‘Pleasing progress’ at Franchise Brands

July 27, 2018

Revenue and profits have jumped at Franchise Brands, the Kidderminster based group, thanks to its £28m takeover deal for drain cleaning business MetroRod.

It become its fourth franchise business and has helped push revenues up 88% to £16.8m in the six months to June with Franchise Brands swinging to a £1.4m pre-tax profit from a £200,000 loss a year ago due to the costs of the MetroRod deal.

Executive chairman Stephen Hemsley said: “The first half of 2018 has been a period of pleasing progress for Franchise Brands with the business as a whole performing as expected.

“Metro Rod is capable of significant growth and I am very encouraged that we have started to see the benefits coming through of the new strategy. The investment we are making will help unlock Metro Rod’s potential; new technology is already allowing us to automate processes, reduce costs and provide a superior customer experience.”

The group also owns car body repairer ChipsAway, cleaning business Ovenclean and dog sitters Barking Mad, all of which “performed solidly” in the first half of the year

Mr Hemsley added: “The outlook for the group remains very positive and I look forward to the remainder of 2018 with confidence.”

Source: Express and Star

Franchise Brands PLC (LON:FRAN) Declares Dividend Increase – GBX 0.33 Per Share

May 20, 2018

Franchise Brands PLC (LON:FRAN) announced a dividend on Thursday, March 22nd, Upcoming.Co.Uk reports. Stockholders of record on Thursday, April 26th will be given a dividend of GBX 0.33 ($0.00) per share on Tuesday, May 15th. This represents a dividend yield of 0.47%. The ex-dividend date of this dividend is Thursday, April 26th. This is a boost from Franchise Brands’s previous dividend of $0.17. The official announcement can be seen at this link.

Franchise Brands remained flat at $GBX 84 ($1.14) during mid-day trading on Thursday, according to MarketBeat. 10,029 shares of the company were exchanged, compared to its average volume of 35,951. Franchise Brands has a 12-month low of GBX 48 ($0.65) and a 12-month high of GBX 107 ($1.45).

In related news, insider David Poutney acquired 25,000 shares of Franchise Brands stock in a transaction on Monday, May 14th. The stock was bought at an average cost of GBX 78 ($1.06) per share, for a total transaction of £19,500 ($26,451.44).

About Franchise Brands

Franchise Brands plc engages in franchising and related activities primarily in the United Kingdom. It provides automotive repair services comprise bumper scuffs, paintwork scratches, minor dents, and kerbed alloy wheel repairs under the ChipsAway brand name; and oven cleaning services include cleaning of domestic oven brands and models, such as electric and gas ovens, ranges, microwaves, hobs, extractor fans, and barbecues, as well as various removable components consisting of racks, doors, and glasses under the Ovenclean brand.

Source: Week Herald

Franchise Brands hails “record” start to the year

April 26, 2018

Kidderminster-headquartered Franchise Brands has revealed that its trading over the first three months of the year has been ahead of expectations.

The listed company has added that the number of jobs completed by Metro Rod and Metro Plumb was up by 16 per cent year-on-year to record levels.

The trading update to 31 March comes after the business revealed last month that its revenues for the year to 31 December 2017 increased to £24.3m compared to £4.9m 12 months earlier while pre-tax profits also rose to £2.1m from £1.2m.

Executive chairman Stephen Hemsley said: “Group trading in the three months to 31 March 2018 has been marginally ahead of management’s expectations.

“In particular, the number of jobs completed by Metro Rod and Metro Plumb was up by 16 per cent year-on-year to record levels, although the average order size was slightly lower due to the heavy rain and snow resulting in more lower value emergency plumbing and drainage jobs.

“Costs were well-controlled with the headcount at Metro Rod falling by 16 per cent year-on-year, as the benefits of the IT investment in that business start to become apparent.

“The board looks forward to the remainder of the year with confidence.”

Source: Insider Media

SMALL CAP SHARE IDEAS: Domino’s former boss looks to replicate success for his Franchise Brands

April 11, 2018

Buy and build is a strategy that has served many small businesses well over the years. AIM-listed Franchise Brands is adopting a similar path, but with a twist.

As the name implies, the operations the group owns are franchises and for its purposes it is less the type of business rather than the structure that matters.

That factor helps explain a current portfolio that includes drain cleaning, dog sitting, car body repairs and oven cleaning. The common link is they can all benefit from one, central support services function.

As more brands are added, more benefit (and profit) is extracted out of the management hub so that the sum of the parts becomes greater than each business individually.

If that model sounds familiar it may be because Franchise Brands is the vehicle of one-time Domino Pizza UK boss Stephen Hemsley and his business partner, Saracens rugby club owner Nigel Wray.

Hemsley enjoyed a 20-year career at the UK arm of Domino’s, where he helped steer the group from start-up to a market cap of £1.6billion.

Finance director at first, he became chief executive and finally chairman and still retains links to Domino’s through a non-executive seat on the board.

A strong core and infrastructure were key to the pizza group’s success and he is confident he can repeat the trick with Franchise Brands.

There is one significant difference. Domino’s UK had an exclusive licence with the US owner, a master franchise, but this time Franchise Brands owns the brands itself, which crucially gives it complete control of marketing, branding and the other support services.

The four bands currently in the portfolio are Metro Rod (drainage and plumbing); ChipsAway (minor car paintwork repairs), Barking Mad (dog sitting) and Ovenclean (cleaning ovens).

All brands and IP are owned by the company, with direct franchises to operators in most cases, though ChipsAway does have some master licences overseas.

MetroRod is the most profitable currently and the most recent addition, having been acquired for £28.4million in April 2017.

Hemsley says the potential of the business has been a nice surprise, especially the fact it is in effect two businesses.

Metro Plumb, a specialist plumbing service, was almost thrown in for nothing and ultimately might have even more potential than Metro Rod, which specialises in drain cleaning and maintenance.

Both companies are B2B business, not domestic, working for utilities and businesses supplying emergency repair services and there appear to substantial opportunities for each.

Plumbing business: MetroRod is the most profitable currently and the most recent addition

Plumbing business: MetroRod is the most profitable currently and the most recent addition

At Metro Rod, the initial thought was it would be competing in a market dominated by four large groups.

In fact, Franchise Brands has found that the market contains up to 1,500 smaller players and a lot of scope to build market share.

‘Out of a business worth £750million, we have a market share of £35million,’ said Hemsley.

Metro Rod has also been a little neglected. Formed 30 years ago, it has changed hands a few times since, but this is the first time a specialist franchising team has held the management reins for more than 20 years.

Brand building features heavily in Hemsley’s rejuvenation plans.

‘It’s all in the sales and marketing – professionalising this to raise the profile of the brand and the understanding of what we do.’

Adding Metro Rod has also allowed Franchise Brands to strengthen both the central IT infrastructure – it never had the scale previously – and finance function with a chief financial officer now on board as well.

That has freed up the three managing directors, which now includes one to run Metro Rod, within the business just to focus on building the franchise networks not the back-office or admin stuff.

One other brand in the portfolio is Ovenclean

One other brand in the portfolio is Ovenclean

These investments will dampen profits in the short term – as the additional central costs will outrun the growth in the income received from franchisees.

As sales pick up or more brands are added, the rewards will come through and should increase rapidly. That was how it worked at Domino’s, Hemsley says.

Initially, royalty income from franchise businesses struggle to keep up with central costs, but once the system is in place and annualised, any further expansion drops straight to the bottom line.

‘At Domino’s we had five years of growing overheads as costs rose as fast as income.

‘But once everything was in place, profits went from £5million to £100million.’

Franchise Brands’ is still a way off that, but house broker Allenby Capital is pencilling in profits in 2018 to rise to £2.81million (from £2.1million) and to £3.5million in 2019.

Cash generation is good as commercial risks and capital expenditure are borne by the franchisees. There is a dividend, 0.5p in 2017, while Hemsley and Wray still own stakes of 26.4 per cent and 27.8 per cent respectively.

Executing the strategy for Metro Rod will take 18 months, says Hemsley, but after that point the incremental turnover starts to come through on annualised overhead costs.

‘From 2019 onwards – it will start to get interesting’.

At 69.5p, Franchise Brands is valued at £54million.

Source: This is Money

 

Franchise Brands’ strong core the key to growth plans

April 6, 2018

Franchise Brands PLC (LON:FRAN) does what it says on the tin – it owns branded businesses and franchises them out.

Under its umbrella, the company currently has four businesses but is in the process of beefing up its infrastructure, especially IT, after which it will add more.

That strengthened infrastructure is key to what is, in effect, a classic buy and build strategy.

As more brands are added, more benefit (and profit) is extracted out of the management hub at the centre.

Stephen Hemsley, executive chairman and co-founder, is confident the plan will deliver substantial gains for shareholders.

And he has plenty of experience to draw on.

Twenty years of making dough

In a 20-year career at the Domino’s Pizza franchise in the UK, he steered the group from an early stage start-up to a market cap of £1.6bn currently.

Hemsley was finance director at first, then chief executive and finally chairman and he still retains links to Domino’s through a non-executive seat on the board.

His plans for Franchise Brands contain much of what he learnt during that time at the pizza delivery business.

Most franchise owners and managers are great at building a relationship with their franchisees, he says, but a lack of critical mass means they struggle with the support services requirements.

Finances are handled poorly, they recruit badly, have weak IT systems and lack marketing sophistication.

While a good relationship with the franchisees can compensate some way for this, Hemsley, and long-standing business partner Nigel Wray, believe a better option is to provide those skills to the franchises.

Sum of the parts

Brands with common characteristics can leverage a centralised support services function, so the sum of the parts becomes greater than each business individually – and that is what Franchise Brands aims to do.

It may sound like Domino’s UK pizza business, but there is one major difference.

Domino’s UK had an exclusive licence with the US owner, a master franchise, but this time Franchise Brands owns the brands itself, which crucially gives it complete control of marketing, branding and the other support services.

The four bands currently in the portfolio are Metro Rod (drainage and plumbing); ChipsAway (minor car paintwork repairs), Barking Mad (dog sitting) and Ovenclean (cleaning ovens).

All brands and IP are owned by the company, with direct franchises to operators in most cases, though ChipsAway does have some master licences overseas.

Metro Rod points the way

It is the most profitable currently, but Metro Rod is the largest and most recent incomer, having been acquired for £28.4mln in April 2017, and will become increasingly important.

Hemsley says the potential of the business has surprised the company since it took over, especially the fact it is in effect two businesses.

Metro Plumb, a specialist plumbing service, effectively was thrown in for nothing and ultimately might have even more potential than Metro Rod, which specialises in drains cleaning and maintenance.

Both companies are B2B business, not domestic, working for utilities, businesses supplying emergency repair services and there are huge opportunities for each, Hemsley believes.

At Metro Rod, the initial thought was it would be competing with the four heavyweights in the sector, but in fact, the market contains 1,500 smaller players and that diversity gives a lot of scope to build market share.

“Out of a business worth £750mln, we have a market share of £35mln”.

Brand building

Metro Rod has also been a little neglected. Formed 30 years ago, it has changed hands a few times since, but this is the first time a specialist franchising team has held the management reins for more than 20 years.

Brand building features heavily in the rejuvenation plans.

“It’s all in the sales and marketing – professionalising this to raise the profile of the brand and the understanding of what we do.”

Adding Metro Rod has also allowed Franchise Brands to strengthen its IT infrastructure – it never had the scale previously – and finance function with a chief financial officer now on board as well.

That has freed up the three managing directors, which now includes one to run Metro Rod, within the business, just to focus on building the franchise networks not the back-office or admin stuff.

These investments will dampen profits in the short term as the additional central costs will outrun the growth in the income received from franchisees, but as sales pick up or more brands are added, the rewards will come through increasing rapidly.

That was how it worked at Domino’s, Hemsley says.

Invest first, profits later

Initially, royalty income from franchise businesses struggle to keep up with central costs, but once the system is in place and annualised, any further expansion drops straight to the bottom line.

“At Domino’s we had five years of growing overheads as costs rose as fast as income.

“But once everything was in place, profits went from £5mln to £100mln.”

House broker Allenby Capital expects Franchise Brand’s profits in 2018 to rise to £2.81mln from £2.1mln, on revenues of £33mln (£24.3mln).

Cash generation is good as commercial risks and capital expenditure are borne by the franchisees.

Franchise also pays a dividend, 0.5p in 2017, while Hemsley and Wray still own stakes of 26.4% and 27.8% respectively.

Executing the strategy for Metro Rod will take 18 months but after that point, Hemsley says the incremental turnover starts to come through on annualised overhead costs.

“From 2019 onwards – it will start to get interesting”.

At 73.5p, Franchise Brands is valued at £55mln.

Source: Proactive Investors

FRANCHISE BRANDS REPORTS REVENUE SURGE

March 24, 2018

Revenue surged by £20m at Kidderminster-headquartered Franchise Brands, according to new results. The news comes as the company has made two senior appointments.

Franchise Brands reported revenues of £24.3m for the year to 31 December 2017 compared to £4.9m 12 months earlier. Pre-tax profits also rose to £2.1m from £1.2m.

The company also confirmed the appointment of Peter Molloy as managing director of Metro Rod and Colin Rees as chief information officer, with immediate effect. Metro Rod was acquired in April 2017 for £28.4m.

During the period, Franchise Brands bolstered the total number of franchises it manages in the UK from 393 to 438.

Executive chairman Stephen Hemsley said: “2017 has been a year of considerable progress in the development of Franchise Brands, with strong growth from the original brands, and the acquisition of Metro Rod has propelled the company into becoming one of the largest franchise groups in the country.

“Metro Rod has a market-leading national offering in the commercial drainage market which has never been fully exploited and its upside potential is substantially greater than we originally anticipated.

“The implementation of the new strategy we have formulated is well underway, and I am confident that the additional investment we are making in the business, combined with the quality and experience of the management team we now have in place, will allow us to unlock that potential over the next two years.”

Source: Insider Media