Recognition Express Ltd: The franchise opportunity

Startups speaks to Recognition Express owner Nigel Toplis about the promotional products and merchandising business’ successful franchising opportunity

Description: One of the UK’s leading B2B franchisors, Recognition Express is a leading supplier of branded products, such as corporate workwear, badges, awards, promotional items, and printed displays and banner stands for exhibitions.
Started in: 1979
Founders: Not known
No. of franchises: 50 franchise territories
Coverage: UK, Ireland, Spain, Portugal and Germany
Average cost per franchise: £35,000 plus vat
Website: http://www.recognition-express.com/

It’s hard to recall a British high street without McDonalds and Kentucky Fried Chicken, but back in 1979 the American fast food giants arrived on UK shores and sought a printer for their menus and a maker of name badges. No-one in the UK wore name badges back in 1979. The printing company, which evolved into Recognition Express didn’t know how to do name badges so hired Badgeman in the US.

The printing company started using Badgeman’s technology to make name badges, and Recognition Express grew through a system of franchises starting in Richmond and Thames Valley offering personalised name badges for the likes of British Airways, Rolls Royce, Marriott, and McDonalds.

A sale to Sketchley in the late 1980s – the dry cleaning empire of the time – followed, with Sketchley diversifying into a number of different areas, such as shoe mending, key cutting, and name badges too. Terry Howarth was hired from Pilkington Glass as managing director. The franchise company then expanded its product range to plaques and door plates, everything done with the same engraving technologies. During this time Sketchley also grew its franchise opportunity, adding two or three franchisees each year.

In 1996 Howarth carried out a management buy-out from Sketchley, and continued the business in a similar form to the one we see today. By 2000-01 there were around 17 or 18 franchise owners, at which point Howarth expanded the business to produce other decorated items and investigated the promotional products marketplace. In June 2002 Howarth was diagnosed with terminal cancer and Nigel Topliss, who was running Kallkwik and Prontaprint at the time, was approached for investment. The company now supplies a comprehensive range of branded products – from confectionary and mugs to branded workwear and name badges.

So, Nigel, tell us how you grew the franchise opportunity.

I joined in January 2003 and took over as managing director from Terry. We invested in a number of different product types, moving from the original income stream of badges and manufacturing into much more of a marketing focus. We now have eight income streams including badges, signs, plaques, awards, business gifts, medals and trophies, promotional products and corporate clothing, and large corporate printing. We wanted our franchise owners to have a number of different income streams.

How successful were the first franchises?

Richmond was eventually bought out by Thames Valley, the Thames Valley franchise is interesting because it’s now into its fourth franchise agreement – they’ve renewed it three times. They’re our most successful franchise, turning over £1m a year with retained clients such as British Airways and McDonald’s.

The franchise opportunity

What services do Recognition Express’ franchises offer?

It covers a whole range of services from fast food and hotels to education and corporate gifts, and from retail services such as garment alterations to auditing and tax services – it really covers the gamut of business. The essence is repeatability and consistency. A good franchise is a proven, repeatable, well-supported model, with potential for growth.

How many franchisees does Recognition Express have today?

We have 50.

How is the brand marketed?

There are two lots of marketing to consider. One is the marketing to attract franchisees, which is done via websites, the BFA, going to exhibitions, advertising in franchise magazines, articles in publications such as the Franchising Bible. And then in terms of advertising or marketing the products and services that we do, we are 100% a B2B franchise and the essence of good B2B is that the supplier – the franchise owner – must get close to the buyer.

We do a lot of local marketing, we’re heavily involved in building the awareness and exposure of the franchise owner in their territory, through things like networking, making appointments and attending relevant events. It’s very one-to-one, very targeted, very focused. The essence of this business is activity – the more people the franchise owner sees, the more business they will get. That, in essence, summarises B2B marketing.

How are regions divided?

We don’t have regions, we have territories and these are allocated according to the number of businesses. We will look at an area and if there are the right number of businesses in that area it becomes a territory. We have the opportunity to have 90-100 territories in the UK.

The perfect franchisee

What does Recognition Express look for in potential franchisees?

They must be hardworking, have a good business ethic and be prepared to follow the system, because the system’s what they’re buying into. You also want them to be good communicators, well-organised and focused on the things that make the difference in the business. You want them to have initiative, but you don’t want them to be entrepreneurs. Franchise owners are not entrepreneurs, they are enterprisers – people who can maximise the value of someone else’s system.

What does a Recognition Express franchisee actually have to do?

In short a Recognition Express franchise owner is responsible for all day-to-day communication with customers – this is a business-to-business franchise therefore it is imperative that a franchise owner is continuously and actively marketing in their territory. We’re looking for a franchise owner to build local brand awareness – to continuously prospect for new business – to enhance the value of the brand through exceptional service, regular client communication, speed of delivery and personal contact. Additionally the Franchise Owner will look to build and develop the key accounts in addition to managing existing ‘active customers’ and prospecting for new business.

Is it home-based? Part-time / full-time?

It’s full-time and it can be home-based, but I prefer someone to work out of a business unit because people, in my opinion, work better if they have to go to work.

How are franchisees vetted?

There are a number of ways. First of all, we have a discussion on the telephone so when someone applies we can speak to them, where they’ve come from, what their background and interest is. Then they will fill in an application before coming in for a chat with me. I then send them to go and talk to franchise owners before a second interview, if required. It’s a five-stage process, with opportunities to question the person’s qualifications, ability and attitude at every stage.

What do franchisees that sign-up get?

They get a turnkey business – a licence to trade, all their training, continued ongoing support in all the key business areas including sales, marketing, finance, procurement, training, contact management etc. They also get ongoing business planning, their own local website, access to our extranet services, a 12-14 months marketing launch programme, which includes appointment generating on their behalf. They will get Sage software, a contact management system, a business laptop, eight manuals, and they get a host of marketing collateral and tools and samples etc.

How much do they pay and what are the ongoing franchise fees?

£35,000 plus VAT. Ongoing fees are 10% of gross revenue plus a small contribution to the marketing fund, of about 1%, although it’s a sliding scale up from 0.5 to 3.3%.

How do franchisees finance the purchase – what arrangements does Recognition Express have in place with banks?

We have exceptionally good relationships with the four major banks – NatWest, RBS, Lloyds and HSBC. These will lend up to 70% of the initial cost of purchase. None of the banks has ever refused a loan for one of our franchisees.

Success and growth

How successful are some of Recognition Express’ franchisees today?

We’ve been going for 34 years and you can’t run a business for that long without continued success. Our franchise owners have the opportunity to make very good money, have a good lifestyle, and a secure asset that they can sell on when they choose. Thames Valley has been around the longest, but what is typical is that the most successful franchisees are the ones which are the most active. The ones that are closest with the customers, communicate and interact best with them, are most successful both in turnover and profit.

How is the brand looking to grow?

We’re not afraid to make changes. Over the last few years we’ve made a number of changes in terms of marketing, looking at new marketplaces such as schools, plus things like social media. This business is not about revolution, it’s about evolution – always keeping in mind the strength of the business, which is the ability to get our franchise owners in front of the customers. The one thing is that we are resolutely B2B, not retail or online retail.

What is the potential of the business?

The potential is unlimited, you have to look at it like that. The current estimate for market opportunity for us, in the UK alone, is £3bn. If we got a 10% share of that we’d be delighted. We will never reach our potential because of the enormity of the marketplace. You are much better placed to be in a bigger marketplace than to be a major player in a small marketplace.

What will the challenges be in achieving that?

The challenges are focused around people – you want good franchise owners, you want good staff, you want good health and you want good luck. With these four in place, you’ll have a good business.

What awards has the business won?

We were the BFA’s franchise of the year in 2003.

To what extent are the founders involved today?

They’re not.

Finally, is the company a British Franchise Association (BFA) member?

Full member for over 30 years.

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