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Franchise Finance

Bank expert believes L&Z Direct Debit solution is ideal model for franchise industry.

Franchise Finance was founded in 1979 and today is recognised as one of the foremost providers of finance to the franchise industry, working with a wide range of reputable franchisors to provide finance and related services to their franchisees.

The organisation recently engaged with London & Zurich and recommends its direct debit collection facility to its franchise community clients. The L&Z facility not only allows both franchisors and franchisees to better predict and manage cashflow but also enhances the processes of royalty and marketing levy collection for franchisors and collection of payments by franchisees from their customers. Furthermore, the system makes the interaction between both parties much more transparent, allowing for an ongoing healthy and mutually beneficial relationship.

“Any organisation wishing to deploy a Direct Debit facility historically has had to demonstrate a high degree of credit worthiness to the banks, which rely upon an indemnity in the event of payment errors or fraudulent activity,” says Chris Roberts, a director of Franchise Finance, himself a former manager with one of the UK’s leading high street banks.

“This has proven to be an almost insurmountable obstacle to those smaller SMEs and new organisations, who understood the financial and administrative benefits, but were frustrated in their ambitions to access the facility.

It is therefore good news for the franchise community that London & Zurich had the vision to recognise this gaping hole in the financial services’ offering and the innovative and technological capabilities to develop a robust, secure platform and offering, which is ideal for franchisors and franchisees and, indeed, any organisation that has to collect a multitude of payments at regular intervals.

Chris Roberts and his colleagues found the proactive and open approach of Sam Pollard and his peers at London & Zurich to be helpful and knowledgeable about the challenges of the demands of running a successful franchise operation. The system was developed so that the facility is offered to franchisor clients on a white-label basis, which creates a professional image to franchisees, and subsequently, their customers.

London & Zurich’s Direct Debit package offers clients – such as those with whom Franchise Finance works – a secure, cost-effective and quick means of payment collection and processing, allowing for predictable, managed cash flow. The system recommended by Chris Roberts enables franchisors to collect fees from franchisees who, in turn, can collect fees from their clients too.

Kevin Morgan, London & Zurich’s Managing Director, explains: “Each of the franchisors has his or her unique, protected access to the system and, once logged in, funds can be collected from their franchisees and their clients.”

The benefits of London & Zurich’s secure Direct Debit collections systems are obvious. Franchisors and franchisees within Franchise Finance’s client community network first and foremost want to focus on growing their businesses rather than becoming mired in chasing payment of invoices.

Both parties are able to spread their fees out over a number of pre-agreed payments per month, making life easier for clients. They can also predict and manage the cash flow which supports their business, and they don’t need to devote time and money to making phone calls to chase payments – which can erode the customer relationship and retention – nor are they tied up with administration and paperwork.

There is yet another level in the relationship, in that franchisors, their franchisees and their clients can participate in the London & Zurich referral scheme. Should these parties identify an organisation who could successfully deploy the L&Z Direct Debit system they receive a commission and thus boost their own revenue.

We recommend franchisors that we work with to consider the London & Zurich Direct Debit offering, adds Chris Roberts.

“We recognise that there may be franchisor clients whose smaller franchisees may still insist on paying by cheque, but the majority have the opportunity to enjoy the business benefits and peace of mind offered by the robust DD system from day one. All parties to the solution are able to enjoy professional, open and strong relationships, confident that revenues will be timely. If only everything in life could be so well managed.”

Granite Transformations, which designs and manufactures agglomerate work surfaces and glass mosaic tiles using sustainable methods and resources, is one such franchisor client. It retails its products exclusively through a franchise network of Granite Transformations’ showrooms, with its own fitters performing installations.

Wendy Wiltshire of Granite Transformations comments:  “Our original approach relied upon franchisees making payments by BACS and demanded us engaging in time and resource-consuming credit control. We knew that Direct Debit was the route to go down, but initial discussions with the banking fraternity suggested that it would be a costly and drawn out endeavour.

“We became aware of the London and Zurich solution and subsequently we set up an account. The majority of Granite Transformations’ 20 UK franchisees pay their fees monthly via Direct Debit and because we are confident that funds will arrive in our account on time, the funds don’t leave the franchisees’ bank accounts until the 20th of the month, as opposed to the 10th, which was the case under the BACS regime.

“Training on the system was straightforward and all relevant documentation is produced and issued with our logo upon it. The London & Zurich solution is a fit-and-forget system that has truly made collection of fees easy and predictable.”

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