There are now over 900 franchisors in the UK with 39,000 outlets and over 550,000 people employed. Franchising contributes £13.7billion to the UK economy.
Interest in owning a franchise is at an all-time high. Whilst there are many issues to consider when creating a franchise or buying into one – an area often overlooked is the telecoms.
Dave Millett, of independent telecoms brokerage Equinox, warns there are two very important telecoms related issues that franchisors and franchisees need to consider:
1) Will the franchisor supply the telecoms as part of the deal?
- The advantage; they may have been able to negotiate better deals or even a tailor made solution
- The downside; it may be just another source of income for them with their preferred supplier paying them commission on the calls you make
- If you are locked into using their solution find out the costs and benchmark them against the market. Telecoms is typically in the top five costs of all businesses – so overpaying can damage profitability.
2) Who owns the numbers – you or the franchisor? If you want to go your own way after a few years, and the franchisor owns your number, they will simply reallocate it to another franchisee. Potentially a lot of your customers will therefore be lost.
Here are Dave’s tips to help you with the telecoms in your franchise:
- Only a mobile number? Research shows 30% of people do not trust, and therefore will not contact, them.
- Use your home number for your business? Remember you can’t turn the business off at the weekends, and there is limited functionality for handling a second call and personalising voicemails. Also if you move house you may not be able to take the number with you.
- Free installation and equipment if you sign three or five year contracts? Your franchise may expand and/or move and you could find yourself facing penalties for cancelling the contract. Also, you’re locking yourself into prices in an environment where prices usually go down.
- Are the telecoms flexible and scalable? For example, if you are starting at home, is the number portable so you can take it with you should you move into offices?
- Should you use an answering service? If it’s just to take a message, then does it add any value? If they can handle certain queries then that can enhance your offering.
- Read the small print, check contract lengths, notice periods and penalty clauses. Check your supplier is signed up to the Telecoms Ombudsman. This gives companies of fewer than 10 employees free binding arbitration in the event of an unresolvable dispute.
- See: http://www.ombudsman-services.org/memberlists/communications
So what are some of the options for new franchise owners?
- For micro businesses, a simple inbound geographic number can be set up, (about £7 per month) that will look for an available mobile phone or landline number
- For a little extra it can have a voicemail and whisper facility to tell you that it is a business call. That can help you utilise a single device for business and leisure
- If you’re worried about presenting a mobile number when dialling out then it’s possible to have a landline on your mobile as an App.
If you are a retail operation do you use phone line-based or wifi-based credit card machines? The former has a higher monthly cost but you don’t run the risk of not being able to take payments if your Internet fails.
Overall, the key for any franchise owner is to be wary. Hopefully you’ll have developed a business plan for the company, so before you buy or commit to any telecoms, you should ask yourself the question; does it support my business now and will it continue to do so as my business develops as planned?