FRANCHISE IRELAND

(The online newsletter of the Irish Franchise Association)
Summer 2004

IFA CHAIRMAN'S MESSAGE - from John Green
Welcome to the summer edition of our newsletter - one of the channels of communication between members of the Irish Franchise Association and published in order to raise the profile of Franchising. Your Committee has been busy since our spring '04 edition and the following is a summary of our main activities.

I am very pleased to confirm that the Franchise sector continues to show solid growth as evidenced by the results of the latest Franchising in Ireland Survey 2004 carried out by FranchiseDirect.com and sponsored by Bank of Ireland. The highlights (compared to the 2001 Survey) are -
Turnover of Franchise Systems +24% to €1.272bn (excluding retail symbol groups)
Employment in the Franchise Sector +24% to 18,000
Number of Franchise systems 201
The survey details are published in "Franchise Options", published by Exact Media Ltd, and available in Eason's bookshops.
They will also be available on our website in the near future - www.irishfranchiseassociation.com

Our first Regional Seminar/Mini Exhibition was held in Limerick on 23 March last with more than one hundred attendees, potential franchisors and franchisees. It incorporated short presentations from franchisors and specialists followed by a "table-top" exhibition by franchisors seeking franchisees locally. It was held in conjunction with Limerick City Enterprise Board and attracted lots of local publicity.
Similar events are planned for later this year and you will receive advance notice of the venues and dates - I hope that some of you can join us as presenters and/or exhibitors.

We plan to hold the All-Ireland Franchise Awards 2004 in the autumn and nomination forms will be sent to all members. There will be four categories, Franchisor of the Year (retail and service), Franchisee of the Year, Best Emerging Franchise and Franchise Personality of the Year. The awards will be presented at a function in Dublin to which all members will be invited.

The new IFA logo (above) was issued to all members last month. It gives us a twenty-first century image and I would encourage all members to use it on their promotional material.

I expect the revamped and updated IFA website (www.irishfranchiseassociation.com) to be up and running this month. I think it will raise our profile and prove to be very user-friendly. I would welcome any feedback.

Franchising has been promoted recently through favourable publicity and presentations by myself, Sean McGarry, Michael Bradley and Bill Holohan and I wish to thank them for their commitment and dedication to the IFA.

The next edition of FRANCHISE IRELAND will be published in the autumn and your contributions, articles/comments/messages, will be welcomed per email to michaelbradley@irishfranchiseassociation.com

Thank you for your continued support
JOHN GREEN
Chairman, Irish Franchise Association

We welcome the following NEW MEMBERS:

Jo Jingles is a franchise offering pre school children a fun introduction to music, singing and movement. The company started in England in 1995, launched into N Ireland in 2000 and is now expanding throughout the whole of Ireland. There are 70 franchisees in the network running weekly classes in over 500 centres.
Potential franchisees must enjoy working with children, have an interest in music and a good singing voice. Match this with enthusiasm, fitness and the ability to have fun and you have the perfect Jo Jingles franchisee.
Contact Gill@jojingles.co.uk

Inside Business Magazine has opened its Irish Head Office in Dublin to develop a franchised magazine network throughout the Irish Republic, Northern Ireland and the Isle of Man. Already published in 10 cities across the UK, Inside Business has now launched in Dublin City, and County Louth with a further 2 magazines planned for publication in Dublin West and Dun Laoghaire/Rathdown during September. Inside Business Magazine will promote your business and reach thousands of potential new customers. It will get your organisation noticed, raising your profile and generating new business. For further information call 01-602-4788 or visit www.insidebusiness.ie

Noshncoffee is an exiting new coffee house chain established in the UK. Incorporated now in Ireland since January 2004 our first 2 franchised stores will open in Cork and Greystones. Our plans for 2005 already include stores in Wexford, Limerick, Shannon, Killarney and Tralee.
Further information is available from Emanuel Lantzos on 059 9182543 or 087 6828416, or visit us at www.noshncoffee.com - email: emanuel@noshncoffee.com

News from the Commercial Section of the Embassy of the USA

Franchise Trade Mission to Ireland

The U.S. Commercial Service at the U.S. Embassy in Dublin, assists American franchises looking to enter the Irish market and local clients that are actively searching for the right franchise opportunity. The current level of interest shown by American franchises in Ireland is reflected in the number of companies that have already signed up for a franchise trade mission planned for early October this year. The trade mission is being organized in conjunction with the American International Franchise Association and it is expected that at least ten U.S. franchisors will engage in meetings with prospective master licensees over an intensive three-day program.

"This is the first time that an event in this sector has been planned for Ireland and we are confident that a busy matchmaking schedule will result in a number of master licensees being awarded across a variety of business sectors," says U.S. Commercial Counsellor Dale Tasharski.

In addition to the search for master licensees, the U.S. Commercial Service would like to hear from American franchises already in Ireland that are actively searching for franchisees and who would like to tap into their database of prospects. Anyone interested in learning more about their franchise partner search programs should contact Finola Cunningham, Commercial Specialist, at 01-667-4753 or visit their website at www.buyusagov/ireland.

THE LEGAL ANGLE:

CHANGES IN COMPETITION LAW AFFECTING FRANCHISING

By Daniel Cashman, Beauchamps, Solicitors. Tel 01 4180600. www.beauchamps.ie

A franchise agreement is essentially an agreement whereby the franchisor grants a franchisee the right to exploit a package of "know how" and intellectual property rights. It often also involves the exclusive distribution or exclusive purchasing of goods and/or services. Franchise agreements usually restrict the manner in which the franchisee may conduct his business and many of these restrictions are capable of contravening both Irish and EU competition law.

Since 1 January 2004, the Competition Authority Declaration in respect of Vertical Agreements and Concerted Practices has been in effect. The Declaration provides legal certainty to franchisors and franchisees because a franchise agreement which complies with its terms is deemed not to be anti-competitive. It replaces the Category Certificate/Licence which had applied since 1998. The main changes introduced by the Declaration which are of interest to franchisors and franchisees are:

The Declaration will apply provided that a threshold of 30% of the relevant product market is not breached. The question of what constitutes the relevant product market will vary from case to case and will depend upon the nature of the goods or services, how substitutable other similar products are and the geographic reach of the franchise system. This contrasts with the 20% threshold that previously applied under the Category Certificate.
The Declaration introduced a provision which provides that an "in term" non-compete obligation cannot exceed 5 years duration. The effect of this is that in term non-compete covenants exceeding 5 years could be deemed anti-competitive and void.
The Declaration has further restricted the ability of a franchisor to impose non-compete restrictions on a franchisee after the franchise relationship expires or is terminated. In addition to the existing requirement that such obligation be limited in duration to one year, the Declaration now provides that any non-compete covenant must (i) relate to goods or services which compete with the franchisors goods or services, (ii) be limited to the premises and land from which the franchisee has operated during the contract period, and (iii) be indispensable to protect know-how transferred by the franchisor to the franchisee.

Failure to comply with the Declaration does not render a franchise agreement anti-competitive automatically. However, it does remove the legal certainty afforded to both parties by compliance with the Declaration.

MEMBERS' NEWS

Bank of Ireland Business Banking have just launched a new financial package aimed specifically at the franchising sector. Part of this package is a €100 million Franchising Fund designed to assist the expansion of franchise companies and to facilitate people who wish to start their own businesses through franchising. Other components of their franchising initiative include nationwide briefings by Bank of Ireland Business Managers throughout the country and the publication of franchising guides to facilitate assessment of franchise opportunities for potential franchise operators. These will shortly be available at any one of Bank of Ireland's 270 branches.

Franchise consultancy and magazine publishing group Franchise Development Services Limited (FDS) has announced that the third edition of The Irish Franchise Magazine (IFM) will be on sale in newsagents throughout Ireland from 10 August 2004. IFM is one of five franchise magazines published for the UK and Irish markets by FDS, who has consistently demonstrated a commitment to promoting business-format franchising nationally and internationally since its formation in 1981.
FDS Consultant Gordon Patterson is dedicated to helping companies in Southern England and Ireland expand their operations nationally and internationally through franchising and has been involved with franchising since 1974.
The third edition of IFM will profile a number of brands looking to recruit franchisees in Ireland and Irish brands looking to expand their homegrown networks.

Esquires Coffee currently operate 12outlets in Ireland, 7 of which are located in the North of Ireland and 5 of which are based in the South. Their most recent opening was in Limerick with further openings due in Craigavon, Clonmel, Sligo and Dublin.
For further information contact Tony McVerry at 086 2589076, email esquirescoffee@eircom.net or visit our website www.esquirescoffee.com

Cartridge World Ireland, '1st and BEST' in the refill and remanufacture of cartridges for inkjet, laser, fax, photocopier and all print needs, is delighted to announce it's continued expansion with the opening of new Franchised stores in Ballina, Co Mayo, Douglas and Ballincollig in Cork, Clondalkin Dublin 22 and Tralee, Co Kerry and looks forward to a further 4 stores opening within the next couple of months.
Cartridge World is a solid performer in the Franchise industry, having traded successfully for over 15 years now with some 600 shops in 19 countries. This international success is mirrored in Ireland where, under Master Franchisee, Gerry Smyth, the brand continues to grow from strength to strength.
Cartridge World provides savings of up to 60% to its business and domestic customers and a first class business opportunity to its Franchisees, a number of whom now operate multiple Franchises.
With the spotlight on recycling and the growth in IT still strong, Cartridge World has the best of two dynamic markets and a huge potential for growth. For details contact: 091 767 987 or email:cwireland@eircom.net

Since March CHEM-DRY IRELAND LTD has signed up two new franchisees, one in Carlow and the second in West Cork, bringing to 37 the number of franchisees operating in the Republic of Ireland. CHEM- DRY franchisees are going from strength to strength, developing new commercial business daily, and serving both the Domestic and commercial markets with a Drier, Cleaner, Healthier Carpet cleaning system.
Chem-Dry has become the world's largest carpet and upholstery company since it was founded in 1977, cleaning over an estimated one billion square feet of carpet every year, in 50 countries. Call Chem-Dry on 1850 500 200 or visit our website www.chemdry.ie to find your local Chem-Dry franchise.

Card Connection - an Irish success story! - by Tony Winchester
Card Connection Ltd, the leading greeting card distribution franchise in the UK, started out in Ireland in 1995 but it was a faltering start with neither the original franchisee nor Card Connection really understanding one another!
It wasn't just the distance, it was the culture. Like many British companies before, Card Connection tried to manage the business as just another franchisee but it soon became clear that there was a lot to learn in understanding the running of the franchise in Ireland.
Sadly the first franchisee literally gave up the ghost and he and Card Connection went their separate ways. It was not until January 1999 that the company's operation in Ireland took off again but this time with Card Connection having a far more open minded approach to dealing with Ireland and recognising and accepting that it was another country.
There were, for example sending occasions that were almost unique to Ireland such as Confirmation, Communion, Mass Bouquet and Get Well Mass Bouquet. None of these had been offered to our original franchisee but as the network developed we readily made them available to our newest recruits.
We had targeted 7 areas for Ireland and by the end of 1999 we had recruited 4 and were starting to talk to some of Ireland's national retailers to see if we could supply national accounts.
We completed the Network in 2002. In the meantime two of our Irish franchisees had taken the whole network by storm and today, almost 12 years after we started our business, Joe Sweeney, our franchisee for the West of Ireland, was awarded the prestigious Card Connection 'Franchisee of the Year' award in 2003 and looks well on the way to retaining the accolade this year.
Based in Sligo, Joe's area stretches from Galway to Donegal and he employs four members of staff including three from within his own family. His success is based on the exceptional service he and his team offer coupled with the quality of product he receives from Card Connection.
The Greeting Card industry in Ireland is as competitive as the UK with a number of major players who dominate the market but in a relatively short space of time Card Connection has established itself as the leading greeting card franchise operation in Ireland.
All in all we are delighted that we persevered and look forward to many years trading with our friends from the 'Emerald Isle'!

Thank you for reading FRANCHISE IRELAND.