In Ireland, operators search for pot of gold mostly in cities
|Our travelers found this rainbow on the Dingle Peninsula. Photos by Michael Lefkow.|
For the first five days of our trip to Ireland this spring, my husband and I saw high cliffs, rolling seas, quaint villages, rugged hills and huge expanses of green fields populated by thousands of cows and sheep. But we didn’t see a single franchise until we drove into downtown Cork and encountered Subway, McDonald’s and other U.S. fast-food icons.
It came as a surprise, then, when the head of the Irish Franchise Association said in a phone interview his country’s thriving franchise community has more than 300 franchise systems operating about 4,100 units. Our experience, said association Chairman David Killeen, is a perfect illustration of franchising on an island about the size of West Virginia, but with almost three times the population.
Ireland’s 4.72 million people live primarily in six main cities—Dublin, with 40 percent of the populace, is the largest, with Cork, Galway and Limerick among the others—and the scenic coastal areas we had toured simply don’t have enough people to support chain restaurants. But less visible franchises may have been there, operating from inside farmhouses or even from the oncoming vehicles that sent our rental car escaping into hedgerows along single-track (room for one car only!) roads.
Unlike in the United States, where the majority of franchisees operate restaurants, Ireland’s largest franchise segment is services: Kendlelbell, for example, a virtual office and phone answering service; the Zip Yard, for clothing alterations; and what Killeen calls “one man and a van,” cleaning services such as Chem-Dry and Cleaning Doctor. Home-based franchising soared after the recession abruptly ended Ireland’s famous “Celtic Tiger” economic boom. Unemployment is now 14.4 percent and people “need to buy themselves a job,” Killeen said.
Majority of systems imported
Franchising in Ireland is relatively new. The Irish Franchise Association launched in 1985, and almost 50 percent of the master franchisees surveyed by it had been in business from one to six years. The majority of franchise systems are imported, with 33 percent originating in the United Kingdom and 27 percent in the USA. Home-grown Irish franchises are increasing, from 14 percent in 2006 to 20 percent in 2010. The average franchise fee is 24,638 euros (around $32,000) and the average start-up cost is 124,330 euros, or $160,000.
Two franchise segments from the United States—fast food and senior care—have made impacts on the Irish lifestyle. As we saw in Cork and later in Dublin, U.S. fast food concepts line downtown streets. McDonald’s arrived in 1977, has 81 restaurants and is still growing, Killeen said, although only current franchisees can open new stores. Subway “has exploded” since a master franchisee opened the first Subway sandwich shop in Dublin in 1994, Killeen said, and now has 100 stores in Ireland and 76 in British Northern Ireland.
“You can tell how well the pizza sector is growing,” Killeen said, “by checking in with the cardboard industry, because they are making more and more delivery boxes.” The 68 Domino’s in Ireland and Northern Ireland are owned and operated by the publicly traded Domino’s Pizza Group plc, based in London.
Supermac’s is Ireland’s largest indigenous fast-food franchise, started in 1978 and now with 100 stores.
A Galway schoolteacher, Pat McDonagh, started Supermac’s, Ireland’s largest indigenous fast-food franchise, with a single unit in Galway in 1978 and grew it to 100 stores. McDonagh also holds the country’s master franchise for Papa John’s Pizza and now franchises co-branded units, often with a Quiznos.
All that fast food has gone straight to the Irish waistline, Killeen said. The obesity level in Ireland is 13 percent and the young people we saw in coastal villages were slimmer than those in Dublin pubs. One enterprising Irish couple is attacking the problem with another franchise, Motivation Weight Management, which is so successful, Killeen said, that it may soon expand into the U.S.
Before Ed Murphy and his partner opened the first Home Instead Senior Care franchise there in 2005, all care for the Irish elderly was done by families or government agencies. “We now have 17 franchised offices and are growing by 20 percent a year. But six months after we started, Comfort Keepers from the USA and two British franchises started competing with us. We should have kept doing our job and not telling anyone about it,” Murphy joked.
Should U.S. franchisors try Ireland? We put the question to Killeen, who said introducing new food concepts can be tricky. Dunkin’ Donuts and a couple of ice cream concepts didn’t make it. “We’re a strange breed when it comes to sweets,” he said. “But we’re a nation of risk takers and if funding were available, we would see a huge explosion of interest in franchising.”
In the meantime, Ireland has opportunities within low investment sectors, like art and fitness classes for kids that are held in public schools, Killeen said. Murphy added there is still room for more franchises in the business-to-business service sector, like training, coaching and tax consultancy.
The best way to see if anyone is interested in your concept is to attend a Franchise Expo, sponsored by the Irish Franchise Association; the next one is tentatively scheduled for fall 2013. Yochino Nakajima, Home Instead’s senior VP and chief operating officer of global operations, recommends U.S. Commercial Service-sponsored trade missions, like the one that led her to Ed Murphy in 2004. Check out trade missions at www.trade.gov/cs.
The online U.S. Central Intelligence Agency’s World Factbook on Ireland provides useful information on doing business there—wear formal business attire for meetings, but expect to be called by your first name, for example. “And remember that we drink more, stay awake a bit later, and get up later than you do in the States,” said Murphy.