After spending years building up a successful business, making the leap into franchising is not a decision to be taken lightly. Based on his experience, Andy Savva weighs up the pros and cons of starting and maintaining a franchise network.
Andy Savva is a former multiple independent garage owner who boasts over 30 years’ experience in the automotive repair sector. In every issue of PMM he’ll be sharing his advice with workshop owners who want to improve their business’ bottom line, but simply don’t know how to go about it.Having previously owned and managed successful independent garages, it occasionally crossed my mind and I was often asked by others within the automotive aftermarket and externally, if I would consider franchising Brunswick Garage. The idea sounds good in principle – expand the business, grow the brand and of course, hopefully get a better financial return.
However, I believe independent garages are among the most difficult types of businesses to franchise. About three years ago, a garage in Coventry opened in a blaze of glory; it was to be franchised with the aim of having one in all major towns. The originator of this idea was not from the industry but from the banking/finance world. I remember when the second site was opened, I was asked for my opinion and I was then, as I am now, very clear. It’s practically impossible for it to succeed. To date, I’ve been proved right, as the garage eventually closed down.
The reasons behind my thoughts are these. It’s not like most other franchises where you are purchasing a product, a coffee, shoes, etc.
Selling a service is perhaps the most difficult sale to make. When a vehicle owner is buying a service/repair, that person is really purchasing a promise, a promise that will need to be fulfilled in the future. That requires trust, skill, competence, ability, technical knowledge and much more.
There are too many processes, procedures and interactions between customers and staff members that you can’t just franchise. We are dealing with emotions and behaviours that can’t just be accounted for. What works in one area of England may not necessarily work in another, there are so many variables and barriers to consider – both customer and vehicle demographics and land and property costs differ up and down the country.
However, no matter what your goals are as a business owner, it’s important to review the pros and cons of growing your business in order to hone your vision and assess potential stumbling blocks before they arise. Owning a multi-unit business is hard work. Below, I have tried to highlight some of the key points to consider if you want to expand into multi- site independent garage operation.
- ✓ Economies of scale – when purchasing parts or equipment, you should be in a position to achieve better prices.
- ✓ Marketing activities can be combined – wider message at a lower cost which will lead to increased brand awareness.
- ✓ Cross-utilizes employees between locations depending on need.
- ✓ One manager could be spread over two to three sites.
- ✓ Possibility of sharing diagnostic equipment – this depends on what services you offer at different locations.
- ✓ More profit achieved with multiple sites.
- ✓ A successful multi-site can attract a larger corporation, if exit strategy was the end objective.
- ✓ If family are involved, it could be easier to expand – families tend to form a grounded and loyal foundation, an in-built support system. It could bring long term stability and trust.
- ✗ Increased capital investment – opening a garage is not cheap.
- ✗ Location is critical – are there local transport links nearby? Is it easy for customers to get to?
- ✗ What works in one area may not work in another – it is important to research and understand the customer type and vehicle demographics in that specific location.
- ✗ Difficult to manage if you don’t have rigid processes and procedures in place that are clear to all staff members.
- ✗ Difficult to manage staffing levels and correct management structure with the right pay incentives.
- ✗ Poor customer service from one site can affect another.
- ✗ Managing costs across several locations is not easy – strict controls need to be implemented. Cost can spiral out of control if other sites are unsuccessful.
- ✗ Attention divided amongst other locations – could have an impact on customer service, as the personal touch may be lost, creating distance between stakeholders and staff.
- ✗ Difficult to attract competent and skilled staff – an inherent problem within our industry.
- ✗ Family business creates a lot of challenges too – difficulties arise when it comes to succession planning, sibling relationships, promotion and leadership. This can result in dysfunctional behaviour affecting business decisions.
Whichever way you may decide to take your garage, there are pitfalls and benefits in all camps – single site, multi-site and franchise. Ultimately, it will come down to the desires and ambitions that you have.