After losing TWO major rail franchises, Stagecoach makes it easier for bosses to land their bonus

August 27, 2018

Stagecoach has come under fire for making it easier for bosses to be paid bonuses after it was stripped of the East Coast rail franchise by the Government.

Influential shareholder advisory group Glass Lewis is urging investors to vote against chief executive Martin Griffiths’ pay plan at the train and bus operator’s annual meeting on Friday.

In a report sent to investors, seen by The Mail on Sunday, Glass Lewis lambasts the firm for failing to explain why it lowered the profit targets for Griffiths to get a long-term performance bonus of up to £1 million.

Stagecoach has lost two major rail franchises since the previous target was set in June 2016.

The company came under fire earlier this year after Transport Secretary Chris Grayling took away the East Coast mainline franchise. The line from London to Edinburgh was supposed to have been operated from 2015 to 2023 by the Virgin Trains East Coast franchise – which is 90 per cent owned by Stagecoach and 10 per cent by Richard Branson’s Virgin.

But Grayling said the firms ‘got their bid wrong’ and overestimated how profitable it would be.

Related: Stagecoach East Coast rail line franchise ‘to be axed in days’

Last year, Stagecoach also lost its South West Trains franchise to a consortium including FirstGroup. It ran the service since its privatisation in 1996.

Griffiths agreed with his board that he should receive no bonus for the 2017-18 financial year, in part because of the East Coast fiasco. His total pay for the year was £987,000, but moving the goalposts on his bonus targets will make it easier for him to get one in future.

Under new rules, Griffiths and finance boss Ross Patterson need to pull in earnings of 24.4p to 25.7p per share to get bonuses, down from between 28.9p and 31.9p.

Glass Lewis says it ‘firmly questions’ the lack of an explanation to shareholders on why the target has been cut.

A Stagecoach spokesman said its pay policy was backed by 95 per cent of investors at last year’s annual meeting and noted that another shareholder advisory group, ISS, is recommending that investors back the board.

‘Challenging long-term incentive payment targets are also set every year, taking into account the nature and scale of the business, internal forecasts and market consensus,’ the spokesman added.

‘It is only proper that these targets will change from year to year.’

Source: This is Money

Peterborough Starbucks franchise receives £3.6m investment

August 27, 2018

Following an initial £5.6m growth capital investment in 2015, Connection Capital has invested a further £3.6m into Starbucks UK franchised business 23.5 Degrees Ltd to fund its ambitious expansion plans.

Since Connection Capital’s original investment, the company has acquired and opened 40 stores, including twelve “drive-through” stores, and has just celebrated the opening of its 53rd store, in Peterborough.

23.5 Degrees opened its first store in Hampshire in 2013. Since then it has grown from 20 employees to 700 and has served an estimated 5.6 million customers.

It will use Connection Capital’s investment alongside new bank finance facilities from HSBC to accelerate its roll-out strategy, targeting 150 stores within the next four years. It is well on track: two more sites are already planned to open by the end of August, with a further 23 scheduled to open within 12 months.

Related: Starbucks franchisee opens its 50th coffee shop

23.5 Degrees currently has a large pipeline of drive-through stores – a sector of the market which has significant growth potential and is relatively immature compared to the US.

It is targeting potential sites on main arterial routes, close to major retail destinations or on large industrial estates. However, it will also consider retail park and ‘drive-to’ destinations, as well as high street units in prominent, busy locations.

The expansion comes as the UK coffee shop market is expected to continue to grow strongly. According to consultants Allegra Strategies, the market will exceed 31,400 outlets by 2022 with a turnover of £13bn – up from just over 24,000 outlets and a turnover of £9.6bn in 2017.

Pascal Wittet, the Partner at Connection Capital leading the investment, said: “23.5 Degrees has grown rapidly in just a few years, creating hundreds of jobs and investing millions of pounds into the UK economy along the way. We’re proud to have been part of that. With this new funding, Mark and his team will have the next piece of the jigsaw to build on their success and deliver their ambitious expansion plans.”

Mark Hepburn, Managing Director of 23.5 Degrees says: “Reaching our 50th Starbucks store in just five years was a major milestone and Connection Capital has played a big part in that success. But we’re not stopping there. The UK coffee market is continuing to grow and with our expertise and Connection Capital’s backing, we hope to extend our store count considerably in the coming years.”

Helen Doran, Director Licensed Operations, Starbucks UK, previously commented: “Over the past five years we have seen 23.5 Degrees open 50 Starbucks stores that we can all be proud of. We are committed to growing our partnership together by opening stores with close links to the local community and creating spaces that are warm and welcoming for all to enjoy.”

Source: Business Leader

Theresa May could open Britain’s borders for goods under a no-deal Brexit

August 24, 2018
  • The government could open Britain’s borders to many goods coming from the EU from March next year under a no-deal Brexit.
  • Thousands of British people who live and work in Europe could also lose access to their pensions overnight under a no-deal scenario.
  • The news comes as Brexit secretary Dominic Raab publishes the first batch of no-deal contingency plans on Thursday, who will say the measures are “a sensible, measured, and proportionate approach.”

LONDON — The government could “unilaterally” open Britain’s borders to all but high-risk goods from March next year under a no-deal Brexit in a bid to avoid chaos at Britain’s ports.

The government, which would face a massive increase in customs checks if it failed to secure a deal with Brussels, would set up new “technical options” which would “minimises delays” at the borders and digitally collect VAT, introducing spot checks on some goods but waving most through.

The no-deal plans say that “customs checks may be carried out” on goods entering from the EU but said they would be “highly automated, risk-based and intelligence-targeted” controls, meaning many goods would simply not be checked.

The government would not demand Brussels to reciprocate the deal, meaning UK firms would face big new tariff and non-tariff barriers on goods being exported to Europe which could run many out of business.

Large numbers of British people who live and work in Europe could also lose access to their pensions under a no-deal scenario, the Sun reported.

British citizens who have worked in EU countries and built up pension funds abroad which are then paid into a UK bank account are said to be particularly at risk.

Brussels pensions rules mean that funds that cross borders can only be paid into EU-registered bank accounts.

That means expats and former expats with British bank accounts risk having their payments cut off when the UK becomes a third country in March next year.

‘Sensible, measured, and proportionate’

Dominic RaabBrexit secretary Dominic Raab Jack Taylor/Getty

The news comes as Brexit secretary Dominic Raab publishes the first batch of no-deal contingency plans on Thursday.

He will say in a speech that the measures are “a sensible, measured, and proportionate approach to minimising the impact of no deal on British firms, citizens, charities and public bodies,” and claim “a duty, as a responsible government, to plan for every eventuality.”

The UK is set to leave the EU in March 2019, and a number of issues in talks remain unresolved, meaning the prospect of both sides failing to reach a divorce agreement has increased significantly.

Related: 5 ways life could become harder for British people if there is a no-deal Brexit

But Labour’s Brexit secretary Keir Starmer warned that failure to secure a deal would represent “a complete failure” to negotiate on the government’s part.

“If the publication of these documents is just a crude attempt by Ministers to dress up the severe consequences of a no deal Brexit as somehow acceptable, the whole exercise will be pointless,” he said in a statement.

“A no deal Brexit would be a complete failure by the Government to negotiate for Britain. These documents should not distract us from that.

“No deal would be catastrophic for people’s jobs, the economy, and for the border in Northern Ireland.

“It is irresponsible for anyone to casualise no deal,” he said.

Source: Business Insider UK

Franchise holders at Bargain Booze can now buy drinks outside the group

August 24, 2018

Franchise holders at Bargain Booze and Wine Rack can now source 10% of their goods from outside the Bestway Group as part of updates the company has made to contracts following its purchase of the Conviviality Retail division in April.

The updates to the agreement with Bargain Booze franchisees include the ability to source up to 10% of goods from outside the company as well as simplified paperwork, 21 days credit on all orders and fewer retro payments, sale or return.

The changes, apart from Bargain Booze,  also apply to Select Convenience and Central Convenience – a total of over 2,000 stores – and were communicated to retailers in a number of recent regional meetings.

The measures have been put in place to improve cash flow with an additional scheme put forward that will allow franchisees to earn up to a 4% rebate on wholesale spending across the Bestway Group.

Bestway Retail managing director, David Robinson, said: “Many of our franchisees were impacted by the disruption they had recently experienced, so it was important that we met with as many of them as possible. We wanted to not only communicate our new improved proposition, but also to listen to them and respond to as many questions as possible as we begin to build the plans for the future.

Related: Bestway buys Bargain Booze at bargain price

“It’s vital that we meet the needs of our retailers and, by limiting the amount of paperwork, this frees up franchisees’ time for developing their business. The reduction in the number of products franchisees are required to purchase through the company gives store owners the opportunity to support other businesses and provides shoppers with locally sourced products which may not be available centrally.

“The most important thing is that we get the customer offer right. Increasing the number of lines to franchisees allows them the opportunity to widen their range and customer base and increase basket spend and sales. The vast majority of franchisees have responded extremely positively to the new proposition.”

On 9 April this year, former UK drinks conglomerate Conviviality confirmed the sale of its retail division to Bestway for £7.25 million.

The Bestway Group was founded in 1976 and is the UK’s eighth largest privately-owned company. It includes Bestway Wholesale, the UK’s largest independent wholesaler, Best-one, which operates the franchises of over 1,113 convenience stores, Bestway Foodservice, a service for caterers and the hospitality trade, United Bank Limited, the second largest private bank in Pakistan and Bestway Cement, the largest cement producer in Pakistan. The group also operates Wells Pharmacy, the third largest pharmacy business in the UK.

Source: The Drinks Business

Is UK economic growth higher than in Europe?

August 24, 2018

Claim: UK economic growth in the second quarter of 2018 was 0.4%. In the Eurozone it was 0.3%.

Conclusion

This was correct when the claim was made earlier in August, but the figures have since been revised, with both the UK and Eurozone growing at 0.4% in the second quarter. Growth in the EU and the Eurozone is higher in the previous 12 months than the UK. It’s projected to stay that way.

“UK economic growth in the second quarter of 2018: United Kingdom: +0.4% Eurozone: +0.3%”

Twitter user, 10 August 2018

When this claim was made earlier in August, it was correct that in the second quarter of 2018, the UK’s Gross Domestic Product (GDP) grew by 0.4% and the Eurozone’s grew by 0.3%. The Eurozone figure has since been revised to 0.4%, the same as the UK.

In the longer term, UK economic growth is below growth in the Eurozone.

The Eurozone is made up of those countries that use the Euro, and isn’t the same as the European Union as a whole (which includes countries like Poland and the UK which don’t use the Euro).

Related: Chancellor says no deal Brexit will damage UK GDP for years to come

The EU’s growth last quarter was, like the UK’s, 0.4%. Its growth was still the same even if you remove the UK from the calculation.

growth

Referring to the UK’s performance the Office for National Statistics said: “The economy picked up a little in the second quarter with both retail sales and construction helped by the good weather and rebounding from the effects of the snow earlier in the year.”

GDP is the main measure of the size of a country’s economy. It can be measured in different ways, one of which is adding up the value of all goods and services produced in a country.

What’s happened over the longer term?

Looking at a single quarter’s growth figures in isolation won’t give you the big picture. Quarterly GDP growth has been higher in the EU and Eurozone since the last quarter of 2016.

GDP growth in the Eurozone and wider EU is forecasted to be higher than in the UK in 2018 and 2019.

growth

Source: Full Fact

Pizza Hut UK tightens margins to offset £8m drop in sales

August 22, 2018

Pizza Hut UK has reported pre-tax losses of £7.5m despite efforts to tighten margins and limit discounting. 

The figure, published in its strategic report for the 12 months to 3 December 2017, compares to pre-tax profits of £5.2m the previous year, and follows a drop in sales of 3%, from £233m to £225m.

Overall operating loss of Pizza Hut was £390,000, down from a £7.36m profit the previous year, which the company claimed was caused by “the increase in royalty rate under the franchise agreement and the impact of the prior year having a 53rd trading week”. It also cited drier spring conditions and a less family-friendly cinema offering than seen in previous years.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

However despite this the company, which runs 262 restaurants across the UK, experienced a trading EBITDA of £30.4m, up from £28.3m the previous year.

Within the report the company defended its commitment to marginal discounting on a localised model, as opposed to competitors like Domino’s who have increased sales with themed discounts and offerings including the World Cup inspired ‘meat fielder’ pizza.

The report notes: “Following several years of strong growth the casual dining sector has seen a decline in like-for-like sales over the last 12 to 18 months and by the end of 2017 growth was running below the rate of inflation.

“During this period there has been a decline in consumer confidence, which coupled with nominal wage growth and rising inflation has squeezed disposable income and impacted the consumer’s appetite for discretionary spend.

“Compounding this impact has been the effect of the crowded market place following significant rollout activity over the last few years, the increase in delivery options and the impact of grab & go concepts.”

Source: The Caterer UK

To franchise or not to franchise?

August 22, 2018

Considering a new career in the franchise world? Here are some questions you should answer to understand if the franchise business model is right for you.

Are you new to business?

If you don’t have any formal experience of running your own company, franchising may be one of the best business opportunities available to you. That’s because you’ll be working under a brand that already has significant market exposure and operates with a proven business model.

This minimises your risk and increases your prospects of achieving a profitable and sustainable business.

If you were to start an independent business from scratch, you’d have to go through all the trials and tribulations of turning the concept into a business model and achieving brand recognition.

This can be very costly and time-consuming, especially if you’re new to enterprise.

Do you want to be part of a robust business network?

Being a franchisee doesn’t just give you the opportunity to run and operate your own company under a franchise business model.

You’ll also have the chance to network with fellow franchisees, gain insights into how they’ve built their companies under the same brand, and be part of a large, supportive community.

In fact, franchisors often arrange networking events free of charge and encourage maximum participation. After all, it’s in their interests to get franchisees to exchange ideas and find new ways to drive the network forward, especially when more people are buying into a franchise with the same brand.

Related: Pros & Cons of Running a Franchise

This means you’ll have plenty of opportunities to stay up-to-date with your industry and learn about the latest trends and ideas.

Plus, gaining new business contacts and sharing your ideas can help you stay motivated and focused, especially when your franchise is still in its early stages. On the other hand, a solo entrepreneur might not have the opportunity to attend these types of events and learn from other business leaders face to face.

Is there a specific industry you’d like to work in?

The chances are you’ll enjoy a much higher sense of job satisfaction if you run a franchise in an industry that you’re passionate about and/or have experience in.

For example, someone with experience of managing a restaurant or who has a passion for food is more likely to enjoy running a catering or restaurant franchise, whereas a former athlete or exercise enthusiast may find success running a gym franchise.

Is the franchise model you’re considering going to survive?

Make sure you research the franchise industry so you can determine whether the underlying business model is sustainable.

For instance, some franchise models can become obsolete when a competitor comes up with something much cheaper and more efficient. Consider the viability of a video rental franchise in the early 1990’s, before the invention of the DVD player in the early 2000’s. And things continue to change. Investing in a DVD franchise now would be a dangerous move, as sales have fallen drastically thanks to the boom in digital downloads.

Are you looking for ongoing training opportunities?

To remain competitive and offer the best business opportunities, franchisors must continually invest in research and development. This enables them to innovate their product offering and keep their customers happy.

As you can imagine, it’s in their interests to provide you with ongoing training and support so you can maintain a high level of operational efficiency and sustain your franchise model.

Are you happy to operate under someone else’s concept?

A franchisee has to be comfortable carrying forward a predetermined concept and representing a brand that was created by someone else.

Your franchisor will have clear guidelines for how you market the brand and communicate with your customers/clients, as this will ensure all franchisees are consistent.

For quality control, you’ll also need to work with a list of suppliers that have been approved by the franchisor, even if you wouldn’t necessarily choose these suppliers yourself.

Do you have enough money to finance your franchise business?

Before buying into a franchise, make sure you meet the franchisor’s financial requirements and have enough working capital to fund your franchise’s day-to-day operations.

While franchisors will tell you what the minimum requirements are for the investment, you’ll still need extra money for getting the business up and running, and to pay for legal fees and any moving costs.

Many franchisees finance the majority of their investment with their own money. However, large franchisors will often have good relationships with UK banks, which may be willing to offer more favourable lending terms to franchisees, so you don’t have to miss out on the best business opportunities.

Source: Start-Ups

Two-thirds of Property Franchise Group now on OTM, reveals chief executive who initially advised against it

August 21, 2018

Two-thirds of offices at The Property Franchise Group are now listing their properties at OnTheMarket, chief executive Ian Wilson has revealed.

He said: “I made no secret of it that I was not a fan when it launched. I actually advised our franchisees not to participate at launch.

“I thought it was not a good enough reason for agents to get together to have a pop at Rightmove – there had to be something in it for the consumer.”

However, a meeting with OTM chief executive Ian Springett persuaded Wilson that his franchisees might benefit by giving it a try – especially as it would be free.

Were all The Property Franchise Group’s offices to sign up to OTM – with a probable sweetener of free shares – it would be a major coup for the portal, to recruit what looks like its second biggest group after Spicerhaart.

Wilson said there was evidence that the launch of OTM has made no difference to Rightmove’s pricing plans, with increases continuing in line with what they were before the OTM launch.

Related: The Property Franchise Group snaps up city independent agency

However, there was evidence that Zoopla had had to ‘soften’ its own pricing ambitions.

Wilson says that offices now on OTM are averaging 50 leads from it per month.

Were the franchisees paying – and the large majority are not – Wilson says this would equate to £6 per lead.

He said: “What we cannot tell is whether these are unique leads or duplicates.

“However, we have a new group CRM system being switched on in September, from which we will be able to see whether leads we get from Rightmove, Zoopla and OTM are unique or duplicates.

“By next spring, we will be able to trace back each sale and each let back to the lead, and to which portal that lead came from.

“That information will help us decide whether OTM, charging around £300 a month, will be worth continuing with.

“We will be able to provide our francisees with fact-based evidence showing which portal produces the cheapest leads, which produces the highest proportion of unique leads, and which portal produces the most leads resulting in a sale or let.”

Wilson said that franchisees who sign up after a free trial could be in line for free shares in OTM.

He told EYE: “OTM has £36m of free shares to give away.” He said that the prospect of equity in OTM could be a compelling proposition for franchisees.

In a twist, though, it has emerged that some early OTM adopters in the group’s Xperience and Whitegates brands are in contractual disputes.

Wilson believes these can be overcome, given OTM’s clear enthusiasm to recruit a group of some 300 franchisees.

Wilson said he is concerned that Rightmove’s prices will continue to rise.

He said that, because of his firm’s group buying power, The Property Franchise Group pays less than the average £1,100 charged to small independents.

But, Wilson said, if because of poor market conditions and loss of income from the tenant fee ban, smaller agents go out of business, Rightmove could make up the lost revenue by reducing the volume discount.

Source: Property Industry Eye

Business leaders’ confidence in UK economy at lowest so far this year

August 21, 2018

Business leaders’ confidence in the British economy has fallen to its lowest point this year reflecting the impact of uncertainty over Britain’s exit deal with the European Union, according to a survey published on Monday.

With less than eight months to go until Britain is due to leave the EU, the government is yet to agree the terms of its departure with Brussels and has stepped up planning for the possibility of failing to reach a formal agreement.

The survey of 750 business leaders, carried out by the Institute for Directors (IoD) employers group, found that after general economic conditions, uncertainty around trade with the European Union was the biggest concern.

Asked how optimistic they were about the wider economy over the next 12 months, more said they were pessimistic than optimistic, resulting in a net confidence level of -16 percent.

Related: Business confidence hits lowest level since the financial crisis

That compared with -11 percent in June, and down from a positive rating of 3 percent in April. The IoD said 44 percent cited uncertainty over the trading status with the EU as having a negative impact on their organisation.

“Despite cautious optimism emerging amongst the business community earlier in the year, any momentum appears to have dwindled,” Tej Parikh, Senior Economist at the Institute of Directors, said in a statement.

“We’re heading back to the levels of pessimism we saw before progress was made on phase one of Brexit talks.”

The survey, carried out July 11-26, found respondents were more positive about the prospects for their own organisations, with a net positive outlook of 37 percent, although this was also down from 46 percent in June.

Parikh said that as well as uncertainty over Brexit, larger businesses had been hit by other headwinds including oil price rises, while smaller firms were suffering from high costs, skills shortages and weak productivity.

“It’s unfortunate that the Brexit process has limited the bandwidth of government to meet equally pressing domestic economic challenges, that needs to change sooner rather than later,” he said.

Source: UK Reuters

Applegreen opens its 80th Subway sandwich store

August 21, 2018

Applegreen, a leading petrol forecourt retailer with over 250 sites in the UK and Ireland, has opened its 80th Subway store in Balbriggan, Republic of Ireland.

The sandwich store within Applegreen’s forecourt at Millfield Shopping Centre features Subway’s new Fresh Forward décor with customer-focused touches, such as digital menu boards and free-to-use charging ports.

Applegreen opened its first Subway store in Gorey, Republic of Ireland in 2013, followed by its first store in the UK. The company now has 49 Subway’s in the Republic of Ireland, 26 in England and five in Northern Ireland.

Related: Fast Food Franchises in the UK – 10 Things Every Would-Be Franchisee Must Know

Justin Goes, regional director Europe at Subway International, said: “We are delighted to have reached the milestone with Applegreen. Non-traditional development has been a key factor to Subway’s growth in the UK and Ireland through our partnerships with the likes of Applegreen. It is great to see there are still many opportunities for further stores at its locations, and we look forward to working together to open many more in the future.”

Aaron Duggan, head of food for Applegreen, added: “We are delighted to be extending our partnership and know our customers look to us for value and choice in fresh food and having a well-known brand, such as Subway, offers customers just that.”

Subway says that it supports the UK Government’s public health responsibility deal and has endorsed eight of the nutrition-related pledges. The company adds that it has reduced salt, eliminated artificial trans fats, displays energy information on menu boards, cut calories across its product range and increased fruit and vegetables as part of a balanced diet.

Source: Franchise World