Cleaning product firm looks to build up franchises

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A BUSINESS selling cleaning products to pubs, restaurants and hotels, which recently became franchised, is looking to expand into new markets such as schools and care homes as part of its plans for 100 franchises in five years.

Business partners Dene Bentley and Paul Snary, who own Applegreen UK, which has a Leeds office, as well as a 15,000 sq ft manufacturing site in Idle, re-launched the business as a franchise in October.

So far three franchisees have joined their 12-month pilot programme, with two already operating in Yorkshire and another due to start trading in the new year. The plan is for the franchised operation to launch officially in 2013.

Their aim is to have 100 franchises across the UK within five years, with turnover of £5.2m. Over the next 12 months, Mr Bentley said the business, which is currently turning over £150,000 with £70,000 gross profit, is looking to start a further three franchises.

However, Mr Bentley said that getting funding to support the company’s growth plan has been a struggle.

In August 2010, he said they put in an application for funding from Natwest and Barclays but were declined. They managed to secure an initial £30,000 from the Business Enterprise Fund (BEF), which offers support to businesses throughout West and North Yorkshire.

As part of the loan agreement, they were required to pay for the cost of a business mentor, said Mr Bentley, which he described as “quite costly”.

So he re-applied to Natwest to refund the BEF loan and apply for extra funding. Again, he was turned down.

Mr Bentley said: “We went to BEF in September 2011 and asked if we could refund the loan and not pay the mentoring fees. BEF stopped the mentoring fees because they said they didn’t think we needed it and we got a better interest rate.

“We got £48,000 in total from the BEF, £24,000 of that was used to pay off the old loan.”

Mr Bentley said the support from BEF proved invaluable, allowing the company to move to larger premises and buy in bulk.

He added: “One of the things the fund allowed us to do was put together a comprehensive computer system called The Core.

“The Core is going to allow the guys in the vans to have a fully automated system. They will have a tablet or a laptop to create invoices, but also to gather information about their customers – about what they purchase and when they purchase.”

Mr Bentley said banks’ reluctance to provide business loans to small businesses is “hampering growth”.

Currently, the head count of Applegreen UK is about five, up from two 12 months ago, said Mr Bentley, who added: “Next year if all goes according to plan we’ll probably take on two more warehouse staff and an apprentice in accounts and an apprentice in the customer service side.”

The company has its sights set on expanding into new markets too.

Mr Bentley said the education and care sectors are two key areas the business looks to target.

He said: “At the moment we are selling cleaning equipment, paper products and ancillary products to pubs, restaurants, clubs and hotels.”

But as state schools convert to academies, giving them greater control over their finances, they have the option of shopping around for services they require.

Mr Bentley said this has opened up new opportunities for Applegreen UK. He said schools were previously “paying over the odds without a doubt”.

He said the company is also looking to go into care homes with infection control products for example.

Mr Bentley said: “We do things slightly different to other companies. We have a fully stocked mobile shop whereas everyone else is doing telesales. We take our goods to the customer prior to them ordering so we have the opportunity to up sell.”

He added: “We manufacture all products as far as chemicals are concerned, which cuts out quite a lot of the competition as they have to buy from somewhere else.”