Proactiveinvestors United Kingdom Franchise Brands PLC https://www.proactiveinvestors.co.uk Proactiveinvestors United Kingdom Franchise Brands PLC RSS feed en Mon, 17 Jun 2019 00:16:45 +0100 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) <![CDATA[News - Franchise Brands ready to add to network as Metro Rod beds in ]]> https://www.proactiveinvestors.co.uk/companies/news/220870/franchise-brands-ready-to-add-to-network-as-metro-rod-beds-in-220870.html  

How it is it doing

In May, Stephen Hemsley, chairman and founder  of the AIM-listed firm, said the franchise network had grown sales by 12% in the first quarter compared to 10.4% growth in the whole of its 2018 fiscal year.

Twelve of the group’s franchisees as reported year-on-year growth of over 30% as its strategy of providing them with sales and marketing support and new IT systems paid off.

Metro Rod is a B2B operation but the company’s customer brands, car scratch repairer ChipsAway, oven cleaner Ovenclean, and dog-sitting franchise Barking Mad, had made “a positive start” to the year while recruitment among franchisees had also improved.

For the rest of the year, Hemsley said the group was currently “trading well” overall and was looking forward “with confidence”.

 

Strong 2018

In 2018, Franchise Brands reported a 43% increase in revenue to £35.5mln  from £24.9mln in 2017.

Frnchise fee income increased by 41% to £17.9mln from £12.7mln the year before.

Statutory profit before tax turned positive at £2.3mln versus a loss in 2017 of £0.1mln, while cash generated from operations shot up to £2.9mln from £0.7mln in 2017.

Shareholders were rewarded with a 34% increase in the total dividend for the year (0.67p, up from 0.5p the year before)

 

What the boss says: Stephen Hemsley, executive chairman

“We will consider the selective acquisition of reasonably valued and earnings enhancing franchise businesses that can leverage our core functions, and complementary drainage and plumbing businesses which expand our scope of works." 

 

Latest video

 

Inflexion points At MetroRod, Franchise Brands has a five-year plan to boost franchisee fee income four-fold by 2023 Company has spent heavily overhauling IT infrastructure and central support function More acquisitions likely to utilise this franchise network infrastructure ]]>
Thu, 23 May 2019 14:20:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/220870/franchise-brands-ready-to-add-to-network-as-metro-rod-beds-in-220870.html
<![CDATA[Media files - Record first quarter for Franchise Brands sees shares jump ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/13077/record-first-quarter-for-franchise-brands-sees-shares-jump-13077.html Tue, 23 Apr 2019 16:03:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/13077/record-first-quarter-for-franchise-brands-sees-shares-jump-13077.html <![CDATA[News - Franchise Brands jumps as it reports record first quarter ahead of AGM ]]> https://www.proactiveinvestors.co.uk/companies/news/218926/franchise-brands-jumps-as-it-reports-record-first-quarter-ahead-of-agm-218926.html Franchise Brands PLC (LON:FRAN) shares jumped in late-morning on Tuesday after it reported a record first quarter ahead of its annual general meeting (AGM).

Stephen Hemsley, chairman of the AIM-listed firm, said the franchise network had grown sales by 12% in the period compared to 10.4% growth in the whole of its 2018 fiscal year.

READ: Franchise Brands on the prowl for acquisitions

He added that 12 of the group’s franchisees has reported year-on-year growth of over 30% as its strategy of providing them with sales and marketing support and new IT systems start to pay off.

The company’s customer brands, car scratch repairer ChipsAway, oven cleaner Ovenclean, and dog-sitting franchise Barking Mad, had made “a positive start” to the year, recruitment among franchisees had also improved.

For the rest of the year, Hemsley said the group was currently “trading well” overall and was looking forward “with confidence”.

In its last set of full-year results in March, the company had reported a 36% jump in pre-tax profits to £2.9mln, while also hiking its total dividend by 34% to 0.67p.

The group also said that it was on the hunt for acquisition opportunities.

Shares were up 3.4% at 87.4p.

-- Adds share price --

 

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Tue, 23 Apr 2019 07:34:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/218926/franchise-brands-jumps-as-it-reports-record-first-quarter-ahead-of-agm-218926.html
<![CDATA[News - Franchise Brands on the prowl for acquisitions ]]> https://www.proactiveinvestors.co.uk/companies/news/216357/franchise-brands-on-the-prowl-for-acquisitions-216357.html The multi-brand franchisor, Franchise Brands PLC (LON:FRAN), is looking forward to the year with confidence after making a strong start to the year.

The company behind franchise brands ChipsAway and Metro Rod said it was looking for more acquisition opportunities now that the integration of Metro Rod is complete.

READ: Franchise Brands reinvigorates the Metro Rod franchise

2019 has started encouragingly, with a good trading performance across the networks in the first two months of the year and order intake at Metro Rod ahead of 2018. The level of franchise enquiries at ChipsAway, Ovenclean and Barking Mad is also significantly ahead of last year, the group revealed.

Franchise Brands reported a 43% increase in revenue to £35.5mln in 2018 from £24.9mln in 2017.

Fee income increased by 41% to £17.9mln from £12.7mln the year before.

Adjusted profit before tax, which strips out what the company considers to be exceptional items, surged 36% to £2.9mln from £2.1mln the year before, while statutory profit before tax turned positive at £2.3mln versus a loss in 2017 of £0.1mln.

Cash generated from operations shot up to £2.9mln from £0.7mln in 2017. Net debt at the end of the year had narrowed to £5.0mln from £6.3mln at the end of 2017.

Dividend rises

Shareholders have been rewarded with a 34% increase in the total dividend for the year (0.67p, up from 0.5p the year before) after the final dividend was whacked up to 0.46p from 0.33p the previous year.

“The investment we have made in Metro Rod to support our Vision 2023 strategy is beginning to deliver tangible benefits which I expect to become increasingly more visible in the current year and beyond as we continue to unlock the clear potential for the business,” said Stephen Hemsley, the executive chairman.

“We will consider the selective acquisition of reasonably valued and earnings enhancing franchise businesses that can leverage our core functions, and complementary drainage and plumbing businesses which expand our scope of works," he added.

Shares in Franchise Brands opened 6.6% higher at 72.5p.

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Wed, 13 Mar 2019 08:00:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/216357/franchise-brands-on-the-prowl-for-acquisitions-216357.html
<![CDATA[News - Franchise Brands reinvigorates the Metro Rod franchise ]]> https://www.proactiveinvestors.co.uk/companies/news/212567/franchise-brands-reinvigorates-the-metro-rod-franchise-212567.html Franchise Brands PLC (LON:FRAN) saw its shares rise on Tuesday as the international franchisor said it expects revenues and profits for 2018 to be “at least” in line with consensus market expectations.

The Metro Rod franchise delivered impressive top-line growth in 2018 while the ChipsAway, Ovenclean and Barking Mad franchise operations continue to be highly cash generative, although the group did caution that franchise recruitment has slowed.

READ Franchise Brands profits jump as Metro Rod starts to pull weight

Trading in the initial weeks of 2019 has been positive, with job intake at Metro Rod up on the same period from 2018 and healthy levels of franchise enquiries at ChipsAway, Ovenclean and Barking Mad.

"We are very encouraged by the prospects for Franchise Brands as we enter 2019,” said Stephen Hemsley, the executive chairman of Franchise Brands.

“Our Vision 2023 growth strategy for Metro Rod has met with real engagement from a re-invigorated franchise community, with half of the network recording double-digit sales growth in 2018. Our balance sheet and strong cash flows from our brands support our buy-and-build strategy,” he added.

In afternoon trading, shares in Franchise Brands were up 3.1% at 66.5-0p.

 -- Adds share price --

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Tue, 15 Jan 2019 07:45:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/212567/franchise-brands-reinvigorates-the-metro-rod-franchise-212567.html
<![CDATA[News - Franchise Brands continues share buy-back programme into 2019 ]]> https://www.proactiveinvestors.co.uk/companies/news/211946/franchise-brands-continues-share-buy-back-programme-into-2019-211946.html Franchise Brands plc (LON:FRAN) has announced a continuation of its share buy-back programme, with up to £200,000 of shares to be purchased before June 30.

The cash generative group said the programme is an offset to the dilutive impact of employee share option awards.

It is being assisted by Dowgate Capital Stockbrokers which will carry out on-market purchases of shares on the company’s behalf, including during closed periods for the company.

READ: Franchise Brands lays the foundations for another 10 years

The company owns four main brands - drains specialist Metro Rod, car body repairer ChipsAway, dog groomer Barking Mad and Ovenclean - and it has just celebrated its tenth anniversary.

Metro Rod, the largest of the franchise operations, completed 88,000 jobs during the interim period to March, said Hemsley, a 15% rise on the same period a year ago.

In the first half of the current year, MetroRod, which deals with problems with commercial premises, generated MSF income of £3.5mln, or a run-rate of £7mln per year, but the plan is to boost this four-fold.

 

 

 

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Fri, 04 Jan 2019 07:26:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211946/franchise-brands-continues-share-buy-back-programme-into-2019-211946.html
<![CDATA[News - Franchise Brands lays the foundations for another 10 years ]]> https://www.proactiveinvestors.co.uk/companies/news/211427/franchise-brands-lays-the-foundations-for-another-10-years-211427.html Franchise Brands PLC (LON:FRAN) has just celebrated its tenth anniversary.

Established in 2008 by Stephen Hemsley and Nigel Wray, the business has come a long way, says executive chairman Hemsley, but there is lot more to come, he adds.

Watch: Franchise Brands PLC celebrates 10 years ... and counting!

The business comprises four main brands – drains specialist Metro Rod, car body repairer ChipsAway, dog groomer Barking Mad and Ovenclean.

Metro Rod, the largest of the franchise operations, completed 88,000 jobs during the interim period to March, said Hemsley, a 15% rise on the same period a year ago.

But this is only the start of the expansion plans, he adds.

MetroRod has been in operation for 30 years but only became a franchise relatively recently, with the business being run as a contracting subsidiary of its owners prior to that.

'Vision 2023'

That dulled the entrepreneurial spirit of the 40 or so franchisees, says Hemsley, something he is now working hard to address.

Franchise Brands has every incentive to instigate a change.

The company charges a master service fee of 22.5%, so higher revenues feed straight through to the PLC bottom line.

In the first half of the current year, MetroRod, which deals with problems with commercial premises, generated MSF income of £3.5mln, or a run-rate of £7mln per year, but the plan is to boost this four-fold.

That might sound ambitious, but Hemsley says in most regions it serves, market penetration by its franchisees is around 1-2%.

Any significant improvement would have a major impact on the profitability on both the local franchisee and PLC.

Entrepreneurial spirit returns to Metro Rod

Franchise Brands acquired MetroRod in 2017 and Helmsley admits it has taken a bit of time to get the franchisees back into the mindset of entrepreneurs and grow their businesses, but the penny has started to drop now.

The company has been spending heavily on IT upgrades and the work management system to help the whole process, the benefits of which should also start to show through in the coming year.

IT costs will come down and revenues should rise as order response times improve.

“Metro Rod is capable of significant growth and the investment required to unlock this potential is underway and bearing fruit,” Hemsley said with the interims in July.

For the group overall, interim revenue jumped by 88% to £16.8mln, while underlying profits improved 41% to £1.4mln.

Recurring management fees rose by 86% to £5.4mln, while on a statutory basis, the group swung from a loss of £200,000 to a profit of £1.4mln.

Earnings on the rise

For the full year, brokers have pencilled in underlying profits of £2.8mln, which puts the shares on an earnings multiple of about 23, but that drops to 19 the following year on broker Allenby Capital’s forecast.

At 68p, Franchise Brands is valued at £53.5mln.

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Tue, 18 Dec 2018 12:30:00 +0000 https://www.proactiveinvestors.co.uk/companies/news/211427/franchise-brands-lays-the-foundations-for-another-10-years-211427.html
<![CDATA[Media files - Franchise Brands PLC celebrates 10 years ...and counting! ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/11510/franchise-brands-plc-celebrates-10-years-and-counting-11510.html Fri, 07 Dec 2018 14:06:00 +0000 https://www.proactiveinvestors.co.uk/companies/stocktube/11510/franchise-brands-plc-celebrates-10-years-and-counting-11510.html <![CDATA[Media files - Metro Rod 'beginning to significantly contribute' to Franchise Brands performance ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/9979/metro-rod-beginning-to-significantly-contribute-to-franchise-brands-performance-9979.html Mon, 30 Jul 2018 10:23:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/9979/metro-rod-beginning-to-significantly-contribute-to-franchise-brands-performance-9979.html <![CDATA[News - Franchise Brands profits jump as Metro Rod starts to pull weight ]]> https://www.proactiveinvestors.co.uk/companies/news/201616/franchise-brands-profits-jump-as-metro-rod-starts-to-pull-weight-201616.html Franchise Brands PLC (LON:FRAN) swung into an interim profit as all four brands - Metro Rod, ChipsAway, Barking Mad and Ovenclean –  improved their performance.

Metro Rod, the largest of the franchise operations, completed 88,000 jobs during the period said Stephen Hemsley, executive chairman, a 15% rise on the same period a year ago.

WATCH: Metro Rod 'beginning to significantly contribute' to Franchise Brands performance

As the Beast from the East thawed in March it was its busiest period ever dealing with cracked pipes, but this was doubled-edged as it restricted higher value repair work.

Hemsley said the group is now starting to see the benefit of the work it is putting in at Metro Rod following its acquisition in 2017.

For the group overall, interim revenue jumped by 88% to £16.8mln, while underlying profits improved 41% to £1.4mln.

Recurring management fees rose by 86% to £5.4mln, while on a statutory basis the group swung from a loss of £200,000 to a profit of £1.4mln.

 “The outlook for the group remains very positive,” Hemsley added.

“Metro Rod is capable of significant growth and the investment required to unlock this potential is underway and bearing fruit.”

The interim dividend rose by 24% to 0.21p.

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Thu, 26 Jul 2018 08:00:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/201616/franchise-brands-profits-jump-as-metro-rod-starts-to-pull-weight-201616.html
<![CDATA[News - Franchise Brands' strong core the key to growth plans ]]> https://www.proactiveinvestors.co.uk/companies/news/194349/franchise-brands-strong-core-the-key-to-growth-plans-194349.html Franchise Brands PLC (LON:FRAN) does what it says on the tin – it owns branded businesses and franchises them out.

Under its umbrella, the company currently has four businesses but is in the process of beefing up its infrastructure, especially IT, after which it will add more.

WATCH: “A lot of businesses could benefit from professional central services” 

That strengthened infrastructure is key to what is, in effect, a classic buy and build strategy.

As more brands are added, more benefit (and profit) is extracted out of the management hub at the centre.

Stephen Hemsley, executive chairman and co-founder, is confident the plan will deliver substantial gains for shareholders.

And he has plenty of experience to draw on.

Twenty years of making dough

In a 20-year career at the Domino’s Pizza franchise in the UK, he steered the group from an early stage start-up to a market cap of £1.6bn currently.

Hemsley was finance director at first, then chief executive and finally chairman and he still retains links to Domino’s through a non-executive seat on the board.

His plans for Franchise Brands contain much of what he learnt during that time at the pizza delivery business.

Most franchise owners and managers are great at building a relationship with their franchisees, he says, but a lack of critical mass means they struggle with the support services requirements.

Finances are handled poorly, they recruit badly, have weak IT systems and lack marketing sophistication.

While a good relationship with the franchisees can compensate some way for this, Hemsley, and long-standing business partner Nigel Wray, believe a better option is to provide those skills to the franchises.

Sum of the parts

Brands with common characteristics can leverage a centralised support services function, so the sum of the parts becomes greater than each business individually – and that is what Franchise Brands aims to do.

It may sound like Domino’s UK pizza business, but there is one major difference.

Domino’s UK had an exclusive licence with the US owner, a master franchise, but this time Franchise Brands owns the brands itself, which crucially gives it complete control of marketing, branding and the other support services.

The four bands currently in the portfolio are Metro Rod (drainage and plumbing); ChipsAway (minor car paintwork repairs), Barking Mad (dog sitting) and Ovenclean (cleaning ovens).

All brands and IP are owned by the company, with direct franchises to operators in most cases, though ChipsAway does have some master licences overseas. 

Metro Rod points the way

It is the most profitable currently, but Metro Rod is the largest and most recent incomer, having been acquired for £28.4mln in April 2017, and will become increasingly important.

Hemsley says the potential of the business has surprised the company since it took over, especially the fact it is in effect two businesses.

Metro Plumb, a specialist plumbing service, effectively was thrown in for nothing and ultimately might have even more potential than Metro Rod, which specialises in drains cleaning and maintenance.

Both companies are B2B business, not domestic, working for utilities, businesses supplying emergency repair services and there are huge opportunities for each, Hemsley believes.

At Metro Rod, the initial thought was it would be competing with the four heavyweights in the sector, but in fact, the market contains 1,500 smaller players and that diversity gives a lot of scope to build market share.

“Out of a business worth £750mln, we have a market share of £35mln”.

Brand building

Metro Rod has also been a little neglected. Formed 30 years ago, it has changed hands a few times since, but this is the first time a specialist franchising team has held the management reins for more than 20 years.

Brand building features heavily in the rejuvenation plans.

“It’s all in the sales and marketing – professionalising this to raise the profile of the brand and the understanding of what we do.” 

Adding Metro Rod has also allowed Franchise Brands to strengthen its IT infrastructure – it never had the scale previously – and finance function with a chief financial officer now on board as well.

That has freed up the three managing directors, which now includes one to run Metro Rod, within the business, just to focus on building the franchise networks not the back-office or admin stuff.

These investments will dampen profits in the short term as the additional central costs will outrun the growth in the income received from franchisees, but as sales pick up or more brands are added, the rewards will come through increasing rapidly.

That was how it worked at Domino’s, Hemsley says.

Invest first, profits later

Initially, royalty income from franchise businesses struggle to keep up with central costs, but once the system is in place and annualised, any further expansion drops straight to the bottom line.  

“At Domino’s we had five years of growing overheads as costs rose as fast as income.  

“But once everything was in place, profits went from £5mln to £100mln.” 

House broker Allenby Capital expects Franchise Brand’s profits in 2018 to rise to £2.81mln from £2.1mln, on revenues of £33mln (£24.3mln).

Cash generation is good as commercial risks and capital expenditure are borne by the franchisees.

Franchise also pays a dividend, 0.5p in 2017, while Hemsley and Wray still own stakes of 26.4% and 27.8% respectively.

Executing the strategy for Metro Rod will take 18 months but after that point, Hemsley says the incremental turnover starts to come through on annualised overhead costs.

“From 2019 onwards – it will start to get interesting”.

At 73.5p, Franchise Brands is valued at £55mln.

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Thu, 05 Apr 2018 13:47:00 +0100 https://www.proactiveinvestors.co.uk/companies/news/194349/franchise-brands-strong-core-the-key-to-growth-plans-194349.html
<![CDATA[Media files - “A lot of businesses could benefit from professional central services,” says Stephen Hemsley ]]> https://www.proactiveinvestors.co.uk/companies/stocktube/8942/a-lot-of-businesses-could-benefit-from-professional-central-services-says-stephen-hemsley-8942.html Mon, 26 Mar 2018 09:15:00 +0100 https://www.proactiveinvestors.co.uk/companies/stocktube/8942/a-lot-of-businesses-could-benefit-from-professional-central-services-says-stephen-hemsley-8942.html