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The Franchise Magazine - September 2008
Low cost franchising

Jess Sturman

Karen Sherr the founder of low cost children’s franchise Musical Minis has noticed that the less successful franchisees in her network, are those who did not realise that running a business would be hard work. She says:  “The franchisees who aren’t doing so well are the ones who didn’t really realise what running their own business entailed i.e hard work. If customers phone you to book into a class you have to return calls, you have to promote the business locally and administration needs to be done regularly. The franchisees that are motivated, organised and want the business to succeed do. Franchisees who sit back and aren’t proactive have problems.”

Established in 1990 as a local group, children’s music group Musical Minis began franchising its successful concept in 1997. As a full bfa (British Franchise Association) member with 17 franchisees in its network and a further 12 licences to Sure Start Children’s Centres the company measures its success on its franchisee renewal rate. In the past two years over 70 per cent of the franchisees and 68 per cent of licensees have renewed their franchise agreements.

Karen Sherr explains how Musical Minis can support a franchisee for an initial fee of 8,000 pounds plus VAT. “Most of the large costs in establishing Musical Minis were incurred when the business was set up, for example recording the music.” Musical Minis has established an infrastructure of support that initially is time intensive but not overly costly. This includes the use of Regional Managers, a franchisee forum and a seven-day a week helpline. The initial training is conducted at a place chosen by the new franchisee and is provided either by head office or the Regional Manager.

“The franchise fee includes full training, comprehensive operating and training manuals, an initial advertising budget, music especially record at a pace suitable for young children through MCPS, CD player, musical instruments, lessons plans, puppets and stories.” Additional capital is likely to be extremely modest, perhaps another 100 pounds in the event of upfront payment for halls. The fee is low because the overheads are minimal given the business can be run from home and the location for the classes can be rented.

“I have intentionally grown the business slowly for two reasons. First of all I wanted to ensure Musical Minis was and is able to support every franchisee properly. Secondly, I wanted to balance the business with my family life. In the first year a franchisee’s earning potential is usually between 4,000 pounds and 5,000 pounds with the majority of franchisees recouping their initial investment within 18 months. On average a franchisee will earn 15,000 pounds per annum by year five although this figure depends on whether the franchisee runs most of the sessions or employs staff to run them.”

Musical Mini franchisee Cathie Flynn owns the Merseyside territory. Happy with her decision to invest in September 2002 Cathie has renewed for another five-year term. “I chose Musical Minis because I had been going to Musical Minis class with my daughters and loved it. Head office’s response to my enquiry was positive and friendly without being pushy. At the moment my franchise is generating a turnover within the region of 30,000 pounds.”

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