VERY old post.
I’ve mentioned the BSM and AA franchises in recent posts, but a new player on the field is What Car? They launched their driving school a couple of months ago. [link long since dead]
For £179 a week, they offer a franchise which includes the car and a full support package. At the moment, pupil introductions are also included in this price .
They also do a brand-only deal where you supply your own car, and this costs £67 a week (the car you provide has to be less than 3 years old and meet certain other criteria – obviously to protect the brand image).
The only possible minor issue I can see is their lesson rates. A single hour in this area is £23 – which is fine – but a block booking of 10 hours is discounted to an hourly rate of £21 (a block of 25 hours is discounted to £20 per hour). A lot of pupils will book the 10 hour block, I would imagine – so instructors will be earning around £21-22 per hour. If you annualise this it could add up to more than £2,500 a year less income than other national franchises (who charge greater hourly rate). That £2,500 equates to another £50 on the franchise.
EDIT 22/02/2010: A reader has provided me with some very useful information, and as a result I have edited this post to include that information. It is not my intention to be overtly critical of What Car? or any other franchise operation, so I will try and present the information in a neutral way.
I initially wrote that franchisees don’t pay for pupil introductions. This is not correct. Here is what potential franchisees were told in an email before Christmas:
Optional Pupil Introduction Service
As a What Car? 5 Star Instructor you will be able to benefit from our pupil introduction service.
For each new Learner introduced to a Franchisee, What Car? Driving School will charge 10% of what the Learner pays for that initial lesson booking, plus VAT – subject to a minimum fee of £19.50 per Learner plus VAT.
Our aim will be to secure the best value for you on this initial booking by asking Learners or their parents to book a course of lessons using our recommended retail price (RRP) guide. If we cannot secure a block booking we will of course take a booking and payment for a minimum of 2 hours.
As is common in the industry, we ask that you offer a set discount in exchange for the Learner’s commitment in buying the course of
lessons:
£1 discount per hour on a pre-paid course of 5 lessons
£2 discount per hour on a pre-paid course of 10 lessons
£3 discount per hour on a pre-paid course of 25 lessons Once the Learner is allocated it is the Instructors responsibility to retain the Learner and secure additional lessons beyond the initial booking. These repeat bookings will not attract the 10% pupil introduction fee unless the Learner continues to book through our central booking service.
So, franchisees will have to pay for any pupils What Car? passes on to them. My understanding of this email is that new pupils will cost at least £22.91, but if they were to book 25 hours then What Car? would take a 10% cut of the £500 payment plus VAT (i.e. £58.75 – or it might just be £50 if the lesson price is taken to include VAT for these purposes).
What Car? will take that 10% cut repeatedly if pupils book through the central booking system – so unless the ADI can take credit card payments in-car (99.99% of them can’t, because you don’t take enough credit card payments to make a merchant account of that type viable) block bookings will almost certainly go through the What Car? system.
Another email also indicates the following:
Each new Franchisee is required to purchase our Starter Pack comprising car decals, roof box and marketing support materials. This can be paid weekly in addition to the Brand Fee at a rate of £9.00 per week plus VAT or alternatively as a single annual discounted premium in advance of £350.00 plus VAT.
If we try and put some numbers to this, a new franchisee with no pupils will have to pay £179 a week for the car option. Over an initial period, during which he builds up his diary, he will need around 25 pupils – and for these he could pay anywhere between £570 and £1,250, depending on how many lessons they booked (realistically, let’s say he will pay £900 as the halfway figure). He may be required to “pay” this (i.e. lose income) over a period of just weeks or months if the advertising comes good.
Throughout the year a typical ADI could be taking an average of 1 or 2 new pupils a week. Over a year, this could amount to (halfway figure again) £3,500.
Plus, he has to pay £410 for the decals.
So in his first year, our ADI could end up paying out around £300 per week on the What Car? franchise (or even more if pupils wanted to pay by credit card through the What Car? booking system). He would only be paying £179 in the event that he were generating all his own pupils – and in that case, he is simply leasing the car.
I think people would obviously have to consider all their options very seriously – as they should be doing anyway – before committing themselves on the strength of the advertising for any franchise. The AA is clear on its pupil referral costs, and BSM’s main franchise cost (which includes pupils) is also quite clear. As long as people know what they are getting they can make informed decisions.
What Car? is obviously not to be dismissed as a player in the market, but it could be clearer on its charges to franchisees in the advertising.
EDIT 16/6/2011: I’m a bit late adding this, but the post has been getting a few hits lately so I thought I’d better complete the story.
What Car? Driving School has merged with New Driver. Reading through the hype, What Car? simply couldn’t compete on its own.