Case Study Title
To Franchise or not to Franchise?! Author Jamie Meehan Researcher, Limerick Institute of Technology.
Contact Details [email protected]
Introducing Four (4) Short Case Studies on Franchising Franchising is a not a new concept, it has been around for many years. In Ireland, there is a predominant perception that franchising is primarily invested within the fast-food sector but this is not the case. Many sectors have adopted the franchise model to enable growth and achieve high expansion capabilities for their businesses. Such sectors include the fitness industry, B2B services, Senior Care and Garment Alteration firms1. The growths of franchising have been apparent with companies achieving home market saturation and then find it very attractive to explore expansion opportunities overseas using the franchise model. Franchising incorporates a unique binding relationship between a franchisor and franchisee in which to do business. The franchisee buys the franchisors concept for a specific franchisee fee and operates the business as his/her own, often through business format franchising. Undoubtedly, the unique selling point for franchising is that the franchisee becomes their own boss but has the utmost backing and assistance from the franchisor throughout their business tender. Decisively focused on developing and assisting franchises and indigenous start-ups, the National Franchise Centre (NFC) established by Limerick Institute of Technology (LIT) in partnership with Limerick Chamber of Commerce in 2010 is an enterprise hub in the heart of Limerick city which is rapidly creating methods that test traditional ideas of new business development, based on the notion of leveraging knowledge, experience and expertise through excellent connections, networks and enabling continuous didactic training and learning. “The National Franchise Centre is the first 3rd level franchise specific enterprise development facility of its kind in Europe and focuses on the creation, sustainability and development of businesses within the franchise sector.” (National Franchise Centre, 2011) In response to the perpetual rising levels of unemployment in 2010, Limerick Institute of Technology and Limerick Chamber of Commerce assessed the viability of a franchise specific enterprise centre and concluded the requirement for the creation of the National Franchise Centre at an information session at LIT. The NFC acts as an intermediary body within a cluster between education and enterprise development that helps to nurture and support entrepreneurs to develop enterprises and create jobs for themselves and the local area. Substantial levels of redundancies at Dell, a local multinational enterprise (MNE), people living in socially deprived areas with no employment and/or employment prospects, in conjunction with devastating market conditions at the time, were acute factors leading to the creation of the NFC. According to Central Statistics Office (CSO) figures (Cso.ie, 2013), labour market rates in 2010 were in a period of mass decline. Arguably, franchising was seen as a robust, viable and formidable response to the nationwide problem of unemployment;-as individuals would be investing in a proven existing business concept, arguably leading to employment generation. Following on from this, another major factor in the establishment of the NFC was that its founders LIT and Limerick Chamber went on to source funding and support from other organisations such as AIB, Emerson and Limerick Regeneration. They all understood the true value in the centres creation and therefore participated in this project of creating the NFC. Given the substantial reduction in employment in the region around that time, the centre was in a position to draw down 1
Franchise Examples: Fitness (BeeFit Gyms); B2B services (Chemdry and BCM); Alteration services (The ZipYard); Signage, printing and web design (Snap); Courier services (Fastway); and Technological services (CEX) franchises.
European Globalisation Funding (EGF) which certainly aided the establishment of the NFC in 2010, the leading franchise specific enterprise development and incubation centre in Europe. The National Franchise Centre was founded to support the formation and growth of new enterprise developments and expected to generate jobs. Undoubtedly, it is a centre of excellence in Ireland which focuses on the successful framework and methodology of franchising. In establishing the centre, LIT in partnership with Limerick Chamber of Commerce recognised a gap and requirement for a third-level centre, to educate people who were attracted to getting involved in franchising. Therefore, it is a support organisation for innovative small and medium sized businesses (SME’s) and entrepreneurs. It is an instrument for enterprise development that will undeniably positively enhance the Irish business landscape. Contributing to the overall economic and social development of national regions is an essential objective of the NFC, through the execution of support services and programmes to entrepreneurs, encouraging them to transform into reality their innovative business ideas, and the delivery of tailored services to existing SMEs, aimed at modernising and innovating them. Subsequently, due to all these outstanding factors, the NFC was rolled out in 2010. Since its establishment in 2010, the National Franchise Centre has effectively rolled out three outstanding programmes of real excellence in regards to training, education, knowledge enhancement, experience, fundamental support and skill-sets providers. The three programmes, FAST, LEAP and Franchise START provide aspiring and existing entrepreneurs with a wealth of knowledge that prepares them for the start of their journey of setting up their own business, expanding their existing business and using franchising as a means of entering into new business activity. Undoubtedly, the NFC is improving enterprise activity through its training, mentorship, experiential guest speakers, incubation space, and association with Limerick Institute of Technology and Limerick Chamber Of Commerce. Labour activation is imperative to the strategic objective of the NFC and the activities at the centre help to identify the participant’s pathway to enterprise development. The NFC has found that franchising is growing in recessionary times, thus illustrating that there is a need for the Irish government to develop an overall support strategy for franchising. Now let’s take a look at some of the stories of the entrepreneurs that have gone through the programmes at the NFC. These unique cases provide never before seen data and illustrate just how effective the NFC was at a first-hand basis for these entrepreneurs. Arguably, these experiences will help to really emphasise the need for the NFC’s existence and exemplify the difficult strategic process of setting up a business in Ireland in the current economic climate. The companies that have been examined are:
Argos Fire & Safety Ltd., a fire and safety provider firm looking to franchise; BlueChief, an independent technology company; PC Pal, a franchise specialising in computer repairs; and SOCO, an indigenous technology company.
Argos Fire & Safety
Setting the Scene! It was back when Karen (owner) was a little girl that she was first introduced into her family business, Argos Fire & Safety. She had begun to learn what the business was all about at this point. On one fine summer’s day, sitting on the cliff-side, looking out upon the bay, it suddenly dawned on Karen that she wanted to take up her family business and to start having a real input on the key decisions of the business. She was always very passionate about her family business and spent countless days helping out her father as much as she could when she was younger. It was from there that Karen then believed that going into work every morning amidst family was the most perfect, happiest and most life changing decision that she was ever going to make. “Argos fire & Safety distribute fire and safety products throughout Ireland and provide a full back up service to all clients.” Clients respect this as they get full support from the company. Any issues or maintenance problems, the company will be on speed dial to fix, providing prospective franchisees and clients the feeling of comfort and a sense of relief. “The aim is to grow the business and help others become more independent in their professional careers by having their own business.” To Franchise or not to Franchise! “Argos Fire and Safety is a family run business that has been in operation for over 32 years.” Now is the time for Argos Fire & Safety to take the world by surprise and expand. This has forever been playing on the minds of each individual in the Corcoran household and now they have come to the conclusion that franchising is the route for them and for the business to achieve expansion. Franchising has been selected as the route of expansion instead of other strategic options for instance: mergers; acquisitions; and partnerships due to its robust model, high growth rates and lower risk factor. Karen is embedded within the second generation of Corcoran’s, taking over the family business. Going live with the franchise part of the company in 2014 is currently of major importance to Karen. Furthermore, the selection process for the products and services that the company should sell was a rigorous and time consuming process. Karen would have liked to complete this decision making process earlier. Franchising is a fundamental part of growing her business and she hopes to have that up and running between early 2014 and 2015. A key factor for the adoption of the franchise model is to grow the business and to also help other prospective entrepreneurs/franchisees become their own boss. What has become apparent is that the Corcoran family have always wanted to give back to their roots and support people to go into business for themselves. The family have a wealth of knowledge and skills in the IT sector and on what it takes to be an effective trainer. Karen’s sisters have also helped to grow the business so it really is a tight-knit family that is working together to make their business a success. Were it not for the efforts of many, this life changing ordeal of setting up and expanding the business couldn’t have ever been on the cards. Long hours, vast commitment, effort, and a lot of capital has been allotted to the business by the family to make it a triumph. The journey has been long, challenging but ever so rewarding. The training that Karen personally received at the National Franchise Centre was “great, constantly learning new things, helped with the vision of the business and the business mentoring was very helpful”, due to being specifically tailored to her needs. For the development of the business, the National Franchise Centre has helped “steer them in the right direction and put things into perspective for the company”. Also, the true benefits of franchising were identified whilst on the FAST programme at the NFC. Balancing the training at the NFC with trying to run her own business was a very challenging task for Karen. Furthermore, the NFC
served its purpose for her by providing invaluable resources that has helped strategically position Karen and her family business in a very effective direction. Since leaving the FAST programme, the business is growing and the adoption of the franchise model is occurring. Every business encounters challenges, hiccups and bumpy roads as they are part and parcel with every day business life, but the main CHALLENGE which she encountered was time. There’s just not enough of it! Business format franchising was examined at the NFC, which is the most common and popular type of franchising, in which a company offers a franchisee a successfully developed model for operating a business, using the companies branding, marketing, expertise and trademark. Usually the franchisor’s company will provide the franchisee with an invaluable and significant amount of guidance, training and mentoring in order to be able to start managing and operating the company. The franchisee has to pay a fee or certain privileges in return. This type of franchising has been adopted by Argos Fire & Safety, whereby they train the franchisees for a full two weeks about all the products that they provide, the advantages of them and on all aspects of the maintenance work. Maintenance training is an on-going process as new regulations are paramount and continuous to the fire and safety industry. The franchisees buy into the business and distribute the products. Business format franchising has aided the business by helping to improve the vision of Argos Fire & Safety. Expansion and growth is imperative for the business, Karen and her family. She is certain that it will work due to a high market demand. Undoubtedly, all companies have to abide by fire health & safety and duty of care regulations which can only improve their business. Franchising is a model that has been tested for Argos Fire & Safety and now they have adopted the model so that they can provide this key information to prospective franchisees. Argos Fire & Safety is suited to business format franchising as they are helping to create jobs and provide people with the sense of job security, especially when economic times are at their most challenging. Expanding the business and labour activation through this type of franchising is imperative to her business. For many, the future might have looked very bleak after being let go from work, redundancies and large cut backs but Karen’s family business is proactively improving this environment, to give people a glimmer of hope and that light at the end of a very dark tunnel. Karen is trying to employ more people and get them back to work. They have a close working relationship with manufactures and have developed good business relationships with them. This will help to support the franchisees that come on board. There were many reasons as to why Karen decided to start working in her family business: the sense of employment security; giving back to the community; and she is a real hands-on, people person. The creation of a business that can benefit society as a whole and keep people safe, when at work or at home, were fundamental reasons for the creation of Argos Fire & Safety. What’s Next? The plan for the future for Argos Fire & Safety is clear, it is a growing business that wants to continue to expand and have a total of five franchisees by 2015. Franchising is the way forward for her business. Growth through franchising is nearing ever closer, the prospect of immense success is upon them!
Setting the Scene! Shane McCarthy (CEO) and Keith O’Neill (CTO) are recent UL graduates and have always been mischievous, forward thinking and driven individuals. Whilst sitting at home in their college digs, Shane and his now business partner, Keith, came up with the idea to set up BlueChief, a technology
firm. It wasn’t named BlueChief at the start as it took a couple of months for them to decide the name of their business. To say that they were lethargic college students would be an understatement, they were happy to get by and enjoy the social life that came with it. College was only something to really pass the time and to learn a little for Shane. Keith took it a bit more seriously. Setting up a business only came into their thoughts at the end of their college journey but Shane has said that “No, it was never really in my head, I wanted to be a professional soccer player. This is something that made me actually go into business as I always wanted to be the best at everything I did”. Coincidently they ended up living together after known each other for about a year. They figured out that together they had the talents that complemented each other really well and from there it took about 9 months until they got onto the LEAP programme at the NFC and started to get the ball really rolling form there. Keith had “always wanted to try and go do something himself rather than follow the hurdle and get a job straight out of college”. BlueChief is described by Shane as “a web-based services company, our goal is to create services that will run via the internet that people can subscribe to. We are going to outdate the paper-based practices and make them all internet based practices”. Whereas, Keith describes it as “we sell webbased systems to other businesses. We build services to make businesses lives a bit easier and we put them online so that they can access them wherever they want, whether it be from their phone or computer. Each product will address a set of problems within a specific industry. Web-based for businesses”. Clearly, it is a very modern business that integrates the use of the internet to help make businesses more efficient. BlueChief’s journey began “2 years ago, we both found the perfect partner, the exact opposite to each other, and we got on very well and decided together that we could do a lot to change the technology world and then cemented it down”. Clearly, they have a unique partnership that has led them down this path of enterprise development. Shane had no real business background coming into setting up the business, “not particularly no, neither of my parents work at present either so I wouldn’t say that we are entrepreneurs by trade, we are very artistic and creative but I wouldn’t have ever have called myself a business person”. It was fascinating to learn that since Shane “setup this, two of my cousins have got involved in the business world and set up their own businesses, but nothing before that”. The idea of setting up a business has rubbed off on Shane’s family and his enthusiasm for business has helped his own family to explore their own new career paths. Whereas, Keith has always had a strong business background. The O’Neill family have always been heavily invested within entrepreneurial activity. From a very young age, Keith started working with his father on the business in which he had created himself, a nightclub in Waterford. Keith would work long hours after school, at weekends and during the holiday periods. To this day, Keith is still working on improving the website, for which he created for his father’s business. There is a strong entrepreneurial presence within his family as “my Dad and his two brothers would be entrepreneurs; they all have businesses of various shapes and sizes. There is not necessarily a lot of big businesses in the family but more self-employed people in my family. My father would have a registered company now for maybe 26 or 27 years so that’s where I have gathered a lot of my information as I’ve grown up in the business world”. Certainly, Keith’s involvement in his father’s business from a very young age has helped him to decide that setting up his own company is what he wants to do with his life! To say that it has been a life changing ordeal is an understatement for both. For Shane, “Yes I would agree, with it, definitely, it has changed my personal life, my relationships that I have been able to form with friends, family or peers. It has changed my personal life, my FINANCIAL life, my gym life, it’s changed every single aspect of my life, yeah. I would say initially it is for the negative and when you open up your mind to the possibilities then it is for the positive”. Likewise, this was certainly a life changing ordeal for Keith as he has said that “more so than you probably would let on, it is different and challenging but fun along the way. It really depends on your outlook I guess, if you take the challenges head on and enjoy them, you are going to have fun but maybe it’s not for everyone”.
Undoubtedly, there are positive aspects with setting up your own business. The excitement has been the most positive aspect of owning a business for them. Shane believes that “The excitement, getting up out of bed every morning buzzing, can’t wait for the day to begin and meet the challenges head on. Six hours sleep at night every night. If I got anymore I would be really worried because I have too many thoughts processing in my mind every day. The most positive thing is definitely the excitement, the fact that with your own hands and your own mind and your own mouth, you can change the world. The excitement is that you get to do what you want to create change. There isn’t many people that can get out of bed in the morning and say today I get to do what I want to do. Being a business owner is the BIGGEST privilege that YOU can have! There are millions and billions of people who never get to have that. And we get to have it at our finger tips whilst still in our 20s”. Keith states that “well you could go with the easy things like work hours and holidays but I think the rewards that are there are all your OWN making. You feel things when they are hard and you feel them extra when they are good. The full responsibility lies with you so if you are a fan of that, there is a lot of benefits there”. The author has had the pleasure of knowing the two lads for quite some time and would describe both as individuals who overcome any challenges that they face, embrace their responsibilities head on, are very enthusiastic about what they do and are trying to better the start-up community of Ireland. The decision to go down this journey was decided for Shane when he found “the perfect partner, I’m very analytical, forward and very driven, I’m a strategist. My business partner is very analytical but he is a problem solver and he can fix things. When you align them together, his introvert with my extrovert and you align my strategy with his logical thinking, its problem solving using the internet, and its problem solving to help people while using the internet. That’s what we do and that’s what suits our characteristics. Now that’s what BlueChief does, so perfect really”. Keith decided to set up BlueChief as “it was a match of skills, it is something that I have always been interested in. I never did it in college”. For Keith, “It was always an extra-curricular activity up until the end of college. When I met Shane it was clear from the offset that it was businesses that we wanted to target and it came from there. We let it evolve itself a bit more than maybe other companies do. The day we went into the NFC and the day that we came out, it was black and white in terms of what our business model actually was”. From the day that they both went into the NFC with their idea, it was always going to be centred on web-based systems and industry focussed. The actual forming of it happened over a year. The partnership that they have as founders of BlueChief was key to setting up the business. They have both said that they “couldn’t do what I do without him and he couldn’t do what he does without me. And we know that and we love that fact”. It is a match made in heaven, that will help BlueChief achieve perpetual success. Shane has had little or no experience in this area before setting up this business “hated computers. As a matter of fact next week, I am going demoing our first software to a REAL company and try to close a sale for a nice big 5 figures, EXCITING times! No I don’t, but being honest I don’t think you need experience. People buy people, I’m selling a software to a person or within BlueChief, I’m the CEO to manage people and once you’re fair, just and honest with people, it tends to be reciprocated. That’s what I’ve learnt!” Keith has no commercial experience but “I have a bit of experience setting up web-based systems as I did it for my FYP in college, for the clubs and societies membership system in UL. That was similar to this but I’ve had no commercial experience of setting up a businesses, managing a team of developers, hitting all those deadlines, juggling a hundred things at once, whereas in college it was very different”. Experience is undoubtedly an advantage but not necessarily a necessity when setting up a business, the real necessity is that you have the sheer PASSION and DESIRE to succeed! Both have highlighted the fact that they would have had a bigger bank balance before setting up this business. Shane says that he would have “not moved into my house with my business partner, or our general manger and my girlfriend simultaneously. There are loads of negative things that you could
highlight but I’m being honest no, you’re never supposed to do business with your friends, we have and we are succeeding. You’re never supposed to live with your business partners, we have and we are succeeding. You’re never supposed to have loads of young people involved in a company without experience, we have and we are succeeding. So basically, there are a lot of things that get waved in front of us where we were told we can’t do stuff and shouldn’t be doing it that way and we are succeeding in doing it just that way. And that’s what BlueChief is all about, I think!” A big factor that Keith would have done differently before setting up BlueChief was that he “would have saved some money before hand, which would have been the correct thing to do”. There isn’t really many things that he would have done different. Talking to as many people as was physically possible was something that they did at an early stage, which has stood to them. It has helped them to create a network of robust relationships. It was important for Keith to “engage with other people, to build a team and a good team around us that was fundamental to this working out. There is probably things that we should have done differently but there is nothing that actually comes to mind now. In fairness we have been pretty spot on for a lot of stuff”. To Franchise or not to Franchise! They have not adopted the franchise model but BlueChief could be franchised and both founders believe this to be true. Shane has a strong belief that “it could definitely be done though. Being honest, I never talked about this with my business partner but I have thought about it myself though, yeah I think so. What have you to do, you have to find someone with web-development skills, someone with people skills, align them together and make sure they have one route, which is to put people before money. That is what myself and my business partner Keith have done, we put PEOPLE first! By putting people first, we solve their problems and get money after as oppose to getting money first and solve the problems after, which is the old model. So I think it could be franchised to cut back to the point. Yeah, I think our model could be franchised because at the end of the day it’s using webbased technologies to solve people’s problems, and doing it in a partnership. I don’t see why that could not be replicated on a global scale. If you take for example, you were to go to the UK and find someone like me or Keith, you could do something like this. Find the right partnership, create the correct policies for partnerships to be formed and then this can become a franchise”. Keith states that “as of yet, no. But we may in terms of reselling through franchising for when we are expanding and to actually provide services for businesses that use the franchise model”. After spending the year learning at the NFC, they believe that franchising is a good option for somebody who wants the security and doesn’t have the time or ability to do something themselves from scratch. Shane sees franchising as a suitable strategic option for those who prefer less risk. He says “4 out of the 5 start-up’s fail, whereas 4 out of the 5 franchises succeed, so it’s definitely the safer bet. I like it but I am more risk adverse, I’d much prefer to take risk and see how I get on with it. I have the luxury of being 24 years of age so I can understand for a more mature person who doesn’t have that and has a family, that going down the franchise route is brilliant. I just don’t like the restrictions. You are going in with an existing formulated plan and strategy, you have to abide by this, this is the way we do this, whereas from our perspective it’s how do we create this, how do we build this, how do we hack this and how do we grow this. I don’t think you can do that in a franchise, you can create and recreate slightly but you don’t have much room to pivot. With start-ups, it’s all about keep calm and pivot! Franchising is a more suitable model to a more experienced business person, not necessarily an entrepreneur. An entrepreneur usually likes risk, a person involved in a franchise, not necessarily. It is a very good model, suitable to people who don’t want lots of risk and people who tend to have more experiment or maturity and who find it easier to conform to certain things”. While, Keith believes that “In Ireland, there is a lack of variety of franchises. It seems that there is a few that do really well and everything else is below that line and unheard of”. The BIG thing about setting up a franchise is that you have to have that bankroll behind you or some way of getting the investment that you need. For both Keith and Shane to adopt the franchise model down the line, “it would have to be the right time and the right investment, opportunity and the money would have to be there before we
could jump into it but it’s not something that we would ever rule out”. They would both consider the franchise model once they could create the correct structure to build that partnership. Shane articulates that “Keith does our finances and I’m the sales guy, think about that?! I do the content for the websites but he is the tech guy, think about it?! They are very diverse roles but we are AOK with that. I’m the CEO but Keith makes a lot of the decisions within BlueChief. Keith’s the CTO but I put a lot of pressure on the development side of the team. It is that relationship, that bond and that acceptance of the roles that you have which is key to developing a franchise model for our business. To cut back to it, yes I think it could be franchised but it’s about finding the correct strategy and structure to build the partnership and then it can be franchised”. It is evident, that there is a strong relationship between both Keith and Shane and that relationship can only help to franchise the company in the future. Shane has stated that the NFC experience was “the best experience of my life, being honest, the first 6 months were key for me, to understand how to be a CEO, understanding what it takes to build a company. I got more benefit out of the NFC in the first 6 months than I got out of the New Frontiers (a different programme) and/or I got out of college. To summarise, the NFC started us on a path to GREATNESS!” For Keith, who also enjoyed the experience, “if we were to talk about the upstairs part in the training rooms, the workshops were ran brilliantly and were very interactive. We got very lucky with the group that was there with us as it could have been very different if we didn’t have people who were so engaging and helpful. We found that that everybody in the NFC was very quick to share their knowledge and expertise. They would help you out whilst looking for nothing in return. The only downside that we found from the time we spent there was that downstairs in the office space was so quiet and it was almost a corporate and industrial feeling, which took away some of the creativity and motivation of the place from being down there. We still loved the space and the location of the centre was very good. We can’t complement the workshops enough as they were very good and we got a lot out of them but it was just the atmosphere and uptake of the desks in the office space that needs some work”. The NFC was vitally important in the early development stage of their business, “for one being around likeminded people which was okay I’ll be honest, but it was the support structure, it was the people who came in and told you about financials, it was the people who came in and made you go out and do market research. It was the people who came in and told you how vital a business plan was. Whether they are RIGHT or WRONG, its things like that you are unaware of, that they suddenly make you aware of. It’s the fact that you can ask them questions and get put on the spot which is key!” Keith states that “It was great, to be connected with the Limerick Chamber was a massive bonus and to get the expertise and knowledge from such a good organisation”. Also they both believed that being tied in with the Chamber events, workshops that they run and continuing to receive chamber membership was excellent. “The support from LIT was fantastic. The network that you gain access to from being part of the NFC is huge”. Being part of the LEAP programme at the NFC changed their business model. Shane has insinuated that “Yes and I’ll be honest it wasn’t for the best, they put us in a more structured format, now don’t get me wrong they were unbelievable but it was more structured and the old ways of doing it. Since we have left there our business model has changed to the new way, which is GROWTH HACKING! It’s just finding a way to make it work, to grow your business, whereas their way is to develop a business plan, then you go get investment, then you get a few customers and build it from their which is the old way of doing things. New start-ups are different to that but I will highlight it is unbelievable for 99% of businesses, it’s not the NFC’s fault that BlueChief happens to be a unique software solutions Start-up”. Keith has a different view though “it helped us to become clearer in ourselves. Just because we have an idea in our heads doesn’t mean that we are able to explain it to the world properly and having people there from such a wide mix of different ages, backgrounds and interests
was key. To be able to explain your business model to them was one of the biggest things we learnt especially through market research. Before that we would have had the opinion that you can go out, build something and go sell it. But this thought us a different approach, it thought us to be a bit more analytical and to put more strategies in place”. Both founders believe that it changed their business model but Shane believes that it was the outdated way of doing things. Challenges were encountered whilst at the NFC for them both. It was discussed with Shane that challenges have been faced, “Yes, being honest the first 6 months I didn’t see any challenges, it was brilliant, informative, knowledgably, engaging, it was everything I wanted it to be. I couldn’t have dreamed about it because I didn’t know it was going to be that good! The challenges came in the next 6 months of the programme where you are supposed to have 40-45 businesses in around the centre, where the reality is there is only 6 people there, 4 of whom work with us and one of whom is an administrator and one of whom is a researcher. That was an issue because you are going from having likeminded people, who you can bounce ideas off to talking to blank wall! It puts you in a corporate environment which is not suitable to Start-ups. A Start-up needs vibrancy, it needs peer-topeer learning, it needs places where you can bounce ideas, not a quiet room and environment where there isn’t many people to engage with”. That was the BIGGEST challenge, the second 6 months where people aren’t engaging properly or appropriately. For Keith there were challenges with the NFC, as he found that the opening hours were “insufficient and not practical for setting up a business”. The centre would be closed after business hours so it was impossible to gain access to the facilities after hours. The NFC is very effective as “the workshops were ran brilliantly as people did engage but there was sometimes that they actually forget that you are starting up a business. Being in workshops, mentoring sessions and having to complete projects doesn’t really give us much time to develop the business. They maybe should focus on allotting more time where you have to actually sit down and work on your business and get things done. That would be good”. Undoubtedly, changing the atmosphere downstairs in the office space is a must, making the place feel more creative and engaging. Encouraging more collaboration and encouraging people to be at their desks more often would be a big help to all involved. It is apparent that the first 6 months are excellent, its engaging, its forces you to learn and understand what you have to do. According to Shane, “The second 6 months it doesn’t, I’ll rephrase, it didn’t in our scenario. I’m not saying it won’t in another scenario, maybe they have changed their model right now but in that scenario there was 6-8 people at very most in and around an office and that was it. You have 40,50,60 desks and there is nobody at them and it drains your energy level, it pulls you back down a bit from the buzz and the hustle bustle of it. This is what I would change, the second 6 months, you have to make it more engaging, more interactive and you have to give the people a reason to come into the office. Giving people a reason to collaborate because that’s the key as collaboration is key going forward for any entrepreneur”. They would both recommend the NFC and have already done so. Shane has acknowledged that he would highly recommend the NFC, “Yes definitely, for the first 6 months especially, the second 6 months I don’t know, being honest if I was to recommend the NFC to most people, it would actually be to college graduates above anybody. Above people who are older or who are looking for work or who are looking to get back into a field. Above people who have lost a job and who have money and above people who want to buy into franchises. Coming out of college, if you look at the people who went through the NFC, who just left college, they got the most value. For the first time in your life as a college student when you leave college, you are now applying the skills you have learnt into something that you need. Throughout college you’re thought =Mc2 theorem, and all these other things, where are you ever going to use them?! When someone comes over to you and gives you a sheet and right go out and do market research, this is something you have to do for your company in two weeks’ time and this is your practice run. Yeah, you don’t have a choice really like. But when you are a college student and you are coming out with an idea and you formulate that plan and you want
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to know where to go to next, the NFC is definitely a viable option. The structure they put around you will allow you to tailor your ideas. The only other thing that would apply into it is that you need to integrate the new business way of doing things, online, using SaaS, collaboration, co-creation, all stuff we were not told about. The NFC tells you about a business plan, you have to do a business plan. Since I have left the NFC, I have not touched our business plan and we have won 3 different competitions and now when we want to present to investors, we use a slide deck, which is something that I was never told about in the NFC. I was actually never told that even in New Frontiers (a different programme), it’s something we have learnt. Now that is something that has to be shown to every Start-up, every franchise or whoever in the NFC from here on in. Because that’s the new way of doing it. Why teach someone the outdated practice when you can teach them the revolutionary new one”. From speaking with Keith he says that “we already have recommended the NFC, the LEAP programme in particular. As a place to go with an office space that has all the key facilities, it is pretty good. The programme itself was great and we learnt a lot from it. So yeah, we do recommend it to people already”. After finishing the programme the NFC has provided their business with further support. Shane believes that “Yes, I think they are very helpful and we meet with them constantly, when I say constantly I mean once a month I would say. They have been very helpful and still give us a support structure going forward from PR advice, to engaging with us when they see us or when we meet. I would say they are very friendly and approachable. It is a very supportive environment!” Clearly, Shane believes that BlueChief can do better with the growth of the business as he states “No, yeah (laughing loudly), that’s a question I don’t think I can answer properly. Yes I’m satisfied that we are doing brilliant stuff, the team is going brilliantly and where are hitting our right targets but I’m never really satisfied for the reason that I always think that we could be doing better and I think it’ll always be the same whether we achieve 10 billion, 100 billion or 1000 billion, it won’t make a difference because I will always think I wonder could we have done better (grinning)”. Keith is fairly satisfied with the growth of the business to date as “Yeah, I have to say as we are still here which is the big tester. Give us another year and we’ll see whether it all worked out. But definitely there were foundations that were put in from the NFC that stand to us today”. There are challenges in which the company have encountered. According to Shane, “Yeah, daily (laughing loudly), from ideas being the route of all evil and distracting you from everything else, to pivoting weekly for a few months when you are not quite sure what you are going to do. Also to defining what really is your business model, how are you going to pay staff in the future and how am I going to demo this software when I don’t actually have it. I think the point I’m making is that there are constant obstacles in a Start-up and I wouldn’t have it any other way! A real Start-up is someone who hacks their growth, someone who will always overcome obstacles. An obstacle is just something that YOU allow to get in your way! You can go over it, through it, around it, build something that allows you to play with it, whatever just don’t stop at the other side of it and leave it get in your way!! That’s what an entrepreneur is to me, that’s what obstacles are. There are always challenges at BlueChief every day and there will always be challenges at BlueChief. That’s why I’m very happy with the team we have here, they smile and get on with it! That’s it like!!” Keith believes that budgeting and financing, to keep that flowing, have been the main challenges since being in operation. Not that they have much financial problems but “that would be one of the main areas that we are probably weakest at so there is going to be trouble there. In terms of sales, marketing and all that side of things, we feel we are doing them well. The development is going fine, so no, there is not too many challenges since we have come out of the NFC”. What’s Next? The future for BlueChief is that they “want to grow an international company, one that employs thousands of people and two that has helped millions of people. That’s it!” Undoubtedly, the future for
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BlueChief is clear, they want to ultimately achieve internationalisation, “we don’t plan on selling out, and we don’t have an exit strategy, on purpose. We want to keep this going and see where it can lead. The beauty of the thing is that we don’t have the slightest clue where this is going to be in 6, 12, 24 months and so on”. Who knows?!, is the feeling within the BlueChief camp!!
Setting the Scene! Paddy had never even thought about setting up his own business. He came from a background of where entrepreneurship was not normal. Starting out on his professional career in the 80s was a difficult time for entrepreneurial activity as not many people doing that sort of thing. “You got an education, got paid and didn’t think about anything else”. His father was a teacher and he came from a farming background so it was never a journey that he had ever thought about exploring. It wasn’t in his blood or didn’t even consider it for a second. There was no business background and family entrepreneurship was non-existent. The notion of setting up a business was dormant for him. He has worked for US corporations for over 30 years so he had been embedded within a corporate culture environment. It was quite restrictive as he had to follow their way of doing things and was always told what to do. There was no incentive to take on the initiative because of such a restricted environment. After doing that for a long time, he spent a long time as an engineer and 15 years as a manager- so he gained a lot of good experience. It was about 5 years ago when the IDEA suddenly came to him to set up his own business. “It is something that came into my head, when ideas like this pop into my mind, I work endlessly to make it happen, a lot of my own attention and focus goes into making it achievable”. After working for somebody else, he knew that this is what he wanted to do with his life. Undoubtedly, the freedom of working for himself and not having to obey certain rules were important factors that led to the creation of his business. Paddy wanted the FLEXIBILITY of time, to spend quality family time and witness his children growing up. Working with dell was difficult; going away on holidays was problem as you had to do it on their terms. He wanted more flexibility, time, freedom, and more control over what he does, so that there was no-one else to blame but himself. PC Pal is a “Computer repair and IT support for home and small businesses”. Going into business for yourself is undoubtedly a life changing ordeal but in a positive way for Paddy. “You need to be ready for it and have thought it through extensively, need to be sure that it is what you actually want to do, accept that it is not going to be smooth sailing and that it is going to be really challenging, through good times and bad and you have to ready to accept that. It is not something that you do likely or take likely, if you’re going to do it you have to give up everything that you have and devote everything you have got into it. Working on your own is a very lonely business so it’s a BIG MOVE. But it is very rewarding to say the least”. There are many positive aspects of setting up your own business, flexibility for one, being in control and being involved in all aspects of the business. Paddy is involved in sales, marketing, the engineering side, the finance side, the whole end to end of running a business, he finds extremely interesting and challenging. The reason he chose PC Pal was because he had looked at various options, going into garages, petrol stations, couriers services, a lot of different options even pubs but then decided that why would he go into this when his area of expertise was in computer technology. He had learned a lot about that and loved it. He really enjoyed it and read about that industry all the time. This helped him to make that the decision to go down this path rather than submerge into something completely different.
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Paddy has gathered vast experience through the years, the last 15 years he was a manager so he had been out of touch with how the technology market operates. “This is a long period of time being away from this industry. Technology is constantly evolving so to spend 15 years away from practicing it, is a lifetime. I had to pretty much start from scratch but at least I had a good business to go with”. To Franchise or not to Franchise! This is a real franchise business, he is a franchisee and is part of a collective group of franchisees. There is a franchise business model that he follows in which he must pay monthly franchise fees and it is a traditional franchise operation. Franchising has aided his business as it has helped him to get to market a lot quicker. ‘Route to Market’ was achieved at a faster pace due to buying into an existing successful business operation. “The marketing strategy was already in place which showed me how to attract customers. Marketing material was already in place, business cards, signage, branding. The website was already up and running so it helped to establish an online presence for the business and get recognition. CRM Systems were also in place, to not only attract customers but to retain them”. Branding is huge for PC Pal, it would have taken him a long time to complete all of the above, he wouldn’t have the skillset and to pay somebody to do all that work just would not have been feasible. To have the marketing and branding framework in place was of massive benefit to him. It allowed him to go to market quicker. “The support that you get from a franchising organisation, the headquarters, is second to none. It is of huge benefit, in my industry as technology is so wide and vast and is constantly changing, so you just couldn’t know everything. So it’s very important to have that back up of a team in the UK to help me, so that when I get stuck they are there to call upon”. Furthermore, the robust support from the franchise business itself, the existing marketing and branding frameworks are the two huge benefits. Paddy believes franchising to be an effective model “I don’t think it is for everybody, people need to understand that when they are getting into franchising, exactly what it entails and what exactly they are getting into. You may want freedom and flexibly but you do have to sacrifice some of that when you get into a franchise because you do have to go along with the business model that the franchise has come up with and you really can’t deviate from that. You have got to be prepared to accept that from day one and know that you can’t go and do your own thing. You may feel going your way is the right way but if it doesn’t fall in with the business model of the franchise, then you are going down the wrong path”. The training in which he received at the NFC was IMPECCABLE, “I have done a lot of training in 30 years; I would say that the training I received at the franchise centre was easily the best. I had clear goals that I wanted to achieve when I first came to the business centre, which was to fill the gaps around my knowledge base about sales, marketing, finance. The people involved in the training centre, the people giving the training and the mentors were real business people with real business experience, not academics that were teaching you from a text. So the people that were there, you knew that they had done it, been there and were talking from experience. What I learnt about things like marketing and finance and sales was imperative. The sales side of things was going through the psychology of sales and to just get that was great. I had always thought that sales was something you had or hadn’t, that people were born as with it but from the course I learnt that sales was really just a technique and that you just apply those techniques. If you know and understand the techniques anybody can do it really, you don’t have to be a great talker or an outgoing sort of person, if you know and understand the psychology of sales anybody can do it. Also, I always taught marketing was just advertising but the training really opened up my eyes to what marketing really is and I’ve used that a lot in my business. Marketing is almost end to end, the 4ps and all that. The finance training was facilitated by a financial controller of a big company so he really knew and understood that whole area. At the start of the course I felt that those three areas, I lacked real knowledge but by the end of the course, I had the real confidence to go ahead and felt competent in those areas, which is great and tells me that the course achieved its aims”.
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Certainly, the NFC was very important in the early development stages for his business, “It was really good, used the time to do the ground work that I had to do and I was able to do it with a mentor so it meant that somebody was there to help me”. When he came onto the FAST programme, he knew that he wanted to go into to the area of IT but didn’t know what area specifically. He used his time on the programme wisely; it has to be said, to help him identify specific areas that interested him. “When I left the National Franchise Centre, I had identified the franchise that I wanted to go after pretty much and was almost ready to be up and running after the course concluded. I achieved that through working with the mentor, examining all aspects of setting up my own independent business or franchise business route. The mentors kind of forced, if you like, me into looking at different franchise opportunities. I may have only focussed on one whereas they advised me to look at various opportunities to get the best fit. I looked at 3 or 4 different ones, analysed the pros and cons of each one and as well as that I got a lot of good information around franchising and what I should look for in a contract. I spent the time training but more than that, coming up with the actual final outcome of where I should go with my business.” The NFC really helped Paddy to identify the correct business for him. “I just knew that I wanted to get into a business and that’s as much as I knew so the NFC helped me to go through a process of discovery and understand what businesses I should look into and helped me to go through those and come up in the end with something that I felt was right for me”. I didn’t see the NFC as a challenge, I saw it as an opportunity, so no challenges”. It is clear that many of the entrepreneurs that went through the programmes, ran at the NFC would recommend it and Paddy is no different, “Yes, I would recommend the NFC. I don’t think that anybody should be allowed to start up a business without going through something like the NFC. I genuinely and honestly believe that. So many people start up a business and they really do not know what they are getting into and don’t have the skillset required to get up and running. It may take a lot of time but it’s probably the best time that they will ever spend because starting up a business; you need to know everything about running a business and most people don’t have that. Some people may have different aspects of it but nobody will have the full knowledge. It is not only the training that you receive, it’s also the fact that you meet other people in a very similar situation to yourself, who are involved in starting up a business, who have gone through difficult times and that in itself is a huge plus as it helps you to understand that you are not the only person in this situation. There are others out there in the same boat as yourself. You learn from them and I have made friends that I now to this day, continue to meet on a regular basis from the NFC. Peer learning is vital”. He is engaging with the centre regularly since leaving “Yes, I regularly keep in contact with the team. I’m a member of the Limerick Chamber so I go to a lot of their events and I go to the events that are organised by the NFC. I have been back a few times to give some presentations that the NFC has asked me to do. I have done about 3 to 4 different presentations to the participants on the programmes at the NFC. So yes, I keep in in close contact”. For the most part, entrepreneurs are never satisfied with the growth of their business, Paddy believes. “I don’t think anybody can be satisfied with the growth of their business in the current climate. I am up and running a year and it’s been slow and difficult. I think 2013 was a difficult year anyway for the country so certainly in 2014, I have found a huge increase in business and a huge increase in positivity and confidence. I’m starting to see real growth now that probably wasn’t there last year”. There have been some challenges encountered along the road, “Absolutely, there are days when the phone doesn’t ring and you don’t have any work and you think to yourself was this a good idea and why am I doing this. Certainly, you have those days when you thought maybe it’s time to call it a day and then the following week the phone doesn’t stop ringing and you are so busy that you don’t have a day off. So that can be difficult. Being on your own is not easy, by any means, having colleagues to
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talk to; to share and help solve problems is always good. That can also be difficult and that is why I do the networking to try and keep in contact with people but starting a business is not easy, not for the faint hearted, but the rewards are more than worth it”. What’s Next? The future for PC Pal is this, “I’m currently trying to prove the business model in Ireland, as 2013 was a difficult year and 2014 is starting well, so I’m starting to see that the business is really picking up. I see 2014 as being a good year and I see the business model as being a good model and I want to continue to grow the business in Limerick. The plan is to start expanding the franchise throughout Ireland. I am constantly in discussions with people, in particular a person from Cork and a person from Dublin, so hopefully they will take on the franchise. I see it as a great opportunity to have a national brand in Ireland for computer repairs and I believe that there is an excellent growth opportunity for this type of franchise. So that is where I hope to grow the business”.
Setting the Scene! The Idea of SOCO began back when Niall (owner) was completing his MBS in Entrepreneurship in the University of Limerick. He is a recent graduate that has always had a keen interest in how the technology world operates, especially app design, web development and the marketing nature that coincides with that. The author knows Niall on a personal level and would describe him as a very down to earth, knowledgeable, hardworking and very intellectual, particular around the area of I.T. He has always wanted to set up his own business and is very entrepreneurial minded. Once he had finished his masters he started “working with two start-ups during 2010-2011, but constantly looking/researching ideas I could work on myself. Tried some stuff out in early 2011, before choosing SOCO fully about April 2011.” This highlights that he has a real appetite and willingness to try and succeed in setting up his own business. There are two key reasons as to why Niall (CEO of SOCO) choose to set up on his own “(1) I’ve always wanted to do it and (2) – timing: difficult to get jobs in what I wanted to do at the time. Only other real option was to leave the country but I saw that as a cop out. I’d prefer to stand and try fight the situation”. Undoubtedly, Niall was trying to proactively improve the enterprise landscape in Ireland by immersing himself into this epic journey into the Start-up world. SOCO is “Your social concierge. Helping you find out what’s happening near you in real time”. In today’s business world, a firm like this is in great demand as people want to know what is going on around them but want it at a fast pace. The main reason behind setting up this business was that underlying interest in technology, practicing marketing and the timing in his life was right. Throughout his professional and academic career, Niall has gained invaluable experience, “Experience in this field –marketing, branding, relevant education, and deep understand on the new media and user behaviour”. Entrepreneurship has always been a big part of his life as “My father has a small business. Employing three. Set up when I was 9. Always helped out with that from the age of 9 (worked most weekends and all summers with him)”. Whilst most would agree that going into business for yourself is a challenging and life changing ordeal, Niall believes “Yes, and No. Yes, if you are used of 9-5 and a stable pay check. It’s not as life changing if you are used to living that way”. It is imperative to note that with great responsibility comes great rewards. The process of setting up a business can be extremely difficult, lonely and daunting but there are positive aspects. For Niall the key POSITIVE aspect was the “Feeling of accomplishment. Most people probably think you get time off whenever you want, etc. It’s the opposite – your mind is always turned on. I found it very hard to relax and hard to turn off from work. Although I didn’t succeed with SOCO (I will in the future with something else) – What drives me is the possibility of building something great and lasting, and providing jobs/ better lives for others (That might sound like bull, but when I think of business, I think about the jobs I could
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possibly create, one of the main things in my mind)”. As mentioned, he is very determined, not to just make a success of himself and his own business but to enhance employment generation opportunities. Many of the real high profile and successful entrepreneurs have the same trait of embracing and acting on the idea of creating jobs. To Franchise or not to Franchise! For many entrepreneurs when they look back on their journey of setting up their business and engaging in business activity, they have some regrets and the feeling that they have missed opportunities. Certainly this was no different for Niall, as he states that he should have “been more STRICT with myself and stopped sooner. I couldn’t get a technical co-founder. If I had one from the start, I guarantee I would have got investment”. SOCO, an independent business and for this reason Niall felt that franchising has no relevance to this case. Developing a business that is started from scratch and has the ability to change the world is of major interest and importance to him. Although, he did say that franchising is more for the person that wants a higher level of security and support around him/her. It was the LEAP programme in which Niall participated on, which is primarily focussed on nurturing the development of indigenous businesses. He describes his experience of the NFC positively as it had a “Good atmosphere, good place to bounce ideas and get quick user feedback”. SOCO did not succeed as he just couldn’t find the right individuals to help him take it to that extra level which it needed in order to become sustainable and successful. It wasn’t for the want or trying as the right people were just too difficult to identity and come by. Unfortunately, the NFC wasn’t that important in the early stage development of his business but it did help him to realise that the business was feasible but maybe that it was time for him to think about other employment options. It has to be emphasised that this is a major success in itself! What’s Next? Furthermore, the NFC didn’t change the business model of SOCO and no real challenges were encountered for Niall whilst participating at the centre. However, it has been suggested that changes be made to help make the NFC more effective “focus more on a specific industry. There were too many people, all doing different things. I, for example should not have been accepted, but referred to a tech-specific incubator such as NDRC Launchpad in Dublin or similar”. The NFC is helping to effectively improve the Irish business landscape by nurturing and aiding the development of new firms that will create jobs for the economy but Niall believes that it should be only recommended for entrepreneurs that want to enter into franchising “Yes, for franchising (FAST programme). For the LEAP, I’m unsure. I think it needs more focus – I don’t think you can mix technology with ‘everything else’.” Whilst it is clear that the business didn’t get off the ground and up and running, he is still very positive about the idea of setting up a business “I failed. But I will try again”. The future is as clear as the horizon is on a hot summer’s day for Niall, he wants to have another crack at setting up his own business, whether it be SOCO or something else!!
Undoubtedly, it is important to place an emphasis on how the National Franchise Centre has successfully rolled out three effective programmes, LEAP/FAST/Franchise START. All three are contributing to the betterment of the national and regional enterprise support structure. Undoubtedly, the NFC acts a platform for entrepreneurs to succeed in creating their own business. It acts as an intermediary between education and enterprise development, both benefiting the wider community and the entrepreneurs themselves. It is also important to note that with the establishment of the centre, a cluster was created between education and enterprise; it is a form of social enterprise as it is not-for-profit and is helping to achieve pathways to employment by nurturing new enterprise developments. Furthermore, there is 16 | P a g e
evidence to suggest that through Franchise START, the NFC is supporting existing businesses that want to achieve expansion through franchising. Thus, further exemplifying the true value of the centre and franchising as a model in general. On establishment, the NFC adopted a blue ocean strategy by creating the first European Third-Level Franchise education and development centre for franchising in Ireland. More NFC support mechanisms need to be rolled out nationally, this will improve entry rates, success rates and establish the franchising remit as a central part of enterprise development in Ireland. This will also help to improve the Irish franchising community, new enterprise developments and the overall government objective of labour activation. The NFC can be seen to present a blueprint for future franchise support mechanisms across Ireland. The case for franchising is strong given the current economic and social climate. It’s time to open up the debate for franchising to form part of the national enterprise support framework in Ireland! References: National Franchise Centre (2011) IFA Awards Application: Draft. National Franchise Centre, [accessed: 1st Aug 2013]. Cso.ie. 2013. Principal Statistics - CSO - Central Statistics Office. [online] available at: http://www.cso.ie/en/statistics/labourmarket/principalstatistics/ [accessed: 29th November 2013].
Questions: 1. Identify and discuss any common key trends between all the four case studies? 2. Franchising is imperative to the Irish enterprise landscape. Critically analyse this statement? 3. Design a SWOT/TOWS Analysis on each of the cases which highlights their USP’s (unique selling points) and future perspectives? 4. Give your own opinion (5 key points) on each of the case studies and how the NFC has affected the businesses in any way? (Positively/Negatively) 5. Evaluate how the NFC can become more effective? (5 key points)
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