Deliveroo, Just Eat, Uber Eats) allowing sit down restaurants to deliver their pizza as well. 34
Maurice Abboudi of Lanbury Associates Ltd is an experienced board member, operator, investor and advisor to the hospitality and leisure sector, recipient of PAPA’s Lifetime Achievement Award 2020 for contributions to the sector and judge on BBC2’s series two of Million Pound Menu. If an operator is thinking of moving into franchising, what should they do? How can they assess the best franchised opportunity? So how do you identify good franchisors from bad ones? Look through all the slick marketing. Go and visit a few sites. Speak to the staff. Look at review sites. Speak to existing franchisees and ex-franchisees if possible. Reputable franchisors will encourage this. Be wary if after one interview you are offered a franchise – they clearly do not have a robust franchisee recruitment process. Once you are comfortable with the company, go through a checklist. Read as many of the franchise magazines and material on the BFA (British Franchise Association) website – they have great checklists and articles of what to look out for. At the very least, look at the following areas. • the strength of the brand • the quality and consistency of systems, implementation and execution at store level • training and on-going support • product and supply chain • marketing and advertising • property and site selection • financial viability • franchise agreement – term of agreement, territory, termination clauses etc • franchisee selection • experienced personnel The cons include the following. • franchise fees • royalties • loss of control – you must follow franchisor guidelines • required purchases – can’t buy a cheaper product elsewhere • exit – can only sell to another franchisee • termination – franchisor can terminate your franchise if you don’t operate to standards required www.pizzapastamagazine.co.uk
