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Last Updated: Friday, 26 March, 2004, 14:40 GMT
Lunch Lesson 12 - Franchising
Have you ever wondered how some people came up with the ideas for their businesses?

A few years ago, there wasn't really a demand for personal trainers or dog walkers or massages in the workplace.

But entrepreneurs identified demands for these services and are making money as a result.

So the origins of the Mattress Doctor are perhaps not surprising.

Allergies

Former accountant Bryan Walters and his business partner Bruce King were looking at various business options.

Bruce's wife suffered from asthma and in their research they came across businesses in Germany and the US which cleaned mattresses to try to get rid of dust mites and ease the symptoms.

"The more we looked at it we found that no-one was doing it in the UK," says Bryan.

"And we seem to have one of the highest rates of allergies in Europe."

And so the Mattress Doctor was born. Bryan and Bruce bought some equipment which they modified and set to work.

"The more we looked at it we found that no-one was doing it in the UK," says Bryan King
Cleaning

There are estimated to be two million mites in the average mattress, responsible for various breathing complaints and allergies.

The Mattress Doctor process involves loosening the contents using high frequency waves then removing them with a powerful vacuum cleaner.

Mattresses are sterilised with an ultra violet treatment and finally a hygiene spray is used to slow down the return of any mites.

It takes about 40 minutes to treat a double mattress and costs from 50 depending on the size and location.

Having a clean mattress isn't a guarantee for curing asthma but, coupled with other measures such as good ventilation in the bedroom, it can have a positive effect.

Expansion

Business was doing well and Bryan and Bruce started to think about growing it.

"We ran our own area for a period of time and then looked at how we could expand and franchising seemed to be the obvious route."

"We could get coverage fairly quickly whereas if we tried to build up our own infrastructure it would take time and a lot of money."

Franchising is a growing sector in the UK. Some big High Street names such as Kall-Kwik and even McDonalds are franchises.

Dust mites
But you can find some more unusual business opportunities, including:

  • Property letting
  • Internet cafes
  • Childcare
  • Private investigations

    Cost

    A franchisor will charge franchisees an initial fee allowing them to run a branch of the business.

    This will generally cover start-up equipment, training and marketing support.

    In return, the franchisee is taking on a tested business format that still allows them to be their own boss.

    A Mattress Doctor franchise costs from about 8,000, but some franchises require an initial investment of 10 or 20 times that amount.

    There's also a monthly charge of 250 to cover repair and replacement of equipment and continued support.

    "It's a shared risk, shared reward concept - if they do well, they do very, very well," explains Bryan.

    "Some franchises are very restricted and you can't breathe outside the contract. We decided it would be better to allow them to do it their own way, provided we had some control over the branding issues."

    Success

    "The franchise opportunity took out quite a lot of the risks of starting up a new business," says Paul Bolland
    In the first year, Mattress Doctor already has 24 UK franchises. The St Albans area is run by Paul Bolland, a former international hockey player.

    "Buying into a franchise that was well developed and proven and established yet with a very large untapped market was something I was keen to get into," says Paul.

    "The franchise opportunity took out quite a lot of the risks of starting up a new business."

    Paul has been operating for six months and has already nearly repaid his original investment. He's keen to expand.

    "Cleaning a mattress isn't the most pleasant thing you can do, so I'm looking in the next six to eight months to take on a cleaner so I can concentrate on the advertising and marketing to get more customers."

    Bryan is also looking to continue growing the business.

    "We would like to get up to 100 franchises in the next three years," he says.

    "It's a relatively untapped market. Cleaning seems to be very a popular franchise for people to take up. It's easy to do - you don't need complicated skills - and it's a relatively cheap franchise, probably at the lower end of the fee scale."

    "If it works, it's a fantastic investment. On the rare occasions it doesn't work, people haven't lost a fortune - it's something that they can afford."


    Student Guide

    Bryan Walters and Bruce King wanted to set up a business. After some research they discovered that there was no-one in the UK who cleaned mattresses.

    As the number of asthmatics grows, dust mites which live in mattresses come under suspicion. Mattress Doctor sorts them out.

    Bryan and Bruce developed special equipment that loosens the mites and sucks them out. A hygienic spray then delays their return.

    After a while, when the business was going well, they decided they wanted to expand - but there was a limit to the number of mattresses that could be cleaned in one part of the country.

    They needed to spread geographically - but this would make the business very complicated. Instead, they decided to sell franchises.

    Just think...

    Why was Mattress doctor a bright idea?

    Why do you think it would be complicated to run a business across the country?

    Selling a franchise

    Bryan and Bruce want their business to expand but they want to make sure that anyone running a Mattress Doctor business keeps up the standards so customers know that they can expect a good quality service.

    People who are thinking of buying a franchise from them must therefore be well trained in all sorts of aspects of the business.

    Each person who takes a franchise receives

  • training in mattress cleaning
  • training in running the business
  • the equipment they need to clean mattresses
  • strategies for finding customers
  • backup from Bryan and Bruce

    In return they buy the franchise. It costs 8,000 plus 250 a month.

    This covers the services and the use of the name and the service charge is for looking after the equipment.

    Many people buy franchises in famous name businesses because the name gives them instant recognition.

    They usually cost a lot more than the Mattress Doctor franchise.

    Bryan and Bruce can run a much bigger business as franchisors than they could if they'd kept direct control over everything themselves.

    They also earn a steady income from selling the franchise.

    The price has to be set carefully. It must reward them for their work and risk but not be too high to deter potential franchisees.

    It's all a question of demand and supply!

    Just think...

    What sort of paper work would Bryan and Bruce have to do?

    What sort of problems might crop up if they tried to run a national mattress cleaning business themselves?

    What sort of factors would determine the price set for the franchise?

    Attracting franchisees

    For the business to succeed, Bryan and Bruce need to attract people to run a local Mattress Doctor.

    This spreads the service across the country. There are currently 24 people running the franchises.

    The company's website gives you al the information you need about the business and buying a franchise.

    Just think...

    What do you think Bryan and Bruce would want to know about people before they sold them a franchise?

    How would you set about finding out about them?

    What sort of characteristics would you be looking for?

    What is a franchisee looking for?

    Many people think it's a good idea to run a business but haven't quite got the courage to set up on their own.

    A franchise is a good solution as it provides access to a business idea that is already working and the backup and experience of people who have already made it work.

    People are also looking for a reasonable income from their work so they will want to see the likely return on the business.

    Paul Bolland bought the Mattress Doctor franchise for St Albans and had nearly covered his initial investment in the first six months as well as covering the costs of running the business.

    Just think...

    What sort of costs will a franchisee have to pay?

    Where does their revenue come from?

    What costs should be deducted from gross profits to find out what net profit will be?

    Developing the business

    Bruce and Bryan want the business to grow.

    They aim to have 100 franchises up and running over the next three years.

    They aim to be successful because the business isn't complicated, doesn't need great skills and is relatively cheap to buy so people aren't taking too much risk.

    It is also a unique idea.

    Just think...

    Why do you think the franchise might appeal to people?

  • WATCH AND LISTEN
    The BBC's Rob Pittam
    "There were similar systems in the US and Germany, but nothing in the UK"



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