I’m getting a lot of hits on the search term ‘franchise free adi ‘ or similar. I’m not completely certain what people have in mind, but I suspect they’re after information on becoming an independent ADI.
- First of all, 99% of ADIs are self-employed, whether they work with a franchise or not. It is important to bear this in mind, as it means that an instructor driving around in a BSM car isn’t ‘working for’ or ’employed by’ BSM. The same goes for The AA and many other schools.
- Working with a franchise doesn’t automatically mean you cannot advertise using your own business name. I know that The AA, for example, expects its franchisees to freely advertise and build up their business themselves. The only thing a franchisee cannot do is use The AA’s logo or livery in that advertising (it can mention it by name, though). Many people use this to build up a business, then leave and become independent.
- Some smaller franchises expressly forbid you to advertise in your own name. For all practical purposes you’ll be working for someone else (i.e. trying to expand their new driving school enterprise), even though you’re self-employed and have none of the associated security that comes with working for someone.
- Being with a franchise means they do the advertising and you get the pupils. How many pupils you get depends heavily on how many ADIs are competing for the available ones in your area and how good/big the franchise is.
- If a big franchise can’t supply many pupils – especially in this present economy – don’t automatically assume that you could do any better. Don’t even assume that you could do better than a small franchise in this respect. You almost certainly couldn’t.
- In essence, if you choose the correct one all a franchise does is provide you with a car, some pupils, and certain security if you have problems. That security isn’t available to you without extra cost if you are independent.
- If you are independent (or on a very cheap franchise) you still need to get hold of a car. Assuming you’re not going to drive an old banger which you own outright, you’ll either buy one or lease one. It’ll typically cost you about £100 a week to keep a car which is less than 3 years old on the road (sometimes more, sometimes less – but not much less). Insurance is likely to be another £10-20 a week. Note that large franchises typically replace cars automatically every 6, 12, or 18 months, whereas if you buy one outright you’ll probably be keeping it for several years.
- The older a car is, the more can go wrong with it – and a learner car gets a lot asked of it! At the very least it’ll do more miles than average, but the tyres and clutch (and other parts) will get more wear and tear than average! Larger franchises get preferential booking when the car needs servicing or repairing (otherwise it is replaced for you). If you own it or it is leased, chances are you’ll have to fight for a place in the queue at the garage…
- The less you pay for a car, the more money you’re likely to end up paying to keep it running. If it breaks down you may find yourself without one to teach in whilst the garage tries to sort it out. Large franchises usually just replace it – typically within 24 hours – if it is unusable.
- If you don’t have a franchise behind you then every single pupil is going to have to come from your own efforts. That means advertising .
- Advertising is a continuous operation. Todays full diary is tomorrow’s empty one, so you have to keep the ball rolling.
- Advertising is not cheap. If you think it is, or that a few postcards in shop windows will keep you in full employment until you retire, you’re not going to get very far.
- A small ad in Yellow Pages will cost about £800 for the year. There is every likelihood that it will generate ZERO enquiries.
- An small ad in a local free pamphlet is likely to cost around £150 for three entries over a quarter. There is every likelihood that it will generate ZERO enquiries.
- A larger ad in a newspaper or glossy magazine is likely to costs many hundreds or even thousands of pounds for each entry.
- You need a website. But don’t think that doing it yourself is automatically enough – if it looks like it was scraped off a boot after a walk through a field full of cows, it’ll attract little interest. Admit your own limitations – you’re a driving instructor, not a web or graphic designer (probably: some might be), so most will have to pay for someone to build a site for them if they want a decent one – another £200 or so. And still there are no guarantees.
- To get sufficient work most people will be spending at least £1,500-2,000 a year on advertising, and it will take at least 1-2 years for most people to get enough work from that source alone. That’s assuming it gets you any work at all – I stress again: there are absolutely no guarantees.
- Even if your ad is successful, you’ll have to pull it to prevent having to turn people away, but put it back in again when the diary starts emptying in a few months. A continuous battle, like I said.
- People get too greedy! They imagine that they’ll be charging £25 an hour and tot this up for a 40 hour week over 50 weeks a year (£50,000 turnover). All that money will be in their pockets if they can avoid that pesky franchise…
- Reality strikes home! As independents with no reputation or established pupil base they can only charge £19-20 an hour (maximum £40,000 turnover). They may be forced to charge even less if undercutting is rife in the area. And work is harder to get than they thought, so the average week is only 30 hours (£30,000 turnover). Or possibly less than 20 hours (absolute maximum £20,000 turnover). Or even less! And still they haven’t accounted for their car, fuel, and other essential business spending (total around £10,000 for car and fuel, plus that £2,000 from advertising). Before you know it, all the household bills have got to be paid with £10,000 or less!!!
- There are independent instructors out there who have literally no work at all, even thought they are trying hard to fill their diaries. Don’t assume that you’ll be the one who discovers the Holy Grail: that hitherto untapped source of guaranteed work. Every ADI who ever existed has looked for it. Many foolish new ADIs have insisted they have found it. Most probably aren’t ADIs anymore – but this doesn’t stop other newcomers from jumping off the same high cliff!
- Ignore claims from those who say they have discovered that magical source of pupils. They may well be in an area where there is a lot of work and they’ve manipulated their business well enough to exploit it, and I’ve mentioned elsewhere that instructors aren’t the sharpest knives in the drawer (they nearly always think that what they do or experience should be done or experienced by everyone else). What matters is whether or not you have the same scope in your area and good enough marketing skills to achieve a similar result. It won’t happen in places saturated with instructors, no matter how much you think it will.
This job is very simple from a business perspective…
Balance Sheet For ADIs
…you add up how much money you take in from your pupils (your turnover), and you subtract from it anything which is absolutely essential for keeping the business running (e.g. the car, fuel, insurance, advertising, etc.). What’s left is your gross profit – on which you are taxed.
So the main things anyone thinking of going independent needs to consider is how they are going to maximise and maintain ‘money in’, and how much they are going to spend under ‘money out’ in order to achieve it. Oh, and there is the unknown ‘risk factor’: will my advertising work?
If you have pupil enquiries coming out of your ears then being independent is undoubtedly the best way to go. Otherwise, be very careful… and don’t listen to idiots who think that because they have a full diary in London then you will too up in The Orkneys. It isn’t that simple.