Franchise Brands sees a surge in new business
The boss of Franchise Brands (FRAN:AIM) says the company’s Metro Rod drain clearance and maintenance services business has just seen its busiest-ever day for orders.
Freezing weather led to burst pipes, creating plenty of work for Metro Rod which was acquired by Franchise Brands in April 2017. The ‘beast from the east’ was also well timed as it followed Metro Rod’s first ever marketing campaign which meant its brand was front of mind for certain people who needed help.
‘There was no marketing for Metro Rod in the past,’ says Chairman Stephen Hemsley. ‘We’ve just done our first campaign which targeted the education sector, namely schools, academies, universities and nurseries.’
He says public sector opportunities are normally put out to tender and are low margin. Metro Rod is now being proactive in the hope of getting regular work not being put out to tender. Initiatives have included free surveys in the hope it will lead to repair jobs.
‘We’ll target property maintenance in the second quarter of the year,’ reveals the chairman. ‘That’s really the buy-to-let sector. We can offer plumbing, drainage and handy man work.’ He says Metro Rod will probably undertake four or five marketing campaigns this year.
Franchise Brands owns a selection of franchise companies and provides central services to help franchisees grow their business.
Metro Rod has historically undertaken work on a reactive business, serving national business customers including retail, water utilities, social housing and insurers.
While the maiden marketing push is clearly paying off, plus the weather has been on the company’s side, there is a slight catch to consider. ‘To some extent we’ve been too busy recently,’ admits Hemsley. ‘We’ve haven’t had the labour force to take advantage of all the opportunities.’
He says the challenge is to now make sure franchisees have enough staff, equipment and vans in order to do more work.
Any franchisee that doesn’t want to step up to the challenge of being busier will see their territory split with another franchisee who is more entrepreneurial or even replaced by someone more ambitious, warns Hemsley.
Franchise Brands reported a £65,000 pre-tax loss for 2017, weighed down by one-off items including costs associated with buying Metro Rod and subsequent IT investment, as well as a £0.3m provision for money owed by collapsed services group Carillion to Metro Rod.
Excluding these items the business made £2.1m pre-tax profit which is forecast by Allenby Capital to rise to £2.8m in 2018 and £3.5m in 2019.