Councils set to reinvest in franchising scheme
GREATER Manchester’s ten councils are set to reinvest £84,000 in a scheme helping unemployed people develop their own franchise business following a year-long pilot.
The FranchisingWorks Manchester pilot has been jointly developed over the past year between London-based social enterprise Shaftesbury Partnership and Manchester’s New Economy. In total, it received £444,000 in funding, including cash from the Manchester Innovation Investment Fund and sponsorship from Royal Bank of Scotland.
The initiative has received praise from David Cameron and has just secured £1m investment from the new Big Society Capital fund, although during the pilot stage it failed to meet a key target of getting 50 people to start new businesses.
Although it engaged with more than 1,000 unemployed people across eight Greater Manchester boroughs and comprehensively beat targets for the number of people it advised on setting up franchise businesses (485 compared with a target of 200), the actual number of people who set up a franchise through the initiative was just 16. Of these, only five used a fund set aside to create new franchises, with the remainder choosing the finance the new business themselves.
A document due before Greater Manchester’s Combined Authority on Friday recommending the £84,000 pledged to the pilot is reinvested in the initiative argued that the low number of franchisees signed up was due to a delay in securing more funding for the scheme to purchase franchise licences. It said this had now been resolved, and that it should be close to achieving the pilot’s target of 50 start-ups by June.
“A very healthy pipeline of ‘ready-to-start’ clients is fully engaged and progressing well,” it said.
It added that the franchisees who have begun their own businesses to date were all performing well.
FranchisingWorks helps to fund part of a £10,000 licence fee to allow an unemployed person to start a business. The franchisee will eventually pay off the fund from receipts generated by the business. If the business fails, the licence reverts back to FranchisingWorks and can be offered to another potential start-up.
The partners estimate that with a new wave of funding just announced from from Big Society Capital (£1m), the Esmee Faibairn Foundation (£200,000) and up to £425,000 in loan capital from the RBS Mircrofinancing Fund, up to 300 new businesses could be created over the next three years.
Announcing the £1m Big society Capital cash earlier this month, Prime Minister David Cameron said: “They had the brilliant idea of getting people who had been out of work for years to start up their own franchises, giving them a stake back in our economy.
“Now, with a £1m from the Big Society investment fund they have the means to help hundreds of people in Manchester to start their own franchise in the next few years.”
