- A growing number of younger entrants are opting to take up franchises.
- Many see the model as a way to strike out on their own, with the backing of an established brand.
- HSBC’s support goes beyond finance, to include mentoring and events that develop franchisees’ business skills.
For an increasing number of new business entrants, franchising is an ideal option. Under the umbrella of an established brand, with training from the franchisor, it offers a middle way between employment and going it alone.
As a result, today’s franchise operators are a younger and more diverse band. The latest British Franchise Association figures show record rises in female and under-30 franchisees.
The model suits a certain type of entrant. “Franchisees are expected to be creative – the Big Mac was invented by a McDonald’s franchisee,” says Andy Brattesani, HSBC’s UK Head of Franchising. “But they have to sacrifice some autonomy and be able to work within the brand parameters.”
This needn’t rule out ambition. Franchisees increasingly grow by expanding their portfolio into different sectors, or by mixing franchise and traditional business models. To get there, however, they are likely to need support beyond the brand-specific training offered by most franchisors.
Leaders of the future
Angelina Mouralidarane worked in her father’s London-based franchise business, Iceking, to support herself through medical school. She became well versed in all aspects of the KFC and Pizza Hut Delivery brands.
After a spell in emergency medicine, Mouralidarane left the profession to return to the food business. She now runs Iceking with her brother, Chris.
She is keen to forge a new direction: “I’m not just here to take over the reins and keep it ticking over. I want to develop the business.
“A franchisor may take the creative lead and direction, but it requires focused, forward-thinking franchisee talent to bring the brand to life.”
She is finding additional support through membership of a ‘supergroup’ of second- and third-generation franchisees, brought together by HSBC.
Andy Brattesani sees the young franchisees as part of tomorrow’s cohort of business leaders. “They’ve only ever learned from their parents. I formed the group to expose them to different sectors, from farming to technology, and to develop their business acumen.”
Breaking down barriers
Mouralidarane says she has benefited in several ways. “Within the franchise brands I operate, I’m the only female franchisee sitting at the table. The group has allowed me to break down barriers and integrate into that world.
“The idea is for us to be mentored and exposed to developments that could affect us and our businesses. Andy puts us in slightly uncomfortable situations – giving talks and panel interviews, for example – so we can identify our strengths and weaknesses.
“It’s also an opportunity for us to discuss internal challenges we all face. It allows us to network beyond a purely brand event.”
Power of the network
The group is one of the ways HSBC supports franchisees, besides the significant lending investment it makes in new franchise businesses.
A specialist team works directly with the franchise community, linking with other functions across the bank. Within the team is a telephone advice service offering guidance specifically to new franchisees with lower borrowing requirements.
HSBC also uses its vast network to connect franchisees with brands from the UK and overseas – helping brands to grow their footprints.
Bringing this community together sometimes helps to uncover gaps in the franchising system. For example, discussion with clients about cyber risk at a recent franchising event revealed that the topic is only patchily covered in the training provided to most franchisees – leaving businesses at risk.
“We found that our client franchisees commonly use personal devices for business without encryption or anti-virus software,” says Barry Searle, HSBC’s cyber security consultant.
“Franchisees assume their franchisor has cyber risk covered. In fact, the lack of advice or processes on this topic leaves franchisees at risk of system breaches – and makes the whole brand vulnerable to reputational damage.” HSBC is now advising its franchise clients on how to secure their businesses.
From franchisee to franchisor
Meanwhile, Angelina Mouralidarane is following the course of many franchisees in stretching her business beyond its core sector. Iceking has just launched as an independent in the fitness industry, opening its first free weights gyms in Croydon and Mitcham.
She hopes this venture will ultimately enable Iceking to step into a franchisor role.
“When we feel we’ve built the business far enough, we want to franchise the gyms,” she says. “We don’t always have to be the franchisee – we can be bold and become a franchisor too.”