PROVIDING SOME KEY
Taking on a franchise is one
option for farmers looking
to diversify. But its not
something that those in
agriculture tend to know
much about. A conference
happening on April 12 should
provide some answers
ITS not often farmers receive a consistent message from the experts. But if theres one thing that accountants, advisors and farm consultants are united about it is the need for farmers to broaden their farm business by diversifying. Even Tony Blair has said as much.
One way is to take on more acres, but that often means a big investment in machinery. Another is to start a separate non-farming business to augment the increasingly meagre returns currently enjoyed by farming.
You could start up the business yourself from scratch – lots of farmers have done that in the past – but it can be struggle to find the right bolt-on business. Especially if there are already hundreds of people out there doing B&B, icecream, wild boar or whatever.
And many farmers tend to feel theyre not skilled enough in marketing to know which businesses will succeed in the long term.
This is where franchises come in. These are a familiar enough type of business in towns and cities, but theyre much less well known in the countryside. Many famous-name high-street shops are franchise operations, as are delivery firms, vehicle cleaning and repair businesses, building services and property maintenance operations, landscaping and food firms.
There are now 600 firms operating franchise networks and 30,000 businesses have taken on one. Its a sector thats expected to become increasingly important.
Moreover the success rate of franchise businesses is high, provided the enterprise chosen matches the skills, motivation and personalities of the people taking it on. According to the British Franchise Association, nine out of 10 franchises are still operating successfully five years after their launch. Thats much higher than the success rate of stand-alone businesses. And farms often have the added advantage of having spare buildings and family labour available.
The theory of franchising is simple. You buy the rights to the name from an established operator and pay to equip the business. In return you get training, support and marketing advice and the undeniable attraction of an established and often well-known name.
There are considerable start-up costs. The capital required varies from franchise to franchise. Most charge a one-off fee of between £10,000 and £30,000 and youll need to add working capital and equipment costs on top of that. If the franchise is a well-established one, banks will often lend up to two-thirds the start-up costs.
And though its your business, youll need to be self-disciplined about following the franchisors requirements and methods.
Why come to the
One of the biggest difficulties for farmers is finding out more about the way franchises work. This is very important. Taking on a franchise will be a big step for you and its essential to look carefully at the franchisors approach, attitude and track record before making any commitment.
One way to find out more is to come to a conference being organised next month. Called Franchising a Way to Profits? It is organised by British Training and sponsored by Barclays and farm business consultants Andersons in association with farmers weekly.
It will focus on the wider implications of diversifying farm businesses, starting with a look at the existing business itself. What is the potential for expanding the business by adding other farming operations? Is your farm suited to diversification? Do you have the right location, facilities, management ability and staff?
And if you do decide to diversify, is taking on a franchise the right decision? How do you evaluate the potential franchise and how do you know if its the right one for you? The conferences panel of experts will try to answer these and a multitude of other questions.
• Should your business diversify?
• Can you identify all the available potential business opportunities?
• What is business franchising?
When? Wednesday April 12, 2000
Where? Barclays Pavilion – National Agricultural Centre, Stoneleigh
More details? Contact British Training on 01590-678477 (tel), 01590-671573 (fax) or email@example.com (email)
Barclays will also be giving out a CD containing details of 100 different franchise ventures to the first 100 people to book.
The range of possible franchises is huge, ranging from The Landscape Company (landscape/garden design) to Pirtek (mobile hydraulic hose repair). Well be featuring both franchises in FW in the near future.