Institute of Microtraining: The franchise opportunity
Established in Austria and Germany, training chain IoM is now launching in the UK. The franchise outlines why you should become part of its "success story"
Franchise: Institute of Microtraining (IOM)
Description: Corporate training provider – blended learning
Started in: 2011
Founder: Dieter Duftner
No. of franchises: 20
Coverage: Austria, Germany and the UK in 2016
Average cost per franchise: £29,000 (low six figure for regional master franchise)
The Institute of Microtraining (IOM) was founded in 2011 in Innsbruck, Austria, by Dieter Duftner. As the first adopters of microtraining in Europe, the Institute’s goal is to establish a set of high standards for effective and continuous education in both stand-alone and long-term training programmes.
Investing in employees’ continuing professional development in a way which suits their levels of expertise will boost productivity and retention, resulting in an increasingly satisfied workforce.
Developed by leading educational theorists, microtraining is now best practice for delivering succinct and effective training for business, based on the social constructivism learning theory, that learning is an active process which must be tailored to each learner, and the connectivism theory, that knowledge is best acquired through collaboration and communication.
The Institute has a portfolio of standard modules, which provide solutions for 95% of clients’ training requests. Thanks to these existing resources training can be purchased at ‘off the shelf’ prices. IOM’s learning experience fosters a completely new culture and philosophy of professional development among businesses and individuals alike.
Moving into franchising
So how did you move into franchising?
As a management team, IOM has always preferred working with entrepreneurs rather than an employed team. We believe in the power that comes from local franchisees who know their regional market very well and have a long-term vision for themselves to build a sustainable and successful business.
UK CEO Dr Arnd Halbach started his career in a large German retail group and it was an eye-opener for him to work both with franchisees and corporate outlets with an employed store manager. Dr Halbach: “I always felt that the conversations with the franchised entrepreneurs were much more to the point and that we were fully aligned in our goals. This is what makes franchising such a great and unique organisational format!”
Where did the business open its first franchises?
The business started in Austria in 2011. However, it wasn’t until 2015 that we on-boarded its first franchisee, actually based in the south of Germany.
This has got to do with our core belief that an organisation can only become a franchisor if, and when, it really knows the market and we have proven that the offering works. We have taken almost five years to prove our microtraining value proposition and refine the product and sales process. Now we believe that we really have it down to an art and can share all of this experience with our franchisees.
Dr Halbach:“I think it’s fair to say that what a franchisee is buying often is the amount of mistakes that the franchisor has made in developing the product and the solution he has developed over time. When we launched our franchise we wanted to be sure that we had eliminated those mistakes to give our franchisees the best possible product and process and we feel we have achieved that.”
How successful were those original franchisees?
It is certainly true that the first franchisee always has a more difficult task than someone joining the network as number 50 or number 100. It does take a special person with a “pioneering spirit” to go first, even with all the support that is provided from the franchisor’s end.
Our first franchisees probably did take a bit longer to achieve success until they signed their first clients and delivered their first client training programmes. Today, with franchisee number 20 in the on-boarding process, we have become even better in getting every franchisee off to a quick start.
One thing is quite clear though: timing for the IOM product and training service seems to be just right. Many companies are currently out there looking for smarter and more effective training solutions and IOM are one of the few international providers with a focus on microtrainings and the new blended learning format. It feels a bit like selling telecom solutions in the 1990’s: markets are really opening up due to new solutions and technology and IOM are there to service those thousands of small and medium clients actively seeking advice and new training offers.
The franchise opportunity
What makes the franchise different / unique?
We provide tailored, flexible training packages for companies which may otherwise find the cost of upskilling employees and the loss of productivity during conventional training prohibitive.
There is no other training franchise quite like IOM in the UK with its depth of product and sector coverage. We have spent years developing our blended learning process using bite-sized micro-training units ensuring that learning retention is as high as it can be. This is achieved through the creation of tailor-made training solutions to each and every client with over 2.1 million training combinations available. When coupled with a strong marketing programme in a market sector that is almost insatiable in its needs there is a clear recipe for success.
What services do you offer?
Each IOM franchisee has access to the full portfolio of IOM products which can then be tailor-made to create customised client solutions. With over 2.1 million combinations of products available, IOM can deliver over 95% of client requirements thereby creating tailor made training solutions at ‘off-the-peg’ prices.
IOM has a wide range of programmes in a broad range of topics and has experience working in:
- Banking and insurance
- Hospitality and tourism
- Service industry
- Manufacturing and processing
- Media and marketing
- Healthcare, public sector, charities and NGOs
How big is the market opportunity?
Any company with 10 or more employees can make efficient use of IOM’s in-house microtraining. According to the latest 2015 business population estimate by the Department of Business, Innovation & Skills, there are about 240,000 of these companies registered in the UK, employing a total of 17 million people.
For franchisees that wish to focus on larger clients with 50 or more employees, there are still around 40,000 of those businesses in the UK that IOM need to get in touch with.
How many franchisees do you have today?
We looking to start the business in the UK in 2016 and do not currently have franchisees in the UK market. However, we have 20 franchisees in three European countries and we are looking to grow this number to over 65 by the end of the year;,possibly more with the move into the UK and one or two other European markets.
How is the brand marketed?
How do you promote a new brand in a new market? That’s a difficult question to answer. From IOM’s experience, this is exactly where a franchise structure can provide the best results.
As a franchisor, we not only take care of national PR, sales tools, and a state-of-the-art online presence but we are also driving a sophisticated content marketing strategy together with our franchised partners. Every franchisee has his or her specific professional track record and networks, often established over 10 years or longer.
IOM wants franchisees to be able to leverage their specific industry experience by positioning them as the expert for microtraining solutions in their niche area. That has got a lot to do with creating online blogs, ebooks, whitepapers, etc. together in order to generate lead flow for IOM’s franchisees. It also means signing up for national and local events and online groups where decisions makers from that industry vertical meet and network.
There is a lot more to be said about marketing, because at the end of the day a franchisee doesn’t just buy the product, but also buys the sales methodology from the franchisors and we are happy to discuss this in more detail.
How do you divide the regions?
IOM has worked with local franchise experts and some very experienced UK sales people in order to divide the country into four sensible regional master territories. Those four territories are going to be where local franchisees receive their first level support, where they meet on a regular basis as a regional team and work together to leverage mutual contacts and experiences.
When it comes to the individual franchisee we do not believe in creating small exclusive regions for each franchisee, which has a lot to do with our franchisees’ marketing approach often being more industry focused rather than just local. If you have worked nationally or even internationally for the past 15 years, why would you want to be restricted to your home town now that you are planning to build your own business?
We are using technology to solve the question of prospecting and market potential: at IOM, each franchisee can reserve up to 250 companies in the shared CRM-system at any given point in time. Those are the 250 organisations and contacts that he or she is building relations with and helping to developed new learning solutions based on the micro methodology.
The training industry typically has a sales cycle of anywhere from two to 24 months and we encourage our franchisees to really select client prospects carefully. But once franchisees are in touch with a client organisation, they have got the sales tools and the content marketing campaigns that will allow them to stay close and sign up the client when the client is ready to take their decision.
The perfect franchisee
Identifying the perfect franchisee can be difficult as often people do not consider franchising as a career move. Once someone has thought about setting up their own business they then have to identify a product or a service that they can feel comfortable with for the next 10 20 years.
The background of an individual is not so important to IOM – what is important is that an individual has the drive and motivation to build a business from the ground up. This is not for everybody but for those that have that ambition, IOM are experienced franchisors. Our UK franchise team have over 30 years of franchise experience and can therefore enable motivated individuals to get their business up and running.
What do you look for in potential franchisees?
We look for people with the right attitude and right aptitude. We look for individuals from any walk of life that have the drive and commitment to build a business. The characteristics of an individual must be those that show a positive approach, a self starter that can work well in a start-up where you may have to do much of the ground work and also be a strong leader in a growing business.
We are seeking those with a pioneering entrepreneurial spirit to take on the management and development of our franchise as a regional master franchisee. You must possess strong leadership skills and have a persuasive personality to help bring other franchisees into the system.
So do franchisees work from an office, or are they home-based? Is it part-time or full-time?
The typical franchisee works from home or rents a small local office if that is more convenient. There is no need for an office but, specifically in the UK, we will encourage our regional master franchisees to provide some shared office space where franchisees can bring clients to microtraining seminars and possibly even have a desk where they can spend a day or two each week, at least in the beginning.
How are franchisees vetted?
We ave got a clear selection process that has proven very effective over the years. As a potential franchisee, you will meet a number of different team members during the process and IOM will be assessing mainly two things: your entrepreneurial drive and your sales and communication skills.
In order to start your business with microtraining, you do not need to have any experience in the training industry. We will teach you the specifics of our market and how learning and development might be different to your past career. However, you need to be a very self-determined person and someone who enjoys relationships at all corporate levels in order to make this a huge success for yourself.
What do you offer franchisees that sign-up?
There is a full-blown starter package that each new franchisee receives, including a full range of marketing materials and a microtraining-tablet that comes with all software , apps and tools individually pre-installed. You will have your email, CRM-access, company databases, etc. available and virtually no set-up time is required from you.
As you might expect from a training company, you will receive very comprehensive training at the beginning including two three-day-sessions at IOM’s international training centre in your first week and after your first two to three months in the business. In addition to that, you will go through our trainer certification process and will have an experienced coach assigned personally to you who will be in touch every week and will accompany you to your first client meetings.
This way, you can focus fully on client contacts from day one and will have minimal admin work in order to get started.
How much do franchisees pay and what are the ongoing franchise fees?
The initial fee for a regional master franchise is aligned to the scale of the opportunity for the region. A regional (local) franchise costs £29,000 and the regional master franchise will reflect as a multiple of the potential. We are keen to talk with individuals and are confident that with the right investment they can create the package to make this a superb ROI.
The management service fees payable by the local franchisees of 8% of turnover are shared between the franchisors and the regional master franchisee. A further 2% of turnover is contributed to cover marketing and promotion.
Success and growth
How successful are some of the franchisees today?
It’s fair to say we, and some of our franchisees, have been overwhelmed by the positive feedback we are receiving from the market. Some franchisees put together a very aggressive business plan before they started and after six months have grown even faster than anticipated. That is what we like to see of course!
How is the brand looking to grow?
We areefocused on making the UK market a great success story and aim to bring on board around 120 franchisees over the next few years. Besides this focus on the UK market, we will, of course, continue to build our existing markets and are also moving into a number selected European countries this year and in the coming years.
What is the potential of the business?
Our ambition is to be, and remain, the number one in the microtraining niche in Europe.
What will the challenges be in achieving that?
Again, time to market is critical for our success. We feel that there is a window of opportunity at the moment for innovative companies like ours to actively create new market segments and lead this change within the L&D industry.
The biggest challenge is to find enough entrepreneurs who share our vision and want to be part of this success story from the very beginning. We know that only people with a strong personality and a certain “pioneering mind-set” are the right partners at this early stage of development – and these are the people we are looking for.
What awards has the business won?
- World Summit Award 2012
- World Summit Award 2013
- E-Day Mobile Award 2012
To what extent are the founders involved today?
IOM founder Dieter Duftner is fully engaged in the business as group managing director. He is working with the IOM product development team in Austria to continue creating high quality and relevant content for IOM clients across all areas of business.
The same is true for the core management team, some of whom have been around from day one and are loving being part of the IOM international success story after years of development in the IOM pilot.
Finally, is the company a British Franchise Association (BFA) member?