Franchising in Ireland

Franchising in Ireland – a ‘roaring’ success?

News of the ‘Celtic Tiger’ has been regularly hitting the headlines over the last 5 years. Bill Holohan discusses why there has never been a better time to invest in Ireland.

One need not repeat all the facts and figures in relation to the Irish economic phenomenon which has been dubbed the ‘Celtic Tiger’. Undoubtedly the Irish economy has gone from strength to strength over the past few years and this is reflected in the number of small businesses which have started up in Ireland during that time. Figures from the Bank of Ireland Start Up Barometer show that some 10,041 companies started up in the first six months of 2007 alone, with some 51% of firms opening in Dublin, Cork, Galway, Limerick and Kilkenny. There has been a considerable rise in the number of start ups in Cork in particular, where figures were up 9% on previous years suggesting an increased level of interest in the Southern region

The number of new Irish start up companies has more than doubled from under 10,000 in 1986 to 20,000 in 2006.

Specific areas that have experience growth include: IT related firms, business management consultancies and financial intermediation companies. Also, it is estimated that up to 1,000 of these new firms have been registered by foreign nationals, which is illustrative of the strong growth in the foreign national communities around the country. Anecdotal evidence suggests this is due to a high degree of entrepreneurial spirit among the new ethnic communities, with high degrees of ethnic loyalty to businesses. The most evident example of this in recent years has been the number of Polish branded businesses catering for the Polish community in Ireland.

Franchising Growth

Some of the first franchises were introduced into Ireland nearly 40 years ago and there are now more than 270 different franchise systems in operation employing more than 25,000 people. The growth of franchising in Ireland can be seen from the following tables:

Home Instead Senior Care

There are many examples of franchisors that have successfully expanded to Ireland, one of the most recent success stories is Home Instead Senior Care in Ireland, which started with a single office in the USA in 1994, and began franchising in the USA in 1995. It has now grown to a network of 700 independently owned and operated franchises in the United States, Canada and Western Europe. The system provides senior care assistants for the elderly on a part-time and full time basis for people who remain in their homes and who may need assistance, supervision or companionship.  

The system was brought to Ireland by Michael Kearney and Ed Murphy, who previously had operated and continue to operate the Snap Printing franchise. On the 6 June 2005 Michael Kearney and Ed Murphy opened the first Irish Home Instead Senior Care office in Leopardstown, in Dublin. They currently operate 8 offices around the country and plan to open 4 more by the end of 2007. The main office in Leopardstown had the most successful first and second year ever recorded by a Home Instead office out of 700 offices worldwide. The Leopardstown office is now in the Worlds top 5 leading Home Instead offices in terms of sales, only 2 years after start up. The system was awarded the Irish Franchise Association ‘Best Emerging Franchise in Ireland’ Award in 2006. According to Ed Murphy, sales are projected to reach 30 million Euro and upwards in the next 5 years.  

Foreign franchisors in Ireland

Anyone wanting to come into Ireland from abroad needs to undertake market research to ensure that the system would be compatible with the Irish legislative and cultural environment. For example, Ireland is one of the highest consumers of ice-cream in the world, but frozen yogurt does not quite hit the same spot. Businesses hoping to operate on a system based solely on frozen yogurt take note!  

Due to peculiarities in the Irish legal environment there are also legislative issues that need to be considered. Franchisors would be advised to adapt their agreements to address these issues and ensure that Irish Law would apply. For example, it is common for agreements coming from the US or the UK to have a ‘boilerplate’ clause providing for the suspension of all contractual obligations in the event of a state of war or national emergency. Ireland has technically been operating in a state of national emergency since the 4 September 1939 (for one reason or another). While no one, as far as I am aware, has been brave enough to plead suspension of contractual rights on that basis, it would be interesting to see if someone were to try to using that as their “get out of contract” card.  Who says the law is not interesting?

Whilst exporting a franchise overseas to any country requires a lot of preparation and information gathering there has undoubtedly never been a better time to expand your franchise into Ireland. With annual growth rates in excess of the average for the developed world and extensive external trade and investments, Ireland has one of the most dynamic economies in the EU.