Monthly Archives: October 2010

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By Nick Strong, Franweb.

It was fascinating for all that attended the national franchise exhibition this year to see how the economic conditions we are going through are affecting the community.

Far from being negative the mood of franchisors on their stands and delegate visitors considering business format franchising as their future was brisk and buoyant.

Steve Roulstone, MD of Castle Estates, commented, “The show has been very busy as has our stand.  We have noticed for the first time an increased number of would be franchisees aged thirty years old and under.  We are excited about the focus and quality of visitor and have already set up some very promising meetings”.

Other franchisor exhibitors I spoke to echoed much of what Steve Roulstone had to say. 

The increase in activity at the national franchise exhibition in both exhibitors and visitors is also reflected on line.  Fro my own business we have seen a huge increase in buyer visits to our websites and a steady increase of franchisor advertisers in recent months. In fact, buyer visitors to our websites in September 2010 increase by 50% compared to the same month in 2009 and more leads were generated than in any September going back to 2006.

 The economy may be flat but franchise business certainly is not.  The franchise department leaders of the banks have made it clear that they have money to lend to well qualified franchisees and suitable franchisors. Clearly every franchisor should select suitable franchisees carefully and every franchise buyer should go through personal and franchise system due diligence before entering into contract, training and trading.

 It is great to see a go ahead attitude and the franchise community is clearly demonstrating this.  Franchise community leads are cautiously optimistic about the future.  The key is to work hard, follow the proven system and work together for the common good.  This is good franchising.


By Kendall Braddock HSBC Franchising Department

Out with a Bang

As the year draws to a close we look at how the UK franchising sector fared during 2010. Now the nights are drawing in and bonfire night is just round the corner – a sure sign that the end of the year isn’t far away.  I thought I would reflect on how the UK franchising sector has fared during 2010.

Hard Times?

There is no denying that 2010 has been a difficult year for UK businesses.  The economic recession forced sweeping changes in strategy for many businesses, add to this the uncertainty of a general election, increased unemployment and reported lack of available credit and it’s not surprising many firms have struggled. However, franchising has remained fairly resilient during these difficult times.  This is mainly due to the wide spectrum of industries covered by franchised businesses, the strength of the business model and the support provided by franchisors and other franchisees within the same networks. 

Evidence of Hard work

Nowhere is this success more evident than this year’s bfa HSBC Franchisee of the Year Awards.  Financial stability and growth, innovation, creativity and the relentless pursuit of success were just a few traits demonstrated by this year’s finalists.   The overall winner, Gerald Thompson of McDonalds showed that the key to his success is building a relationship with his local community. 

Achieving results

Despite being part of a global corporation, he has successfully created local restaurants for local communities through his involvement with a number of local youth football teams, contributing to local prison programmes and proactively engaging with young people with activities such as a Midnight Basketball Initiative. This is just one example of the strength of franchising and HSBC has seen this repeated many times during the years we have been involved with the sector.

By Steve Roulstone

I have been attending the National Franchise Exhibition for several years now and there is no doubt in my mind that the age of those attending is dropping year by year, with for me, a definable difference this time around. I have already commented in these posts that the quality of attendee was very high this year and therefore having spoken to many people between twenty and thirty years of age, it confirms that the younger entrepreneur is no different in researching the potential offered by Franchising than anybody else.

Recognition for the Industry.

I have searched the internet for proof of my beliefs through the written word or quoted statistics, but can find nothing to back up my feeling, but for me, being convinced through what I experienced myself, it looks as if the facts behind the ability for Franchising to offer such a higher success rate for new Business is beginning to be seen and hopefully appreciated by a younger market.  

New Initiatives?

And with new initiatives supporting  the Industry due to be announced  in November as well, although as yet the context and content is not known, good support schemes can only legitimise the Franchising route to being the owner of your own Company for a wider market of would be entrepreneurs.

Age should be no barrier.

It is of course just as important for us to treat everybody in the same way when as Franchisors we look at the attributes of every applicant we see, regardless of age or any other definable characteristic. But experience has to be taken in too account and without being ageist, I will continue to consider the individual qualities of every potential Franchisee I meet. It would be a tough call if like the X Factor, I had to recommend to somebody that they ‘Came back next year’ or something similar but because Franchising is very much a two way street, I would continue to take this approach with everybody who approaches us.

Franchising will be the benefactor.

But normal evaluation aside, I firmly believe that a younger more dynamic age group seriously considering our market place has got to be good for the whole industry. Whatever sector is considered, a drop in the average age of Franchisees has got to be welcomed.

By Mike Edwards

Deciding if a Resident Landlord agreement is the correct solution to any situation can be a nightmare for Landlords to determine. What can on the face of it look straight forward may not be and vice versa. What happens if there is completely separate access for the tenant? Or what if their accommodation is like a granny annexe or a garage converted into a studio, or a building in the garden? The list goes on!

Popular practice

These situations are becoming more common as the credit crunch inspires some innovative use of spare accommodation by Landlords, but do we treat these scenarios as tenancies or licences? And above all if they are tenancies then should they be ASTs which means registering the deposit – or a fine if you don’t!

Some definitions

If the building as originally constructed is a purpose built block of flats no matter how small and the Landlord occupies a unit as their main residence it can never be a Resident Landlord case. But if you have a conversion to self contained flats and the landlord lives downstairs it is a Resident Landlord case but the tenant cannot have an AST because it is a Resident Landlord situation. In the conversion if the occupier has their own bedroom but shares facilities with the Landlord then only a license can be granted. This is because under the 1988 Act the tenant only needs exclusive possession of “any part of the dwelling” to have a tenancy so the exclusivity of the bedroom is enough to make them a tenant and an AST can be created if there is no Resident Landlord.

And more definitions

Rules on exclusive possession are different outside the 1988 Act as to be a tenant the occupier must have exclusive possession of all essential living accommodation. Therefore if the tenant cannot have an AST as the landlord is in the building, he must have exclusive possession of all essential living accommodation before he can be a tenant and therefore be granted a Common Law tenancy (as in the example above of the two self contained flats above).

Further legal implications

However all this throws up another key issue. In managing the situation, you must make sure it should not have been an AST for if it is then the deposit must be protected. So if you wrongly designate an occupier as a licensee and do not give them an AST when you should have done so then you will be open to a claim for mishandling their deposit.

Link to Res LL Part 2

By Mike Edwards

From 1st October 2010 all tenancies where there is no legally stated reason why they cannot be ASTs  will be so deemed unless the annualised aggregate rent is in excess of £100,000 or basically £8,333 a month no matter how short the initial term might be.

The Change in Law

So if a tenant rents at £10K a month for 6 months it still cannot be an AST because annualised the rent would be £120K. The term stated in the agreement makes no difference just multiply the rent by 12 and if the result exceeds £100K then from the 1st of October it can no longer be an AST. Do not make the mistake of thinking the tenant actually has to pay £100,000 or more in a year, they do not. The same rules that applied when the limit was £25,000 now simply apply at £100,000 instead. In effect the figure for a tenancy to fall within the EXCLUDED CATEGORY and be incapable of being an AST has now been increased to £100,000

The Affect

This will mainly affect the London market (over £1924.00per week) or very high rental value properties elsewhere but it applies to all new tenancies granted from 1st October onwards and also to all tenancies granted on 6th April 2007 or later as and when they are formally renewed.

The problem

The issue here for Landlords and agents is because these previous non ASTs now become ASTs do existing deposits now need to be registered and protected for these higher value tenancies. However the provision that applied when deposit protection first came in that periodic tenancies were unaffected is thought not to apply. Unfortunately the Government Department responsible for the TDP provisions (Communities and Local Government) omitted the word “new” at a critical point when drafting these revised Regulations.

The result

In doing so they condemned all existing cases to potential uncertainty which can only be clarified by a test Court case. So the advice from CLG, ARLA and the TDP schemes is to register ALL deposits where, under the revised limit if an existing tenancy was actually a new one being granted now it would be covered by the new rules. A Prescribed Information Form must also be issued and interestingly so must any clauses that would be in any such new tenancy but were not of course in the original agreement.

By Steve Roulstone

I have just spent two days telling people what I do at the NEC National Franchise Exhibition and have come to the conclusion as the result of what my answer was that I might be a bit of a snob!

Vive la Difference!!

You see, I discovered that I always answer the question ‘Who or what are you?’ with the answer that I am a Letting Agent. It was only when the question was put to me in a different context that I found myself explaining the reasons why I call myself a Letting Agent – so what is the difference?

Individual Agent or Company Agency?

I see myself as a Letting Agent, because I am qualified through my professional body and having passed my exams it is something that I rightly feel proud of. As a Company we have always and still do look to have all of our agents qualified (There I go again!) because exams are a confirmation of knowledge and it is something tangible that our Landlords can rely upon. But that does not mean that our offices are not Letting Agencies, because they are.

Agency AND Agent.

The difference is that not all Letting Agencies are run by Letting Agents, if you believe as I do, that to call yourself an Agent, you should carry some qualification, through the Industry you serve, that is recognised by the people who work in it, that marks you as qualified to carry out the role. Those who have read my Blog in the past will recognise a theme here, because I firmly believe that as an Industry, it is only by Industry recognition and Legal registration that we will become truly professional and that has to be the goal for all agencies.

Landlord advice.

So I will continue to call myself an Agent first and my advice to all Landlords is check the professional qualifications of any Agency they wish to employ. As a Franchisor who is aware of the competitors in my sphere of operation, I know that the systems we employ mark us out as protective of our clients interests in all that we do, but why not go that extra mile and prove our knowledge through qualification, then, especially if legally registered, all Letting Agencies will be run by Letting Agents!

By Mike Edwards

There is once again an upsurge in scams within the Private Rented Sector. These come in various changing guises, some more serious than others.

Common problems:

Properties being turned into cannabis farms or to house multiple foreign workers are still on the increase, though such more common abuse of a property should soon be spotted by regular inspection visits – especially if unannounced.

Problems to be aware of:

More recent developments include people communicating with agents claiming to be the Landlord and giving a change of bank details so payments are siphoned into the wrong bank account. Any change of details should only be registered if they are in writing, the signature compared with the Landlord contract on the file and are known to have come from a confirmed source. Acknowledgement can be sent to the Landlord’s known address or by calling the landlord on a telephone number you know to be theirs. Agents without a contract on their file are short of a significant document and if they do not have a signed Landlord contract on file how can they check the landlord’s signature?   

Summer problem:

There have also been instances over the summer of people posing as agents and turning up at a joint agent’s office, requesting keys for a property supposedly on the instruction of the landlord. Or posing as contractors the Landlord has instructed to undertake work to their property. Again a vigilant and well organised agent should obtain confirmation prior to releasing the keys.

Registration of ownership scam:

Two variations on actual property ‘theft’ are also being reported. Firstly Agents are being contacted by potential tenants only interested in viewing or enquiring about empty property. This can be a sign of a potential fraud intended to transfer the ownership of the property away from the Landlord. Secondly there has been an increase in cases where the Land Registry has confirmed a property has been ‘stolen’ by tenants who identify there is no mortgage and transfer the title deeds into their name. If in response to the ‘lender’s consent’ enquiries at initial interview the landlord confirms there is no mortgage then the Landlords should be advised to ensure that their home address is the one used by the Land Registry for service of any relevant notice so they can be aware of any such attempt of transfer.

By Steve Roulstone


Well we have just about recovered from what was a draining two days at the National Franchise Exhibition this weekend. There is no doubt that standing on your feet for two days does take it’s toll (I used to work in retail and you can get used to standing – eventually!) but it is a small price to pay for what is a refreshing experience every year.

Renew your Franchising passion.

When I first became a Franchisee, I felt so passionate and proud about what I set out to achieve and by visiting the show every year, firstly as a Franchisee on behalf of Castle Estates and latterly as the Franchisor, I have always find my passion and pride lifted once more by so many people setting out on the same road. It is always a great reminder of why I do what I do and sets the playing field level again for the next year.

Looking like a bumper year.

But this year, as most commentators have agreed, the level of enquiry has been really good and personally I found those choosing to visit our stand, showed a consistent high level of research and knowledge both of what was possible as well as what they wanted from Franchising. It is probably the first year that I have not heard those immortal words, ‘What’s this all about then’!

13 Months please.

The days after the show are all about speaking to and arranging with potential Franchisees the next step that was agreed at the show, with Literature being sent to those who truly want to read about you and arranging to meet those who really want to get to learn about what we offer. At this time of the year, I could do with fitting in an extra month, just to cope with the demand, but that is probably my fault as I like to see everybody myself and especially on a one to one basis.

Franchise Opportunities.

But there is no doubt that it is also the most important time, as we move to make the best of the opportunity, in the correct way for both Franchisee and Franchisor. If I am impressed with the standard of potential in the people I am going to see over the next three months, then it is right and proper that we ensure we allow this potential to make the most of the partnership’s we will develop over the coming years. Now is the time that the passion that has been renewed again this year, to shine through!

By Steve Roulstone

When considering a Franchise in any industry, there may be more than one way to generate income that may be available through the business to hand. The Lettings Industry is one of those industries and it is Block Management that is a natural outlet for any good Letting Agent.

A natural fit

What needs to be recognised at the start is whether the Franchisor is happy for additional industries to be part of the Franchisees business. At Castle Estates we not only allow but actively encourage entrepreneurs to get take advantage of any opportunities that come their way and will actually offer training as part of the Franchise.

Landlords want our help.

And that is the point, it is normally Landlords who ask for our assistance as many traditional Block Management Companies are somewhat distant from the communities they serve and by being the Local Agent who services the area concerned, Letting Agents can offer a better feel and better communications for the leaseholders involved. Now from where I look at this, if a Landlord approaches my Company and asks for help and I can offer that help, then I do not want to be the person who says no!

And we have the knowledge.

But because our main field of operation is the Lettings Industry, it does not mean that we cannot supply something extra, in fact, I would go as far as to say that Letting agents can make better Block Managing Agents, because in a market so heavily populated by Buy to Let properties, our knowledge can offer better solutions to situations simply because we do know what to do in such scenarios.  

Giving better advice.

Only this week, I was present at an Annual General meeting where a question was raised about HMO’s on site. Now this happens to be an area that I have a good depth of knowledge and I was quickly able to confirm the law relating to this situation, ensuring that safety was maintained for everybody living in this block. Now Block Managing Agents may already know the answer and some surely will, but my guess is there are as many as would not recognise this potential problem and would not be able to supply the correct answer.

Resulting in Additional Income.

So look at the possibilities, diversification is good in any business and I believe by encouraging involvement in this sector, allowing our Offices to earn additional income and spreading the earning potential in a field which sits so well with our industry, we are adding another worthy string to our bows.