Darren Jamieson:
On this week’s episode of The Engaging Marketeer, I’m speaking to Cheryl White from Apollo Care. Cheryl is a franchise consultant for other businesses and she franchised Apollo Care many years ago and now has a number of franchises based across the Northwest, Wales and the South. So I’m going to be asking Cheryl how she managed to franchise Apollo Care, what challenges she faced, what advice she has for other people, and find out a little bit more about some of the businesses she’s helped franchise across the UK.
Cheryl, franchising. What would you say is the main benefit to somebody becoming a franchisee of a business, whether it’s Apollo or any type of business?
Cheryl White:
I think becoming a franchisee of a business is all about support and guidance, Darren, on how you’re going to run that business. What we find is that a lot of people who come to us to start care companies have actually got no experience in care at all. They see it as a really good business opportunity, but obviously as the founders of that business we need to make sure that they align with our values and the company culture and what they’re actually looking to build there.
But somebody looking to start a business, I would always recommend looking at franchises first because it just gives you that little step up the ladder to be able to come in with that ready made business plan, that blueprint and that team behind you before you even begin.
Darren Jamieson:
And is it easy for a business to franchise itself?
Cheryl White:
I would say yes and no to that question. I’m also a franchise consultant as well. I work with three businesses every year to help them franchise their business with me and the team.
The business model to me, Darren, is really simple. The business model can be fitted into I would say 90% of businesses out there. But it would just be the commitment and the time that the person franchising their business, who would then become a franchisor, understands that they need to commit to that.
I think sometimes some of the things that happen is people think, “I’ll franchise my business and then it’ll all just grow and I’ll have brand exposure and everything else.” But there’s a lot of things that you need to put in place in the background to make that work.
The model for me is really simple. It’s a simple model. It’s a rinse and repeat model and it’s a very lucrative model. But the franchisor needs to really put that effort in for at least the first three years to build up that brand reputation.
Darren Jamieson:
I see this a lot with businesses where they’ve got maybe it’s care, whatever the industry is, and they’ve got it in a particular region, a particular city, a particular area, and they’re doing really well but they’ve reached a capacity. They want to expand.
So the options then are to set up a new premises in another location and run that themselves and divide their attention. Or to franchise.
What are the difficulties with franchising in terms of logistics and expense from franchising the business?
Cheryl White:
I think obviously if you’re going to work with a franchise consultant you would pay an upfront fee and then they would help you to get everything in place for that.
I look at franchising as growing and developing your business using other people’s money. So people are investing into you and your brand, and then you’re taking that investment and helping them to grow a business in that particular area.
For me there’s less risk in doing that. There’s less risk financially than going in and starting your own business there because somebody else is putting in that financial capital risk to be able to start that business.
I think as well somebody who is going to set a business up within their own area is more likely to be successful because they’re going to have those contacts there anyway.
So when I had Apollo and it started in Wirral, if I was looking to go to Manchester with Apollo I would have no contacts there at all. I’ve never traded in Manchester and I’ve probably visited there about four times ever. Where somebody who comes in and buys the franchise there, that’s where they live, that’s where they’ve grown up, that’s where they’ve worked, so they’ve got all of those contacts there.
So I would say it’s financially more viable to franchise and set those businesses up via the franchise model than it is for self managed expansion. I think it’s much easier and safer to do it that way.
Darren Jamieson:
So it’s a more cost effective and quicker way to expand a business.
Cheryl White:
Definitely.
If you want to get that brand exposure and that brand expansion, that for me is the no brainer way to do it.
Darren Jamieson:
But if you’ve got a business though, how will you know if your business is ready for franchising or if it’s even possible to franchise?
Cheryl White:
When I’m looking to franchise somebody’s business, people will come to me and ask me if their business is ready to be franchised. There’s three things that I look for.
The first one is has the business been running for eighteen months or more. Because we need a proven business model. We need to be able to see that that business model works and that it makes a profit.
Which is the next step. Does the business make a profit? Because the business does need to be profitable for you to then say that this is a viable business model.
Darren Jamieson:
Is there a particular kind of profit margin it needs to be making?
Cheryl White:
Not particularly, no. We can look at that because sometimes I’ll look at somebody’s business and what they’re actually doing now and I might suggest another two or three income streams they could add to that to then help franchises become more profitable.
I do that a lot. People say to me when they work with me it’s like you take my business apart and put it back together again, because that’s what I do. It’s always a fresh set of eyes looking at it.
Then the third thing would be that the business needs to be able to be replicated in other areas. So you need to be able to pick your business up and put it somewhere else and it will run exactly the same as the way you’ve been running it.
Darren Jamieson:
The thing that always worries me from the idea of franchising a business out is why would somebody else want to invest in my business or become a franchisee of my business when they could theoretically do it themselves? How do I know that my brand, the business I’ve got, is worth somebody investing in as a franchisee?
Cheryl White:
A lot of that is from experience, Darren. People will look at your experience as a business owner and say, “I want to tap into that experience.”
With Apollo, I’ve got over thirty years experience in health and social care. So people who are coming into Apollo who have never, or even if they have got experience in social care, they want that experience. They want that team and they want that blueprint to look at.
When you’re taking a potential franchisee through that enquiry process you’re showing them what you’re going to give to them for their initial fee, but then you’re also looking at what they are going to bring to the franchise opportunity and the franchise network. So it’s always a two way thing.
With Apollo we often say no because we just think people are either not the right fit, they haven’t got the passion behind what they’re doing, or they may not have the financial stability to be able to come in and join the business as well.
We provide them with cash flows and a business plan. It’s not just about the delivery of care. The delivery of care is the main point but it’s also how to run a really sustainable business around that as well.
Darren Jamieson:
So not everybody that applies to be a franchisee gets accepted then.
Cheryl White:
Absolutely not. No. We do turn people away. We used to turn more people away than what we accepted.
But now we’ve really knuckled down on that market and message and made the financial working capital really clear to people so that the people coming to us now have got all of that information before they even get on a discovery call with one of my team.
Darren Jamieson:
When someone comes in to become a franchisee they’ll pay a franchise fee. How is that fee determined by the franchisor and what is it used for?
Cheryl White:
The franchise fee should be determined by what that package looks like. We work with a franchise accountant and I’ve worked with them a very long time.
If I’m working with somebody to franchise their business, what we’ll do is look at at least the past two years management accounts and then we’ll see what those profit margins are. Then we’ll look at what we could charge for an initial fee and what the ongoing management fee would be.
Again it’s what you’re bringing into that package. The British Franchise Association say that the franchisor shouldn’t make any money at all on the initial fee. It should be for setup only, which we try to do.
That initial fee should be to get that person into business for at least the first twelve months. What you earn after that on your royalty fee each month is what the franchisor makes their money on.
Darren Jamieson:
I didn’t realise that. I didn’t realise it was expected that the franchisor doesn’t make profit on the initial phase.
Cheryl White:
Sometimes you might. It depends on a few variables. But really that initial fee should be for setup.
With Apollo Care we charge £36,000 plus VAT for a franchise. All of that £36,000 is allocated to different things. Initial training, residential training, marketing, software systems, all of the stuff that the franchisee will need to operate in the first twelve months.
Then we also have a cash flow budget as well depending on the experience of the franchisee. That cash flow budget goes between about £80,000 to about £104,000 all in.
Darren Jamieson:
Wow.
Okay. And for someone who wants to become a franchisee you mentioned £36,000.
Cheryl White:
Yes. £36,000. Some franchises are a lot more expensive than that. I believe McDonald’s is well over £100,000.
Darren Jamieson:
You need at least a million for McDonald’s in cash flow.
Cheryl White:
Yes. So it’s a lot of money. You need to be really upfront with people, Darren.
We have amazing people coming to us to look at the Apollo franchise and unfortunately they just don’t have the cash flow. They’ve got the £36,000 to invest but we’ve got to be realistic with them about how far that will get them.
We’ll support them for the five year term but they are going to need things like office premises and a registered manager. We’ve got to factor all that in so people are very well informed before they sign on the line and come in and join us.
Darren Jamieson:
So how much would they need for cash flow then for Apollo?
Cheryl White:
If they’re going to come in and be their own registered manager and they’ve got the health and social care background, all in they would need around £70,000 to £80,000.
If they were coming from a non health and social care background they probably need about £104,000.
That’s all set out in our financial disclosure document and we take new franchises through a cash flow exercise so they can see exactly what they should be earning.
Darren Jamieson:
Is it something you’d recommend to someone that’s never run a business before?
Cheryl White:
Yes. I love franchising and I could talk about it all day long.
I would recommend anybody to franchise their business if they want growth and scale on a big scale. Franchising is absolutely right for them.
For somebody that’s thinking of buying into a business, either they’ve never run a business before or they’ve never run a business in that industry before, then absolutely franchise them all the way.
You’re talking then about cash flow. There’s a lot of people who start up their own business that don’t understand cash flow because they go into it with no training or experience and they make mistakes.
You can even make mistakes by getting new clients too quickly and end up spending money so the cash flow runs out.
Darren Jamieson:
How could someone come into a business like Apollo that is established and have no experience running a business and be able to do it?
Cheryl White:
Apollo is heavily regulated by the Care Quality Commission because we provide personal care services.
If somebody is coming in to buy a care franchise from us with no care background at all we help to source a registered manager who comes into the business full time with them who has that care experience.
They would become the registered manager for that business and they have to have a registered manager under CQC guidelines.
Then the business owner becomes what we call the nominated individual. They’re responsible for the running of the business and making sure the teams are well trained. We guide them and support them through all of that.
Part of their cash flow would be twelve months registered manager fee as well.
We do it on the presumption that in twelve months they wouldn’t have a client. We’d expect them to have a client by at least month three but we always have to play it safe.
So the minute somebody comes in to enquire about the Apollo Care business we talk them through these expectations so they understand the journey.
Darren Jamieson:
You mentioned having a client by month three. That would be even more scary.
They’ve spent £36,000 to buy into a business. You’ve told them they need about £104,000. They’re spending money every month and they maybe don’t have a client yet.
How do you reassure them that it’s going to work?
Cheryl White:
It’s just expectations.
When they come on board with us we start what we call our GIB process, which is Getting Into Business. We take them through that week by week.
When I started the original Apollo Care I didn’t get a client until month five because I was doing the marketing and everything else.
That’s quite typical of a new business startup. You’re not going to come into business tomorrow and get clients the next day. It just doesn’t work like that.
It’s reassuring them that this is normal and this is the way the business needs to be built.
Our franchises now would expect a return on investment by at least the end of year two at the very latest on that £100,000. Then they would start to go into profit margins.
The businesses we sell in Apollo are not quick cash businesses. They’re very high value long term asset businesses.
What you’re building an Apollo business for is eventually to exit that business.
If you build it the correct way you will not only get your return on investment, you would start to see profit margins coming in around month 24 but also be building an asset to sell.
Really good run care businesses, especially under established brands, go for a lot of money. A lot more than £100,000.
Darren Jamieson:
That’s interesting because most people that start businesses don’t think about the exit.
Cheryl White:
Yes.
Darren Jamieson:
They just think about being their own boss.
Cheryl White:
Exactly.
And that’s why we talk about assets, growth and exit planning from the start.
Darren Jamieson:
Anyone listening to this that’s thinking they would love to be a franchisee or find out more, what’s the best way to get in touch with you?
Cheryl White:
To find out about Apollo, the best way is to go to the website which is www.apollocare.co.uk.
There’s a franchise button on there which gives more information about the franchising opportunity and you can book a call with one of my team.
If you’re interested in franchising your business, go to my website cherylwhite.co.uk and that explains how I support businesses with franchising as well.
Darren Jamieson:
That’s brilliant. I will pop both of those links below the podcast. If you’re watching on YouTube it’s in the description. If you’re listening on iTunes, Spotify, Audible, Amazon Music or any of the others, scroll down and it is in the show notes below the podcast.
Cheryl, thank you very much for being a guest on The Engaging Marketeer.
More about Cheryl:
Cheryl White is the founder of Apollo Care and an experienced franchise consultant with more than 30 years in health and social care. After starting Apollo Care from scratch, she grew it into a successful care brand with franchises across the Northwest, Wales and the South. Alongside running Apollo, Cheryl helps other business owners franchise their companies, with a strong focus on sustainable growth, solid systems and long term value. She is known for her practical approach, high standards and commitment to building businesses that make a genuine difference.
You can connect with Cheryl here:
Website: https://www.apollocare.co.uk/
LinkedIn: https://www.linkedin.com/in/cherylwhitefranchising/
Facebook (Personal): https://www.facebook.com/cheryl.white.397/
Facebook (Business): https://www.facebook.com/apollocareservice
Instagram: https://www.instagram.com/cherylwhite_franchising/
About your host:
Darren has worked within digital marketing since the last century, and was the first in-house web designer for video games retailer GAME in the UK, known as Electronics Boutique in the States. After co-founding his own agency, Engage Web, in 2009, Darren has worked with clients around the world, including Australia, Canada and the USA.
iTunes: https://podcasts.apple.com/gb/podcast/engaging-marketeer/id1612454837
LinkedIn: https://www.linkedin.com/in/darrenjamieson/
Engaging Marketeer: https://engagingmarketeer.com
Engage Web: https://www.engageweb.co.uk
