Championing the Franchise Industry

Most of the Challenges facing businesses in Ireland are common to all sectors. However, where there are industry specific issues, organisations such as the Irish Franchise Association come into their own. Paul Golden talks to Michael Bradley, CEO of the Irish Franchise Association.

Regardless of the economic climate, the adage that there is strength in numbers still holds true. Every industry requires a group to voice its concerns to policy makers - even the franchise sector, which prides itself on providing a platform for people to go into business for themselves but not by themselves. Since the first franchise was introduced into Ireland some 40 years ago, more than 270 different franchises have become established, employing in excess of 25,000 people and making a considerable contribution to the economy.

According to the most recent Franchise Direct survey (published in 2006), franchising contributes around !2.1 billion per annum to the Irish economy. The revenues generated in this country have grown by almost 70% since the 2004 survey. Similarly, employment has shown considerable expansion. The franchise industry employs more than 25,000 people in Ireland, which excludes the additional indirect jobs created by suppliers. Staff numbers in Irish franchises grew by 42% between 2004 and 2006. The adaptability and flexibility of all the franchising sectors in Ireland has added to overall economic growth by attracting a wide range of entrepreneurs and investors, explained Irish Franchise Association CEO, Michael Bradley. "Franchising provides potential franchisees with a range of opportunities in more than one hundred lines of business, business formats, financing programmes and investment options."

The most obvious selling point, of course, is that franchising is a much lower risk option than starting a business on your own. "Judging by the numbers attending the Irish Franchise Association's regular seminars ‘How to Franchise Your Business - an Introduction' it is also becoming a viable option for existing business owners who are considering expansion at home and abroad," he added. The past decade has seen significant growth in franchising throughout the country, with the number of franchise systems doubling since 1997 and increasing by one third between 2004 and 2006. The 2006 ‘Franchising in Ireland' survey identified a number of key trends behind the expansion of the franchise industry. These included growth in disposable income - Ireland has one of the highest levels of income in the EU, which makes it a very attractive location for franchises from all over the world - and expansion of the service sector. Franchising is almost exclusively a service oriented business and as Ireland's economy becomes increasingly dominated by services, franchise companies will benefit accordingly.

The survey also pointed to the attractiveness of shopping centres. The brand recognition that is an inherent part of franchising is a very attractive proposition for a shopping centre owner or developer and a walk around any of Ireland's shopping centres, which now account for an increasing volume and value of retail sales, illustrates the pervasive presence of the franchise industry. "These statistics are testimony to the importance of franchising and the growth is indicative of the buoyancy of the sector, which presents tremendous opportunity for people wanting to start their own business," added Michael Bradley. "There is still massive scope for new and different franchise systems to enter the Irish market, not to mention the potential for indigenous businesses to expand through the franchise route." He says there are numerous benefits to membership of the Irish Franchise Association for international and indigenous business alike. These benefits include increased credibility and publicity through the association's online directory and quarterly newsletter, while members can also attend exhibitions and awards, CPD (continuing professional development) and networking events.

The Irish Franchise Association lobbies Government and other influential bodies on behalf of the industry and also has a role in ‘policing' the industry. "We do come across examples of franchises who attempt to mislead or misinform potential franchisees," said Bradley. "This is why we have a rigorous selection process for membership and only take on ethical franchises with the four elements of legal agreement, training, operations manual and on-going support." The declared objective of the Irish Franchise Association is to protect and further the interests of properly constructed franchising companies and by these means to establish and maintain a clear definition of ethical franchising standards to assist members of the public, media, potential investors and government bodies in differentiating between sound business opportunities and suspect investments. In consequence of these aims, a code of ethics and strict criteria for membership are produced, both of which are constructed (amongst other things) to ensure that the franchisee is offered a viable business opportunity. It is possible - although far from easy - to set up a bogus franchise, but it is a very misguided and short-term strategy that would not last long, said Bradley, who added that since there is no specific law covering franchise businesses, proper legal advice prior to engagement is essential. Ethical franchises are a segment of the industry that is attracting considerable attention and in 2008 the Irish Franchise Association plans to begin a membership marketing strategy directed at ethical franchises. This programme is part of a wider drive to double the certified membership by the end of 2009.

Other objectives include identifying the precise size and value of the business format franchise sector, the conversion franchise sector and the product/trademark & retail/forecourt sectors in Ireland. The association is also keen to increase the value of membership, for example by introducing group schemes for services such as insurance, banking and telecommunications. Other initiatives include ongoing public relations activity to promote franchising in general, organising an annual conference, sponsoring research and benchmarking and making pre-Budget submissions. "Despite the challenging economic climate, the outlook for franchising in Ireland is very positive," concluded Michael Bradley. "Franchising is a significant contributor to new business start-ups throughout the country and there is nothing to suggest that this upward trend won't continue. "On the contrary, franchising is making its mark around the world as established brands - and some newcomers - expand further and further into international markets, creating global brand awareness in the process."

There is every reason to expect that Ireland will continue to be subject to the same penetration by franchise companies seeking new, lucrative locations for their products and services, concluded the Irish Franchise Association's CEO. "Irish consumers are more brand aware and quality conscious, so any franchise with a strong brand identity and exceptional service quality should reap rewards."

First published in Franchise Options Magazine© to order back issues please call 01 6611660