“A lot of franchisors may be missing a trick when it comes to realising the full value of their businesses,” says Heather Lycett, Managing Director of Blue Concept, a young and growing licensing consultancy.
“We believe that many franchisors don’t understand how to get the best from their collateral and we can help them to do just that.”
Most franchises grow their businesses through the acquisition of franchisees and driving brand recognition with good marketing strategy. They put in systems that seem to take care of things and then enjoy a profit that ensues as the franchise revenues and perhaps other revenues come flowing in. But is that all there is to it?
The relationship between the franchisor and franchisee, and indeed any other company contracting in a similar way, is that of licensor and licensee. The franchisor collects fees and royalties for the use of the brand and its support.
Heather continues: “These revenues are, more often than not, self-reported by the licensee and research has shown that 80 to 90 per cent under-report. How can a franchisor therefore be confident that the correct amounts are being paid from all sources?”
It has to be said that errors leading to under-reporting are, in the majority of cases, accidental or process related. However, the same reasons continually arise as, for example, sales may not be fully recorded, or discounts and royalty rates may not be correctly calculated.
These problems can arise whatever the size of the franchise and they will certainly have detrimental financial implications for the business. Heather can offer a solution: “We recommend that compliance programmes are instigated for each revenue stream of this nature and that they are monitored on a regular basis. This will have the effect of reducing under-reporting and increasing the amounts coming into the franchise coffers – often by significant amounts.”
Heather founded Blue Concept in 2008 to offer IP and licensing audit services so that her clients could fully realise the potential of their licenses. Her team has extensive experience in many sectors and Blue Concept is a leading provider with some of the biggest and well-known brands in the world as clients.
“But we do have many SMEs as well and it’s particularly rewarding to see how we can help them achieve real success with their brands. This is why we see the franchise sector as being a very important part of our own growth,” she says.
Whether or not a franchisor has revenue monitoring in place it will still be reliant upon the franchisee’s or the licensee’s own processes. To all intents and purposes this is done behind closed doors. Blue Concept’s approach is to open these doors and obtain the information required for an accurate audit.
Heather is reassuring on this point: “We are a very personable, flexible team and our ethos is to be very agile so as to cover most situations, but at the same time non-confrontational. Standing outside both licensor and licensee we can cast a clinical eye over the processes in operation and where necessary offer mediation. All this enables us to achieve the optimum results on a continuing basis for our clients.”
Blue Concept is a young company but its name is becoming increasingly known in the world of licensing. They work on the lean principle and so are able to offer their services in a very cost effective way without compromising on the quality of the results. So even if a client already has a licensing audit programme in place Blue Concept will guarantee to save costs in this area as well.
The company’s full IP and licensing service can help clients in every stage of development – from start-up when just considering the suitability of a brand for licensing through the setting up of a licensing programme to the audit and royalty monitoring of established licenses.
Contacting Blue Concept means that the client is speaking with IP professionals who have worked with IP, brands, licensing and royalties in businesses at all levels.
“We are so confident that we can help,” Heather continues “that we offer every prospective client a free no-obligation licensing health check. This consists of a two-hour meeting from which we write an evaluation report, plus a recommended action plan. The client can take these documents and use them as it wishes, but hopefully it will see that value in what we have done, and continue with Blue Concept.”
Heather Lycett and Blue Concept can be contacted on +44 (0)20 3397 2888, firstname.lastname@example.org or visit www.blueconcept.co.uk for more information.