What-Franchise-Issue-20.3

With the UK experiencing financially challenging times, Pip Wilkins QFP, CEO of the BFA (British Franchise Association), interviews BFAmembers to find out what franchisors can do to retain financial stability over the coming weeks and months N A V I G A T I N G U N C E R T A I N T Y : think we can all agree that as I write, in February 2025, many businesses are facing economic challenges and being just weeks away from Rachel Reeves MP’s Spring Statement, many are bracing themselves for even more belt-tightening measures. But no matter what the state of the economy, be it booming or slowing down, professionally run franchises should always keep a close eye on their financials, not only to see how their business and franchisees are performing, but also to be able to react swiftly to any incoming financial storms. With this in mind, we consulted BFA members who are highly experienced in this arena: Theo Millward, MD of Swimtime and founder of FranScape, and Phil Archer QFP, head of business planning and funding at d&t chartered accountants. I Financial metrics We started by asking Theo what financial metrics he uses to assess the health of his businesses and that of his franchise network. Theo said: “At Swimtime we track network sales, active number of swimmers, load factor, consumer happiness metric MPS’s, and retention rate. Using our Franscape system I can see most of these metrics in front of me, which gives me a 360-degree, real-time view of my business. I can then break those figures down in multiple ways. For instance, I can see exactly how many people are waiting to book onto a swimming class with a franchisee who has capacity to take them on: if there is a delay in getting them into a class, the system will flag it to our staff immediately, so we can find out if there’s a problem.” Back to basics How does Theo respond to a financial crisis? His answer is simple: “This comes back to basic business prudence and due diligence. Is your model fundamentally a good one? Are you making a net profit? If you experience a crisis, from any direction, be it from the Government raising taxes or something completely unrelated, you generally have two choices – you either cut costs or raise prices. If you are familiar enough with your franchise’s finances, you should easily be able to see what you can do to stabilise the situation.” The cost spiral We were interested to know what Theo thought were the biggest mistakes new franchisors made, and how they could be avoided. Theo said: “The biggest threat to new franchisors, or all businesses, is what I call the ‘cost spiral’.When you start a new business your costs are going to be more than your income for a while – that’s just life. But then as you grow, you reach ‘apex points’ where you HOW FRANCHISORS CAN STAY FINANCIALLY RESILIENT IN 2025 “Don’t put off making the strategic and structural changes to your business needed to help growth... Rip the plaster off early and get on with building wealth” 52 WHAT FRANCHISE Issue 20.3