Having seen this thread through Google, I felt compelled to add my thoughts. Let's just say I know what I’m talking about. Also, I am getting sick and tired of hearing horror stories about franchises so here goes.
Before I dive into the negatives, which do significantly outweigh the positives it is helpful to work alongside other franchisees throughout the country, sharing ideas and figuring out ways to deal with new technologies and regulations etc. The fact that many things have already been done, such as job deployment systems, branding, quotation formulas, pricing guides, websites and certain strategies can take the burden away from the individual business owner. It is also good to talk through various business-related issues with the head office team. This can help you stay focused and motivated to develop your business.
There are one or two other general positives that you may wish to consider, but as I said the negatives significantly outweigh the positives.
To illustrate the negatives let's firstly start with Mr Electric’s background. The Mr Electric brand is owned by the Dwyer group who also operate a number of other franchise brands. The Dwyer Group is owned by an investment bank or similar type of institution in New York. It started in the USA in 1994 and subsequently set up a master license in the UK in the early 2000’s. A master license is essentially a UK company, which then sells franchises in the UK (a separate business in the UK allowed to operate the brand). In short, there are four parties in the chain, the bank owners, The Dwyer Group, the master licensee and finally the franchisee. Mr Electric in the UK did have a successful period under the master licensee and reached a high of 60 franchisees throughout the UK with numerous national accounts in the early to late noughties.
As has been already pointed out in this thread the master licensee did go into liquidation in 2012. In short, this was as a result of the recession and the business system did not change rapidly enough to deal with the changing market conditions. At this point the Dwyer Group subsequently took over the UK operations and currently sells the franchises. Looking at the contact page on mr-electric.co.uk you will notice 7 franchisees that are probably in operation (any franchise with the 0800 number listed is probably not trading or taking calls so the calls centre will take calls and divert).
Now you are wondering, where did the other 53 franchisees go? Well, having done my research with a few people I know, it appears they were not very well treated in the transfer from the old master licensee to The Dwyer Group who refused to offer any support to franchisees who were owed significant money following the liquidation. The Dwyer Group simply wanted franchisees to transfer and start paying their fees. This did not go down well and many franchisees left. Since 2012 the Dwyer Group has continued to try selling franchisees but as you can see from the contact page on mr-electric.co.uk very little has changed (remember 0800 number essentially means no operational franchise in most instances). I am led to believe they tried to lure some of these 53 franchisees back with incentives a year or so back. I’m sure the incentives were very poor and those franchisees were so cheesed off during the transfer process none of them said yes.
A few key points about what’s in it for the Dwyer Group:
1. As they are owned by a New York banking institution or similar, everything is about the bottom line. Sounds sensible for any business but their easiest income stream is selling franchisees. Do that and you keep the bankers happy. So they will try to sell, sell, sell, while at the same time avoid any other costs, which maybe attributable to building the franchise system in the UK. They would rather try to copy and paste the systems from USA to the UK, which frankly does not work. Both countries are far too different . As such, you get sold a franchise which is loaded with American support systems and irrelevant.
2. They are in the UK and trying to build a global presence to bolster their USA credibility and get into other markets but frankly it is a big ego trip more than anything else so they can sell more franchisees in America. Imagine a potential franchisee in America seeing that they have offices throughout the world, it’s a big sell right? 3 years and no franchisees in the UK though, hmm I think some questions need to be asked about that?
3. Linked to the above point is the fact that the Dwyer Groups priority is America and all tasks for USA franchisees will take precedence over the UK. All tasks associated with changing parts of the system will be USA focused and may not take any notice of UK requirements. As such you may be left with systems that are not very compatible.
So let’s now tackle some of the points raised above:
1. “They're very up front with questions when asked to be fair.” That is exactly what they are trained to be like, they know you will have difficult questions and are ready for them. All part of the sales process I’m afraid and a consistent trend with franchise sales. The answers may therefore not be truthful.
2. Linked to the above point is that during the sales process they will nurse your ego big time. You will feel wanted, like you are a great addition to their team and other arm around the shoulder tactics. This certainly enhances the chances of the sale significantly but of course you should be wary.
3. They will also use current franchisees to offer testimonials, perhaps by phone calls, emails, watching videos or meeting with them. Be very wary of this tactic, you may only see specific franchisees that have been coached prior to talking with you. They may also be receiving an incentive to speak to you. For example franchisees who participate in testimonials may get favourable rates on their fees or expenses and more which ultimately contributes to their business. Remember every franchise is a separate business with their own selfish objectives.
4. They may also sell on the fact you can talk to other franchisees and while this is good, they have businesses to run and can’t talk to you all day. In short this might not be that beneficial.
5. What could you do with the £18,000? In short a lot, many of you are right but using some of the free tools and simply saying get a Facebook page is not the right advice. Even if you have less than that figure get a decent marketing consultant , designer and web developer on board to get these things right. Free website builders are just plain dirt, don’t go near them. Electricians and other trades people are not the best branding experts in the world and often get it wrong. Look at some of the dreadful van designs out there as just one example. Mr Electric have got this right, their vans do stand out a mile and that is exactly what they are meant for. It’s not just marketing you could get your accounts system sorted and buy a job deployment system that works for you. At the end of the day by spending the £18,000 wisely it could have a massive impact and you are in control.
6. Leading on from the previous point and a very crucial point is you have to ask yourself the question, what am I in business for? Sounds fluffy right but what I am getting at is are you working for yourself because you want the freedom to make your own decisions and build your business how you like? If the answer to that question is yes, then franchising is not for you! In short franchising will feel like you are employed in many instances. There will be rules over branding, paying fees on time, doing a job a certain way you may not agree with, being forced into national account processes that are not profitable and many more. If you have any kind of entrepreneurial spirit in you run a business by yourself because your ideas could be far better and you are able to implement them without the control of a franchise.
7. Why have they not sold anymore franchises over the last 3 years, why can they not sell when they are still doing so in America? Well firstly the US is different, a country full of opportunists and people who are more susceptible to their selling tactics. Here in the UK, as is clear with this thread our scepticism is on another level and frankly we as people are not so susceptible to their sales tactics.
8. The reason for the brands early success was in part due to its reliance on the Yellow Pages. Do it right in the nineties and early noughties and you were flying. Yes that’s right flying, many trades’ people just got it wrong and that is why it may not have worked for them. With this approach they had one marketing channel that did most of the work for getting new customers. Add this to the customer service offered by Mr Electric, good customer retention and it worked. Fast track to 2015 and of course we know that strategy won’t work anymore. Maybe some older generations still use the YP but it’s a dead channel almost. Unfortunately Mr Electric cannot get away from this old style system and while the previous master licensee did a commendable job in trying to progress the system, the current approach is severely lacking. The Dwyer Group simply have no clue how to manage Internet marketing, which is obviously a massive requirement for every business, not just small electrical contracting businesses.
9. Let’s go further with the previous point, when franchises like Mr Electric started the availability of information for running a business was trapped in books we did not know , filing cabinets and in people’s heads. So the tricks of the trade were not that well known and buying a franchise made sense. A one stop shop for getting my business going, a solution for getting all those things done that I hate doing. Perfect you may think and frankly it probably was good then but now we have the Internet and with it a plethora of ideas, solutions, software and more to help small businesses to grow. All just a keyword away on Google. So why do you need a franchise with documents for this and systems for that in 2015? Well because you would expect that the solution you were sold was a very effective turnkey solution, where setting up your business was like a well-oiled project, with every task explicitly detailed. For £18,000 this is what you would expect right? Well no that is not what you get, it’s like a sporadic, dispersed set of processes that don’t work fluidly together. As such you spend £18,000 and then you’re left with the unenviable task of figuring out how to grow it with no definable process. They call it a system but it’s not.
10. So when your business starts there is no defined marketing process or plan, they will not tell you where to advertise exactly but will just give a few ideas. It is this approach which destroys any hope of success. How can a new franchisee just figure this out and to top it off you are advised by the team in America who know nothing of the UK market. The marketing plan should be almost identical for each new franchise and should be implemented for them to start with. It should be inclusive of numerous items to get the business moving fast but without a very rigid process for this the business is going to stall or grow very slowly. Of course, this leads to the inevitable cash flow problems. Once more, a lack of emphasis on this critical area is a result of the Dwyer Group’s excessive focus on franchise sales. Sell, sell, sell but fail to support the franchisee correctly. Another reason they choose to not deliver a prescribed marketing plan is because they are afraid of failure. They do not want to be associated with a plan that does not work, so they shift the responsibility to the franchisee, who should not be responsible when they have spent £18,000.
11. Every point tends to lead onto another point that links and this one is no different. The world is changing rapidly and so is business, electrical contracting and more. So, you would think the Dwyer Group would want to adapt at an equally fast pace? Unfortunately not they have no concern for testing new initiatives prior to implementation and expect franchisees to be the testing laboratory. When I spoke to one of my friends who considered buying a franchise he found out that they refused to operate a pilot franchise, which would operate exactly as required and test out new ideas. This struck me as evasive and cowardly. If the franchise works, why don’t the Dwyer Group operate a franchise themselves to monitor the operations of the business and change things as they go along. McDonalds so this you know, not all their branches are franchised some are owned by McDonalds. With this in operation they could easily issue new ideas and processes to other franchisees, knowing full well that they work. Instead they focus on franchise sales instead of understanding how their franchise system needs to change. This obviously leaves new franchisees in somewhat of a pickle because they don’t know what works and older franchisees have no new ideas that work to keep their business growing.
12. Remember the Dwyer Group is a big company and they may play on this size to give you the confidence to buy a franchise but there are many examples above of why this is not a particular advantage. Granted, the head office of the franchise if you like might appear to be somewhat stable but their attitude towards change and innovation is poor! For example if you have a new idea that you think is good for the franchise don’t expect it to be implemented fast even if it is the best idea ever. The slow corporate processes will mean the idea could be obsolete by the time they get around to implementing it. Furthermore, the Dwyer Group have their own agenda, which is based more around how they make more money instead of how your business makes more money. Their priorities therefore lye with themselves first and franchisees a distant second. This comes back to a point raised above, do you really want to be part of a company that essentially controls you so much that you are more like an employee than a business owner? Be part of a big company but have your freedom taken away!
13. Someone above said it was like a “ponzy scheme”. I would strongly argue it is not like Allen Stanford and his crew of nasty people. You do get something from a franchise purchase, don’t get it this out of context. The point we need to make is more regarding the value of the purchase. Is £18,000 good value?
14. Someone said “Surely if his business model is so successful he'd be doing it himself”. This is a very good point, why don’t the Dwyer Group setup all the franchisees throughout the UK, employ people and build a national network of electricians? If the business works why not take the gamble and invest in such an operation? They could also setup a few franchises themselves and run them for a couple of years to figure out how the market is changing, how best to market the business and so on. Their failure to understand the details of their franchise is their ultimate undoing and why people do not see the value in what they are selling. If they could prove a business was working by showing prospective franchisees round an operational business that they run and then showing accurate accounts, I’m sure many people on this forum would think differently.
15. Another comment said “I'm wondering what would happen to 'brand name' if a franchisee was exposed for a dangerous install?” Well this is a challenge, all Mr Electric’s are supposed to be NICEIC approved contractors and you go through this process when you start the business but if something goes wrong with a bad install there are reputation issues. In short, you are only as good as your weakest franchisee so if they have problems of course the NICEIC will discipline their franchise business not the whole of Mr Electric but any press coverage or the like will have a potential negative effect on other franchises. So your business could be affected by another franchisees incompetence.
16. “They're like the 'Kwik-Fit' of domestic installers, in that once you're at a job you'll be expected to upsell non-essential work.” I must be honest about this remark and say that if a business fails to upsell, they are not in business regardless of what they do. Yes you should be honest and genuine but if you see an opportunity to sell something why not, you’re in business for crying out loud. If the solution could make their property nicer, safer or better why not. This element of Mr Electric’s approach is fair enough, many other successful business do it why not them. Amazon do it to us all the time when we buy online!
17. “It seems what you pay for is a corporate image which anyone with half a brain can do for themselves but better”. This is wrong you can’t do it better yourself, you’re an electrician! On the other hand a professional designer, marketing consultant and web developer can help you to achieve results that cost far less than £18,000. I’m sorry but many trades’ people have awful branding because they arrogantly think they can do it themselves. Mr Electric’s is decent but as I said not worth the fee.
18. “Flashy website, an 0800 number, some girl on the end of the phone in a national call centre, a written quotation” and “Mr E usually charge about twice what a local electrician would”. Fair comment , the customer will pay a premium for seeing what is perceived as a more credible and professional business. All those items are added to provide more tangibility to give Mr Electric the edge and definitely something for the average electrician to consider but should they mean a price that is twice as much? No. Touching on your one point, it is essential if you want your business to grow to have a flashy website. Like it or not, it’s the place you judge a business along with online reviews when you're searching for a business. Your business growth will stagnate without one. You’ll only grow so far.
19. “I appreciate a lot of domestic customers like you to turn up on time, be polite and clean up after yourself, but Mr Electric take it a step too far.” Correct they do, the system is too Americanised and they fail to make suitable adaptations for the UK. Having said that they do encourage very good practices. Many electricians think it is acceptable to behave like a meat head in someone’s home so Mr Electric see it as necessary to drum out this behaviour. Good, as far as I am concerned.
20. “It all seems a bit 'Alan Sugar' to me”. This comment doesn’t make sense, this is all about business and sales should always be part of the equation or your business will fail. It’s not just about how technically good you are the most successful business owners are those with the right sales skills. As for the comment about reputation and recommendation, haven’t we heard that chestnut before! Both are wonderful when your business is mature but what about when your business is starting? You have neither!
21. “How much does Richard Branson know about some of the areas he's ventured into?” Very good point he knows little in most instances but he employs the right people and manages them from the top. Unfortunately the mentality of some who have posted here is that their business is all about them and not the team they want to work with. To give Mr Electric credit they do try to offer guidance on business growth to help you get out of the business and grow it in a sort of mini Richard Branson way. However in much the same vein as what I have written above the way they tell you is not procedural enough and sufficiently planned.
That’s my thoughts on the subject. I’ll add another post with guidance on what to ask for when they are selling the franchise so you make it very difficult for them to dance away from difficult questions.
