Why franchise in Ireland
By Tony Fitzpatrick
Any franchisor considering international expansion will surely have Ireland on their list of target territories. It’s the UK’s closest neighbour, everyone speaks English, access by air and sea is quick and easy, and franchising in Ireland is a vibrant industry.
The Irish Franchise Association reckons there are about 250 franchisors, 2,500 franchisees employing 20,000 people and generating annual sales of €2 billion. The business is growing at the rate of 12 per cent per year. Most of the big international brands operate under master license agreements while a growing number of indigenous franchises have brought new names and a welcome diversity to the marketplace.
There’s room for more. The Irish are keen on franchising. A survey by a leading accountancy firm two years ago found that 40% of the population expressed a desire to work for themselves. That figure is likely to be much higher today, given the state of the local economy.
The number of redundancies in Ireland is currently running at record levels, and you can add to these figures the hundreds of people currently in employment who are seriously concerned about job security and are now looking for an opportunity to be their own boss. Many of these people are sales and marketing professionals with skills every franchisor looks for in a franchisee.
The Irish are enterprising people with a “can do” attitude and those who choose a career in franchising do so with a determination to make it work. That should be good news for franchisors looking to enter the Irish market. The Irish like established brands but they are just as likely to go for a new venture provided there’s a market for the product or service.
The scarcity of cash in the economy has certainly had an effect on franchising. Since the downturn, home-based franchises with low overheads and a relatively small initial franchise fee (under €15,000) have become very popular. People can find that sort of money without too much trouble.
However, franchises which require an investment of €50,000 or more are currently difficult to sell. Banks love franchising but they’re not lending like they used to. In the good old days—before the credit crunch—they would lend two thirds to the prospect’s one third. Today that ratio has been reversed, and even with money in your pocket your credit rating needs to be first class before you’ll even be considered for a loan.
Having said that, there are plenty of entrepreneurs looking for good master license opportunities. Scalability can be an issue, of course. Ireland is a small country. Its population (north and south) is about 5 million which puts parameters on the number of territories that can be offered.
A potential master franchise will expect the franchisor to have researched the Irish market and provide evidence that its business has a good chance of being successful there. The language might be the same, but a franchisor needs to be aware that the culture in Ireland is different and what works in the UK or in another country is not a guarantee that it will work in Ireland. Tastes can differ, and many manufacturers in Britain have discovered to their cost that products that sell well at home have flopped embarrassingly in Ireland.
If the master license route is not being considered for Ireland, a franchisor can always go it alone. Some do manage to run their Irish operations successfully from their UK base, but only when franchisees are few in number and control is easy. When the network expands, however, local management becomes essential.
About the author: Tony Fitzpatrick is managing partner with franchise your business who offer a complete consultancy service to both start up and established franchisors in Ireland and the UK. He is a Board member of the Irish Franchise Association. Contact Tony on 00353 872449186 or firstname.lastname@example.org