How to start a franchise and grow with it

By Jez Abbott, Monday 04 July 2016

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Risky business? Actually, becoming a franchisee is a lot less scary that it may seem.

minuteman-press-franchise-staff-east-kilbride-scotland-uk

McLaughlin (centre): any new business is risky

For entrepreneurs looking to start their own business, buying a franchise can be less risky than starting a business from scratch. The franchisor has done much of the groundwork for you, the business plan is ready made and the brand is already established.

“But any new business is risky regardless of the franchisor and their brand name,” says Joe McLaughlin, who has taken a path from textile management to become a print franchise owner. After spending seven years in Sri Lanka, Turkey, Bulgaria and Romania working in clothing supply chain management, he jumped ship.

McLaughlin and his wife Florina have been running Minuteman Press, design, marketing and
printing franchise in East Kilbride for nine years.

The challenge
“When I did clothing manufacturing it was all about fabrics, patterns and cutting out shapes. I looked at printing and it was similar in that you have paper and from that you make a certain amount of items, business cards, letterheads, whatever.”

But that’s where similarities could end and his early take on printing was a shock: “My experience with textiles was the customer was king, but when it came to printing it wasn’t always quite the same; colour quality for example wasn’t always that good and delivery could take three weeks. It was a bit ‘take it or leave it’.”

As well as print he was looking at other sectors, but a franchise expo in Glasgow swung it. His accountant son Mark picked up a flurry of leaflets and spoke to experts across industries before reporting back to dad. From the welter of brochures, one for the US print franchisor Minuteman stood out.

“My business experience abroad involved more responsibility than any job I had previously had in the United Kingdom. This depth of experience helped me make the jump to running my own print business. My son met with Minuteman Press international vice president George Holzmacher and appreciated the no nonsense, can-do, approach of Minuteman Press.

“At the time I felt too young to die but too old to go back into my trade, as it had changed so much. Ironically, one of the places I worked as a factory manager was closed down and eventually became a printer. The Americans don’t oversell, don’t overkill, but they are confident and bend over backwards for their customers.  It was down to Holzmacher.”

McLaughlin explains there were other factors: “Their business model combined with visiting existing Minuteman Press centres - including one in Edinburgh - to speak with the owners is what really sealed the deal for me. There was also the finance: “Reading through the set-up brochures I noticed you paid a bigger deposit – in this case £34,000 – but they took a smaller percentage of sales and when you’d crossed a certain threshold they’d take no more.”

Where other franchisors charged a reasonable £5,000 to £10,000 set up costs, McLaughlin said some also took a hefty, not-so-reasonable 30% to 40% of sales. This compared with the 6% charged by Minuteman. “With my franchisor, once you’d taken £19,000 in a given month, they didn’t take a further cut.”

And big enough for McLaughlin to put down his £34,000 in 2007.

The method
“The first morning all I did was open the door and decide whether to turn left or right,” he recalls, explaining that despite all the back up from Minuteman, it’s down to the franchisee to define and give direction to the business.

Minuteman Press was started in 1973 when Roy Titus and his son Bob opened the first shop in Plainview, New York as a quick copy centre. More than 40 years later the multinational has over 1,000 stores worldwide, with around 55 in the UK.

Despite the complexity of franchising McLaughlin, who freely admits that “at the time I didn’t know a digital printer from a guillotine”, found becoming a franchisee was largely stress free and uncomplicated.

The men from Minuteman advise on costs, marketing and recruiting staff. In McLaughlin’s case they even interviewed graphic designers to make sure he got the right one. They also supplied signage and promotional material.  

“And a major bonus is purchasing power. With over 1,000 stores, the company has negotiating power on Xerox and Konica Minolta machines and with paper suppliers. You don’t have to do anything, no paperwork. You don’t have to talk to kit suppliers, minuteman sets it all up. All you have to do is sign the bottom line.”

Even so, looking at another bottom line, those early days were sobering. Having put down his £34,000 to “get up and running” and lashing out on equipment, totalling around £20,000 of kit spread over about four or five years, sales were slow.

“In my first month I had £5,000  of overheads and £650 of sales. It was one of those tightening-of-the-cheeks moments,” remembers McLaughlin.
 
The result  
It got better: after about six months Minuteman Press in East Kilbride was breaking even and then started to make profit.

In a good month Minuteman Press in East Kilbride can earn £45,000, which means the three-staff set up running two Konica Minolta Bizhubs, pay nothing on £26,000 of that. The company makes about £300,000 turnover and supplies everything from those business cards to labels and diaries.

“One of our biggest orders was for half a million labels: I phoned up the area Minuteman person and asked ‘do you know a label supplier?’ I had never printed a label, so in this case I acted as an agent and had that contract for five years. More recently I had a £12,000 order for diaries, mugs and window graphics.”

McLaughlin says: “The key thing to franchising is having confidence. Minuteman has all these sayings - ‘follow the programme’, ‘if you don’t market, you won’t make it’ and some that just won’t work in Scotland, like the US gambit, ‘Do you folks need print?’

“Some people don’t like selling, but I ‘follow the programme’ and get out every day armed with freebie pads to meet people, give quotes and follow up. My darkest moment was out and about on a cold, rainy day. I gave a wrong quote to a woman by mistake, only to go back 30 seconds later to see her pull the scrunched up quote from her wastepaper bin and give it me back.” 

“I nearly wept, but you have to pick yourself up and keep going. Driving force is another important need for this kind of business, but the biggest mistake is thinking you can do better than the ‘programme’.  You can add your own touches but try not to swerve too far from the programme because it is tried and tested.

“I was in my early 50s when I started and am now nearly 60. I have to decide whether I want to go above the £300,000 mark, which means taking on another store or more equipment, staff and customers. Our turnover is one of the highest in the area and whereas once upon a time I’d be keen for growth, today I’m comfortable where we are.

“But I’m keen to look at new areas of business. Being on an industrial estate we don’t get much walk-in trade from ‘Joe Public’. We have recently built up a catalogue of templates so people can customise cards. When something new comes along I’m still ready to follow the programme and have a crack at it.” 


Vital statistics Minuteman Press

Location East Kilbride, Scotland
Inspection host Managing director Joe McLaughlin
Turnover £300,000
Staff 3  
Established 2007
Products Flyers, window graphics, mugs, pens, business cards, letterheads   
Kit Konica Minolta Bizhub C10-60L, Konica Minolta Bizhub C5501, Duplo DC445 automatic creaser, Ideal 4850/95 guillotine

Inspection focus
Taking on and growing a franchise


TOP TIPS

  • Trust your instincts Buying a franchise is entering a business partnership - your relationship with the franchisor critical to your success - so go with your gut feelings.
  • Do your research Check out the potential franchise opportunity yourself or using a franchise
  • broker and make sure you know exactly what your role will be as the owner.
  • Speak to other franchisees Ask the existing franchisees what their day-to-day work is like, what they do as the owner and what the investment implications are.
  • Focus on service Buying a franchise gives you a proven business model, but it’s you who defines the customer experience and management style.
  • Consult a specialist The contractual and tax rules around franchises can be complicated, so seek advice on law and your franchise agreement documents.
  • Get online help Check out the government’s UK Business link, https://www.gov.uk, which advises on buying and running franchise, as does the British Franchise Association, www.british-franchise.org

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