advice recruitment

Nigel Toplis – one of the most highly regarded figures in the franchise industry – speaks to Alison Ledger on recruitment, cutting fees and the importance of a Grand Marnier and a cavana cigar…

Anyone who is anyone in the franchise industry will know Nigel Toplis is one of the core figures in the franchise industry. Previously Chairman of the British Franchise Association and, with experience across a range of franchises over the last 15 years, Nigel certainly knows a thing or two about succeeding in franchising.

When did you get into franchising?
I spent 12 years at Allied Domecq and four years with Ladbrokes. I joined the franchising industry in 1994 and spent nine years with KallKwik, later becoming managing director. I helped the merger of Prontaprint and Kall Kwik to form On Demand Communications, which was the first of its kind in the UK. I joined Recognition Express in 2003 and launched US franchise ComputerXplorers in the UK in 2005.

Why did you join Recognition Express?
The challenge, the change, the fact it was my own. I was approached by Recognition Express and it took 20 minutes to make up my mind – and I took a 40 per cent pay cut. Recognition Express had good franchisees, but not enough of them, and it needed to expand its product range. I could see there was so much I could do with it.

And ComputerXplorers?
I would love to say that we did 12 months of intense market research, spoke to head teachers and pupils, and evaluated the curriculum, but actually we didn’t. We did the deal with the Americans over a Grand Marnier and a Havana cigar in about 10 minutes. I had known the guys from the US for about 15 years and we had looked at a number of different propositions to bring to the UK, none of which I thought at the time were suitable. We piloted the franchise for about 18 months to two years, which I think is about the right length of time to run a pilot.

At Recognition Express, what problems did you face?
I think the challenge was about identifying the potential, and trying to harness that potential for franchisees. We expanded our product range significantly, which obviously involved a lot of operational issues such as sourcing suppliers, putting together marketing collateral, explaining to the franchisees what we were trying to do, etc. It also meant turning the franchise from being a manufacturing-led franchise to a marketing-led franchise, and that has taken some time.

What advice would you offer to new franchisors?
First of all, make sure you’ve got a decent budget. People always underestimate what it’s going to cost them to launch a brand. Secondly, don’t rush it. Thirdly, make sure you have got all the processes and procedures in place. Good franchising is about replicating what works. And make sure you know there’s a marketplace out there.

How do you recruit good franchisees?
We want people who are, if I could sum it up in one word: passionate. You can teach people business skills, you can show them how to do their marketing, you can even help them to organise their activities, but you can’t give them passion. That comes from within.
We’ve had franchisees that worked out very well, and others where we had to say we couldn’t continue. We always try to interview with at least two of us to get a different perspective. We’ve used psychometric profiling, 360-degree interviews, multiple interviews, but I think what works best is a one-to-one meeting. I try not to interview people – I try to get them to interview us. What you want them to do is to ask questions that point out where their strengths are, where their concerns are, and where they can identify the potential of the business.

When it goes wrong with a franchisee, what do you do?
You sit down with your franchisee and talk to them. Be civilised and say: ‘Look, it’s clearly not working – it’s not good for you, it’s not good for us. If you don’t have the passion to drive the business, you’re not going to make enough money to support yourself.’ I’ve recruited franchise owners now for 15 years and I must have recruited more than 400, but you can’t get it right every time. We had franchisees that worked out very well, and others where we had to say we couldn’t continue. We had some churn in the early days, but it was right some people left because they weren’t right for the brand.

What are the warning signs?
Unmerited arrogance is one. Another is if they start asking about the amount of time they need to spend on the business. If they’re concerned about working hard you don’t want them anywhere near you.

What do you think can be done to raise the profile of franchising?
Most people know so little about franchising because we do so little to promote it. If you ask someone on the street what is a franchise, they might say Manchester United is a franchise, or McDonald’s, but very few would really know what it means. You need other general publications – radio and press – to feature franchising in some other environment.
We – academia, regional development authorities, the government – are guilty of doing nothing. Even the franchise community is just as guilty of being insular to its approach to franchising.

Do you think the government should put it on its agenda?
I have written a paper called Economic Regeneration Using the Franchise Model. It’s about how we can get franchisors involved in regenerating local economies. It is unlikely that we, as franchisors, are going to be spending a lot of money advertising in a regeneration zone. It’s also unlikely that we’re going to get people enquiring from that area because they haven’t got the cash. However, what is certainly true is that there will be people in those areas who are more than capable of successfully running a franchised business.

My plan is this: the franchisor should give up the signing on fee. They should then go to the bank and get the bank to support 70 per cent of the proposition, as they would do normally.

Get a regional development authority agency to sponsor the ballot and get the franchisee to put something in – it might be £500, it might be £5,000. This working capital is used on a pay-as-you-play basis. As you follow the system you get part of the working capital to support you. As you use more and more of the working capital and as you grow the business, you then start taking over the whole business. You won’t actually own the business until you’ve gone through the working capital, which could be 12 or 24 months.

Ultimately, you’re encouraging local people to have their own business. You get local people to employ local people. Local people pay local taxes. You start regenerating the area. It seems daft that the government doesn’t try and do it.

How is the recession affecting the industry?
I think anytime you go through a recession, it’s a bit like putting cleaning fluid on the floor. Like everything else, good businesses will do well in any marketplace. The important thing is that good businesses need to continue to market their business so customers recognise they’re still around.
I think there’s been a radical shake-up where we will see some of the peripheral franchises go. I think the core of the franchise community will get stronger and will be more robust.

There are fewer redundancy packages around this time, is that a stumbling block? Should franchise fees be negotiable?
It is a stumbling block, there’s no doubt that a lack of finance is a problem. On the other hand, we did suffer in the previous recession when people were coming out with lump sums and just buying a job. If they’re not committed to working the franchise, you end up with a long-term problem.
I don’t think you should re-negotiate fees. I think you should look at your package and see whether you think what you’re promoting is fair and reasonable and value for money. And if it is, why are you cutting the fee?

How do you motivate franchisees?
I think the job of a managing director of a franchise is to spend time with franchisees. I spend probably two days a week with my franchises. Either doing business planning, having meetings with them or even dinner. I think good business is about a relationship.
The relationship between franchisor and franchisee is the same as that between a husband and a wife, it’s not manager and subordinate, it’s not supplier and customer. It’s two equals bringing different skills to the same party.

What are your plans for the future?
I’m writing a book called ‘Surviving the Recession’. I’ll be re-launching Popstar Parties next year, and we’ll look at other propositions as and when they come up.

You don’t really strike me as someone who’s looking for early retirement?
No, it would kill me. I can’t sit at home. I can’t retire. I might move my office to Spain for a year and maybe work from there for one week every two or three months.