Free Print Franchise?

[opc]

Hi Everyone,

I am looking for a bit of advice here.

We are an online print company and are looking to go down the virtual franchise route. Our main competitors are the likes of printing dot com however our prices are far more competitive than theirs and we aim to offer a much better and easier to use service.

In order to prove that our franchise network will be a viable business for people to make money from I have given the 1st six territories away however this is kinda got me thinking

What if I were to give all our territories away throughout the UK within this year test period? As you all know we are in the middle of a recession and companies just simply don't have the money to invest that they maybe did a couple of years ago.

The way I see it, if you make it easy for the right person to get into the UK network and work hard to make sure everyone gets the right backup and support then the brand will grow much quicker and it means clients are then dealing with local representatives of the company which will in turn build confidence and trust.

I know it sounds crazy giving these away but surely when you look at the bigger picture of having 121 areas in the UK covered locally and each bringing in regular work it is worth it.

All we will ask of the test franchisees is at the end of 12 month trial period that they have to pay the fees for the transition to a formal Franchise. At present, I expect this to be in the region of £4000. Hopefully by this point the franchisee will have made more than enough money to justify this.

Our Virtual franchises will primarily be suited to businesses already buying print on a fairly regular basis (graphic designers/print managers/web designers) although all people who apply will be considered.

The franchisees will be paid on a weekly basis 20% commission on all net sales within their territories and they can operate from their home or existing premises.

I would really appreciate all of your thoughts as to whether this is a good idea or not?

Kind Regards

Colin

You can view our business via the url link in our profile if you would like to see more about us.

[TFGtv.com]

Two or three things strike me about this Colin....

One of the problems we have across all the creative industries is that they’re full of wannabees. The sort who are so desperate for work that they’ll do anything for anybody at any price... Flitting from discipline to discipline like moths ‘round a flame; and eventually meeting the same fate.. And the problem with these characters is that they’ll tell you they’re anything you want them to be in order to get the work... Though they can seem very plausible, they’re invariably full of B.S. and can destroy your business!

Now, much as there are bad franchises which are never going to earn the people who buy into them a bean; There are bad franchisees who don’t so much want to buy into a business as buy into a cash cow. And expect the business to do the work for them. And I think that's a REAL danger with virtual franchises...

So good, committed franchisees are hard to come by. As are good franchise prospects... And often the payment necessary to buy into a franchise is as much about showing commitment as it is about contributing to the business.

So the first difficulty I see is that by giving the franchise away you’re devaluing it and likely to attract wannabees rather than gonnabees!


I could name companies that sell things like overpriced vacuum cleaners, double glazing, porch blinds and encyclopaedias all of whom advertise for ‘self employed’ salesmen on commission only. And often these ‘positions’ dangle the prospect of an exclusive territory or ‘your own business’; Even, in one case, a franchise along very similar lines to those you’re outlining....
They do this in order to attract large numbers of fairly desperate people. In the case of the vacuum cleaner company I mentioned 40-50 ‘trainees’ per month across the North East of England. And a fairly motley crew they get... Everything from the long terms unemployed grasping at straws to the out and out criminal who is prepared to do this sort of thing.....

YouTube - Excerpt from "Doorstoppers": The Salesman....

They do this because they know that their product is essentially not credible, but by pressurising people into doing desperate things for (essentially) free they will, through sheer volume, generate a huge number of (mostly dud) leads and small number of sales... Sell a dozen £7.5K vacuum cleaners (I kid you not!) in a month and it suddenly becomes worthwhile holing 40 or 50 unpaid numpties up in a ‘training room’ for a week!

So I would say your biggest danger is that you’re more likely to attract some complete chancer than you are any sort of serious professional salesperson! GOOD salepeople are expensive; There’s no getting away from that. Chancers are ten-a-penny!

As for the notion of another business acting as franchisee; Again, there are a whole set of dangers here:

No legitimate creative professional is so desperate for work they have to scrabble around snatching at anything even vaguely creative. Although a certain degree of multi-skilling is essential people survive and flourish in the creative industries by specialising. And by interacting with other specialists.

Now; it may well be that in the course of one business you become a frequent buyer of another product or service. In which case you might act as commissioning agent for that other service. I for instance have close working relationships with a number of Musicians, Animators, Graphics Artists, Presenter’s etc..... And am frequently commissioned by Advertising and PR Agents, Events Organisers, Recording Studios etc....

The thing is though I’m not about to dilute my marketing focus away from my own core activity to promote a another! Though for the right deal I might give a degree of exclusivity to one particular provider or another, that service remains incidental to my own...

From your perspective I'd be asking myself am I opening up a territory or effectively strangling it? I'd want my franchisees out there selling and selling hard, not utilising me as an exclusive facility...

There is of course business to be had from other inter-related companies. But don’t rely on that for the sort of pro-active focused selling you appear to need!

Then there is your commission rate...

Like most companies of our kind we have a range of negotiated discounts available to bona fide professional commissioners. And they DO have to be approved by us in order to access that level of discount. We also have an ‘open’ discount range built into out price structure. So essentially there are three tiers; Rack Rate, Standard Discount Rate and Agency Rate.... Agency rate being available only provided certain conditions are met; Primarily that the commissioner doesn’t undercut us on our own product!

20% is ‘ok’ as an agency discount! But I’m unsure whether that would be an attractive enough rate to pull in a decent legitimate sales professional. Ultimately this goes back to how you’ve calculated the cost of sales. And to what extent you’re abdicating the generation of those sales to the agent or salesperson.... But it wouldn't cut much ice for me....

Just my 2p's worth....

[PennyPR]

I'm sort of with Matt on this - in that a loose network is a reputation risk and no reputation = no business.
But if you are using well-established designers, print managers and web designers, why would they want a print franchise? You are effectively paying them to feed your presses. That ain't a franchise, that's just a commission deal.
Reputable print buyers and designers will have established relationships with local printers they can trust to produce the quality their reputation stands on. Good local printers may be offering the same sort of commission - or even more - without a complicated franchise tie-up. In fact, I don't see any of the normal accoutrements of a franchise here. Someone going to a bank for a franchise loan needs to show there's a replicated stand-alone business model proven over 3 years with figures to satisfy the lenders that would be putting up the franchise fee.
And where's the manuals, corporate identity and ongoing sales of supplies to create additional revenue stream?
These design businesses already have their own identity, business processes and preferred suppliers and may not want to run a printing franchise.
What will stand out from your offer to make them buy into your business?
It seems price is the one USP you're banking on, but print is all about trust in the eye and judgement of the guys in charge of the presses as the inking varies so much according to temperature, humidity and moisture content of the paper and porosity. Paper choice is down to touch, feel, and the way that ink lies on the surface. They'll already have their own paper samples and favoured suppliers. We're still sitting here with a plan chest full of the stuff from our corporate newsletter and magazine print production days. That's all gone online now which is good for the trees and the planet although there's nothing like the smell and feel of a well crafted print job.
Plus paper & ink is heavy/expensive to shift around the country so distribution can become an issue unless it's a big job and you can handle the fulfilment from disc to labelled polylope and postage? But there's still the reputation and trust issues, plus the motivation to feed your press and not one locally.
And if you're paying weekly commission, what happens with bad debts?

[opc]

Thanks to Penny PR and TFGtv for your constructive responses,

I should point out that we are being extremely pernickity about who we are choosing to bring on board and not just taking on anyone. Sorry, I should have explained this better in my initial post.

Whilst we have focused on keeping our prices below that of a successful high street printing chain who are our main competitors, we are trying to build a successful brand based on a system that is much easier to use and understand and offer unrivaled customer service. As you will be aware, there is no shortage of printing companies out there but from doing quite a deal of fact finding, this is where many of them seem to be falling down and they are not looking after their customers. The Director of Amazon indicating that one of the main reasons they have become so successful is because they are 'obsessive about customer service.' This is key to our business plan and I hope what is going to make us stand out from the rest.

As a thank you to the people that do come on board within the next 12 months that help us run our pilot scheme, we will be giving them the opportunity to come on board as an official franchisee and the only cost they will have to be will be the legal fees which is in the region of £4000. The official virtual franchises will be getting sold for in the region of £15000 at this point once we can prove it is a viable franchise model.

The benefit of having a virtual franchise is that the overall brand can have representatives throughout the country being able to offer local support and will be able to go our and visit clients at the drop of a hat if they require any assistance. It will obviously take time to build but hopefully after not too long by going down this road, the franchisees will start to benefit from the nationwide advertising campaigning we will be carrying out and eventually the good reputation the company is building will add value to their franchise.

All payment transactions and orders are carried out online and managed by head office. Payments are required up front so we do not need to worry about cashflow or bad debts. Our prices are so competitive as a reflection of this. I will be putting X amount of profits generated within the franchise territories back in to these areas to help the franchisee grow their business and our marketing team will contstantly be offering help and advice as well as making sure they working within the company strategy.

Franchise owners will receive their 20% commission on a weekly basis directly into their bank accounts. We also have an affiliate scheme available for companies or people not actually wanting a full territory or perhaps they have clients spread through multiple territories. Affiliates are not committed to any one territory and are given their own unique link to direct traffic towards. Any orders received via this link will earn the affiliate 10% commission. Should an affiliate bring in work from a franchise owners territory, the franchisee will still earn 10%, even if they have had nothing to do with that order.

I would love to hear you guys thoughts on this if you have time to respond!

Regards

Colin