Businesses crying out for franchisees

After eight redundancies Cantabrian Dirk Timms decided hed had enough; he purchased a lawn mowing business through the Green Acres franchise, lost 10 kilograms in four weeks, lowered his blood pressure and now makes twice what he used to.

"I used to be able to rest a cup of tea on my stomach and I lived on coffee and cigarettes; now I eat three meals a day and fall asleep the minute I hit the pillow. My energy levels have gone through the roof and on Sundays I can only sleep in until seven forty-five," says Timms, 44.

A former South Island sales manager for Mainland products, Timms worked up to 70 hours a week and managed 70 people and an annual turnover of $100 million before being made redundant. He used to lie awake at nights wondering if his job would be there in the morning and says while rarely personal, redundancies have a psychological toll.

"I was gutted actually. If you try to look for another job, you're over-qualified or you're under-qualified or you're the wrong age or live in the wrong place. I said to my wife 'we can lie down again and take a kicking [through salaried employment] or push on with franchising'," says Timms. The Green Acres franchise was a first foray into self employment for Timms who has never been unemployed.

Reputable franchise businesses are good opportunities for those made redundant, those looking to enter self employment, or those who want a lifestyle change for health or family reasons, says HR consultant Margaret Wyn and Leith Oliver, a business advisor and former general manager of the Auckland New Venture Trust. Both spoke to Franchise NZ magazine.

The training is very specific, the product and the systems are all worked out for you. Franchising reduces risk considerably and means people don't have to step so far outside their comfort zone to be self-employed, Oliver told Franchise NZ. Wyn says people who have recently been made redundant are vulnerable to making bad purchase decisions or to having bad decisions pushed upon them.

People can get very depressed and go through a grieving process [following redundancy]. A lot gravitate towards doing what they're good at [and then] other areas can get neglected, causing problems further down the track. The discipline of a franchise prevents that, said Wyn.

Simon Lord, editor and publisher of Franchise New Zealand magazine, says New Zealand has about 350 franchise brands in categories including home and commercial services, computing, financial services; food, health and beauty, pet care, and leisure and education. Per capita, New Zealand has the highest rate of franchisees in the world.

We have a lot of mobile service franchises; probably because as a nation we are quite spread out. People also feel their leisure time is increasingly limited and are prepared to pay for services that help them extend that time, says Lord.

Logan Sears, co-director of franchise brand Green Acres, is surprised more corporate employers facing restructure and pending staff redundancies don't turn to franchise brands for help.

"It's our experience that organisations creating redundancies only pay lip service to the process of getting people re-employed. Every offer we make to organisations [to come in and talk to people in the process of being made redundant] is ignored," says Sears.

Green Acres supports more than 850 franchisees including those aged under 20 and over 60. It has an ex-airforce pilot and a former Siberian pipeline worker mowing lawns and loving it, says Sears. He says people take redundancies personally and franchising represents a safe and supportive self employment opportunity that can lift people out of a rut. For others, it might mean earning a second income while caring for school-age children, or a chance for fathers to spend more time with family while earning more than they would in the corporate environment.

"There's huge flexibility and there is plenty of work; we're maxed out for resources and need more franchisees. Success only requires self discipline and the determination to do well," says Sears.

Lord says the New Zealand franchise sector is traditionally healthy with good growth and international research shows franchised businesses tend to stand up well during times of economic downturn. "Going forward, [into an economic downturn] existing franchisees may find business a little bit tougher but have the advantage of having a franchise brand and wider organisation behind them. Planned redundancies and a shakeout in the labour market should also deliver franchisors more new franchisees," explains Lord.

Timms, who is Christchurch based, says he's getting more work than he expected.

"I've only been going five weeks and I've got four regular jobs and two or three one offs a week like section clearance or vacated tenancies. You will be doing a job and someone will come out of their house and say can you do my lawns as well?"

While Green Acres franchisees work an average of 30 to 35 hours a week, Timms is presently doing 50. He says he's still learning and expects to speed up as he becomes fitter and more experienced. He says the franchise is turning out to be fantastic and advises people who have been made redundant to see redundancy as an opportunity and not lose confidence or self respect.

Franchising and being self employed for the first time has delivered my wife and I guaranteed income and there's lots of support from Green Acres and all the people out there doing the same thing, says Timms.

Are there any downsides? Timms has only found only one.

"For the first three weeks I had the electric blanket on full every night - my arms and legs were killing me."

The cost of a franchise varies depending on the brand, whether it guarantees a certain level of workflow and what equipment needs to be purchased. The cost of a Green Acres franchise is between $35,000 and $50,000 and includes a branded vehicle. A 20 per cent deposit is required, with the balance (with interest) paid off within four years.

Many people use redundancy payouts or re-mortgage their homes to buy a franchise; others finance the purchase through a private bank loan and pay it off over a longer period.

Franchises are typically owned for about five years, although older people tend to hold onto them longer. Younger people often use them as a stepping stone to gain experience for larger self employment opportunities.

Good franchisors provide training and manuals to help first timers negotiate small business tax requirements and book keeping.

Potential franchisees usually buy income protection insurance to cover unexpected illnesses. While a franchise brand can step in and ensure your franchise customers are serviced, they cannot replace income. Many brands have discounted insurance available through a bulk purchase scheme.

Before selling a franchise, a franchisor will normally conduct a police and credit check (with the buyer's approval).

www.franchise.co.nz

www.greenacres.co.nz