Reading the forums, it never ceases to amaze me how many ADIs who started their careers with a franchise vehemently try to deter new instructors from choosing that route.
A new ADI who is doing this job as their intended main source of income needs to get work as quickly as possible. In any given location in the country, an established franchiser is always going to be able to attract pupils more reliably than a newly-qualified instructor will be able to. That franchiser might overdo the sales pitch a little, by “guaranteeing” a full diary (then again, who is to say that they’re wrong – in the current climate it wouldn’t surprise me in the least if franchisers were able to do that), but it still remains that they have already done the advertising and their machine is up and running.
The driving instruction industry is so well-established and profit margins so well-defined that, at the top end, you simply cannot charge whatever you like because you’ll price yourself out of the market if you do. The only scope you have is to reduce your prices, but since the profit margin is so tight you will quickly start feeling the pinch if you drop below the going rate.
Within this established industry you have fairly stable overheads to cover – notably your car, fuel, and pupil generation. If you are solo, a car is going to cost between about £80-£150 a week just to have sitting on your driveway. Fuel will run to £50-£100 a week if you are working 30 hours. Pupil generation is more difficult to cost, but a small advert in Yellow Pages might cost £600 for a year, and that works out to about £12 a week, so let’s just go with that. Overall, you could easily be paying £200 in business overheads.
If you went with a national franchise then you might have to pay £200 just for the car. Fuel would still be needed, but advertising would be taken care of. It seems like no contest, doesn’t it? Pay £200 on your own, or around £280 with a franchise. But this is where the established solo ADIs are very misguided when they start dishing out advice. Because they do not take into account the all-important turnover, which is obviously the primary key to success as a driving instructor.
There is virtually no chance that a newly-qualified ADI will be able to generate 30 hours of new pupils on their own within a realistic advertising budget (in my first year I did the Yellow Pages thing and got literally zero response; and I also spent £150 on three separate monthly ads in a local free newspaper, which also got zero response), and especially not if they’re charging the local going rate for lessons. Inevitably, they will cut their prices to try and attract business, but at best they will only get maybe 10-15 hours of work (and that after many weeks of trying). So in an area where the going rate for lessons is £25, they will be charging perhaps £20, giving them a turnover of up to £300 a week. Their weekly pre-tax profit will be a mere £100 (or £5,200 a year).
If that same newly-qualified ADI went with a franchise and could therefore charge the going rate of £25, and if the franchiser delivered the promised 30 hours of work, they would have a turnover of £750 and a pre-tax profit of £470 (or £24,400 a year). Suddenly, the franchise option isn’t quite as unattractive as it first seemed, is it?
Just about every new ADI gets it into their head that they’re going to corner the market and have work coming out of their ears. And just about every new ADI quickly discovers that this is nonsense after several months of trying. The surprising thing is that no one ever seems to learn from this. Many stick at it – and then go back to salaried employment as bankruptcy looms. And it all happens because they couldn’t see beyond paying slightly more to a franchiser and getting the work, choosing instead to forge ahead alone and get no work at all. Worse still is the fact that those who survive then persist in passing on the same misguided advice to those who come after them. My favourite line from those who haven’t got a clue what they’re talking about is:
Why pay money to a franchiser when you could have it in your own pocket?
If a franchiser is guaranteeing work, you’d have to be nuts to risk going it alone, especially if you have no knowledge of how to get the work by yourself. Most new ADIs definitely do not have that knowledge. Unfortunately, they’re also dumb enough to listen to stupid people who don’t do this job as their sole source of income, and yet who offer highly misleading “advice” as if they did.
Once you are established, and generating your own work through referrals (where previous pupils recommend you to family and friends), it makes perfect sense to consider going solo. It’s still not as black and white as the “experts” would have you believe since work can fluctuate dramatically, but at least you are likely to be able to take the financial risk by this time. Newly-qualified ADIs usually do not have that luxury.