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CASTLE ESTATES CASE STUDIES

THE DEVELOPMENT OF CASTLE ESTATES

Castle Estates Franchising Limited is one of the leading property management franchisors in this business sector. Originally formed in late 1979 we have been trading successfully now for 30 years and in June 2009 were the subject of a management buyout by one of the senior franchisees, Steve Roulstone.

At Castle Estates we are proud of our success and put much of this down to our approach to franchisee recruitment. As Mike Edwards, Regulatory Affairs and Procedures Manager and heavily involved in the initial training and ongoing support for the network puts it "We are always concerned to ensure that every prospective franchisee has sufficient information from ourselves and satisfactory answers to any questions they have raised. We also want them to have plenty of time to fully investigate the lettings industry by undertaking detailed research in the depth needed if they are to reach a soundly based decision."

At Castle Estates we go through numerous processes and stages with each potential franchisee and no-one is ever rushed or pressurised in any way into taking an early decision. Openness is also an integral part of our approach and as far as new Proprietor Steve Roulstone is concerned, always will be. He comments "The following review holds true now just as it did before I purchased the Company, because of this it remains for you to read as it has always appeared and I still would not change one comment!"

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STEVE ROULSTONE - STAFFS

Originally having joined as Staffordshire franchisee Steve Roulstone waspreviously employed as a sales manager for a building material manufacturer and latterly Steve was manager of a buildings material supply company. Steve's explanation of how he reached his decision to be part of the Castle Estates national network is fairly typical - his decision 10 years later to buy the entire franchise operation of course is not!!

During his previous career Steve spent most of his time in a sales environment, but benefited from the involvement in planning strategy during his time in management. So before taking the plunge into self- employment in early 1979 Steve spent six months investigating various franchise opportunities that would suit both his experience and background skills as well as his budget.

Even though his experience lay elsewhere in Management, he had a growing desire to go into a self-employed business and so he spent a great deal of time investigating franchising opportunities, especially those available within the property letting industry as like so many franchisees Steve was already a Landlord. And like many franchisees Steve also reckoned he could manage property far better than agents whose services he had used.

This proved to be time well spent and Steve will recommend any prospective franchisee from whatever walk of life they are approaching franchising and whatever business sector they are considering, to maximise their efforts in respect of detailed research on specific franchisors.

In November 1999 Steve decided he would choose Castle Estates, having first met directly with them at the previous owner's Milton Keynes Head Office earlier that year. To him as well as a detailed knowledge of their own business as the longest established property management franchisor they had the necessary experience behind them, the fee was right and they have always had a good reputation within the industry.

At that time Castle Estates was also the only property management and lettings specialist with Full Member accreditation by the British Franchise Association and this weighed heavily with Steve. Others have followed but, as with so many facets of a property management franchise it is a case of where Castle Estates leads others follow.

As with so many new franchisees it took Steve himself several months to go through all the various stages, interviews and research before he was ready to start as a Castle Estates property management franchisee. Steve well remembers this phase of his decision and comments " Prospective franchisees are taking a decision which will have a major influence on the rest of their lives and they owe it to themselves to take as much time and ask as many questions as they want to before making up their mind. I actually completed the research and decided to join Castle Estates relatively quickly but they were more than comfortable with enquiries from people planning anything up to 2 years ahead and this is an approach that whilst the franchise is under my stewardship I would not wish to change "

Many of Castle Estates franchisees initially start trading from home, though the franchise can be adapted to suit individual needs. Steve in fact set up his business within the office of an estate agent acquaintance, was then forced into operating from home for a few months but ever since 2002 has been in High Street retail premises. "I wanted to minimise costs initially but also realised that starting from home, whilst minimising costs and risks, would also mean the business would grow more slowly. This sharing of an estate agent's premises seemed to be an ideal compromise and provide a low cost entry route into the High Street and indeed all was well for the first year but differences between us meant I had to relocate from his offices".

Asked how he rated Castle Estates delivery on their pre-trading promises to him, Steve is very satisfied " I was pleased with the 18-20 days initial training course spread over six weeks as I had little experience in this market and needed the detailed training. The ongoing support is there in the form of regular meetings when the franchisees get together to exchange experiences, compare notes and receive updating briefings on industry issues." Having been on the receiving end himself Steve is determined to continue Castle estates' proud record in its training of franchisees.

"We also have direct access to computer and insurance helplines and use an external professional referencing company to thoroughly vet tenants. And of course Mike Edwards is always available to answer any query, no matter how serious or routine. "

The only disciplines for which his sales and commercial background had not fully prepared Steve was the legal side of the property management business. This can sometimes be far from straightforward and Steve confessed he had initially found it to be a steep learning curve. However given the depth and detail of the initial training and the ever present ongoing support, especially the legal helpline, after his first six months trading Steve found the property management side itself to be much easier.

Steve confirms that the good reputation of Castle Estates within the industry helps in discussions with potential landlord clients, as did the introduction of a limited amount of business from Corporate clients with residential property portfolios which is achieved by offering them a tenant find service. This is something unique to Castle Estates and which applies, in varying degrees of demand, to franchisees all over the country.

Clearly a Castle Estates property management franchise has suited Steve well, to the extent that he recently bought the entire business!! But in conclusion were there any particular areas of his previous background and training he was aware of putting to use in this particular franchise?

"My experience of sales, preparing budgets and cash flows, as well as day to day man management was obviously relevant, but it is the self- confidence instilled into all sales people which has probably been the biggest asset. You must have confidence in your own abilities, in the self- employed context that confidence and your own commitment can be crucial. Starting with a bit of self-assessment and then undertaking detailed relevant franchise investigation over several months before you finalise your decision will pay you good dividends."

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PETER & BONNY HAYWARD - EAST MIDLANDS

Castle Estates claim that no prospective franchisee can consider their research into a property management franchise as complete unless they have spoken to Castles. Given the wealth of detail that the company gives to prospective franchisees this seems to be a claim that is well justified.

One of their most successful franchisees is Peter Hayward who served in the Royal Engineers for 32 years retiring as a Captain after deciding not to make a career of it. Peter was a Military Clerk of Works and Garrison Engineer so his responsibilities included construction project work and property management. Before leaving the forces Peter spent 18 months investigating various franchise opportunities that would suit both his experience and his budget as he had been nurturing a growing desire to become self-employed for several years.

Peter invested a lot of well spent time investigating the opportunities available within the property letting industry and, in October 1996 following this extensive research, Peter decided he would choose Castle Estates. To him as well as a detailed knowledge of their own business they had the necessary experience behind them as a Franchisor and the fee was right. They also have a very good reputation within the industry, evidenced for example by the fact that at the time he joined Castle Estates was still the only property management Franchisor to have been granted Full Member status of the British Franchise Association.

Peter originally set up a jointly operated partnership with his wife Bonny from an office in Beeston in May 1998 and bears testimony to how Castle Estates lived up to that famous franchise statement "full training and ongoing support". With over 10 years trading they seem ideally placed to comment.

"We were pleased with the initial training course which we tackled over just 4 weeks and the ongoing support is there in the form of regular meetings when the franchisees get together, plus the legal, computer and insurance helplines. And of course Mike Edwards is always available to answer any query, no matter how serious or routine."

Peter and Bonny firmly established the business and by following the Franchisor's successful formula and a lot of hard work hit their new business targets exactly as they needed to. They took on almost exactly 3 net new instructions per month in their first year, and then towards the end of 1998 made an acquisition of a small parcel of properties from a competitor.

"This is a key way to build the core business more quickly and was always something we had planned to do" said Peter.

Again support from the Franchisor was readily available and they also used the services of a consultant business transfer agent who is also available to advise Castle Estates franchisees on some of the complex issues that can arise.

October 1999 saw another positive development as son Mike joined the business on a full time basis. Again support came from Castle Estates as Mike sat in on some training sessions with a new franchisee but at no cost to themselves which is another long standing service available to Castle Estates franchisees.

Peter took stock of his skills and experience and took a decision that has seen him fulfil his ambition to run his own business and give him employment to himself and his family to a ripe old age - should he want that!

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CERI ADAMS – CITY & SOUTH LONDON

Ceri Adams was approaching 40 when he took stock of his life and decided on a change of direction. With a sales and marketing background and most recently owning and running a very busy bar in central London near Smithfield Market Ceri decided to sell that business and looked for a new challenge.

Like almost every Castle Estates franchisee to date Ceri had more than a passing interest in property and wanted a franchise with a more modest capital outlay than he had experienced to date and an opportunity for steady growth.

"No business is ever truly 100% recession proof but property can go with the flow much more easily than many other businesses" reflects Ceri "because at the end of the day people always need somewhere to live. The leisure trade I was previously involved with is much more exposed to financial pressures as customers cut back on their leisure spending, but property is different."

"From my own personal experiences in various properties I also felt that most competitor agents offered poor customer service, and the potential to initially operate from a home base whilst learning the ropes and going up what is a very steep learning curve" also appealed to Ceri. But really it was the complete lack of anything remotely approaching good customer service in the letting agents he researched that led Ceri to believe this gave him opportunities to introduce a new approach.

Ceri's business is very differently based from almost all other Castle Estates franchisees in that although he now operates from retail premises his is almost exclusively web based or at least is very much a web driven business as far as marketing the business and client properties is concerned. Even with this ultra modern approach and all of Ceri's considerable energy going fully into the business he found his business initially slower to build than expected, but there is a ratchet effect, with a lot of repeat business, so growth has been steady.

The whole story can be found at Ceri's innovative website at http://www.city.castle-estates.co.uk but basically Ceri firmly believes the internet has revolutionised property marketing - but it hasn't changed the way many agents work. Ceri continues " At Castle Estates we have embraced the changes and fully utilise the opportunities the web offers - for our Landlord and Tenant clients benefit. We offer a tenant find service or full property management providing excellent service and low fees for both.

This is because while traditional agents spend a fortune on pricey high street offices and flash cars, we instead invest in the latest web marketing to let. We are members of ARLA and thus keep all client money in fully bonded client accounts and have full public indemnity insurance. Through Castle Estates UK network our clients have all the support & safeguards they should expect from a large organisation.

"The web let's us operate without expensive high street premises. Our overheads are lower, so the fees clients pay are lower. Our internet marketing is instant so as soon as we have a Landlord's property details, they are on the web and we will not tolerate long lead times unlike printed newspaper or magazine ads.

The web enables us to present plenty of colour photographs with floor plans and let client properties faster - this just cannot be done the traditional way. We work longer hours, both for rental valuations and tenant viewings. If evenings or weekends are best for our clients then they are best for us as well. Our clients always deal with the A-team - other agents may keep their best people for property sales, and use the B-team on rentals.

We're flexible, offering a service tailored to you, not just plain old take-it-or-leave-it. We also treat tenants with far more respect than anecdotal evidence would indicate many agents do - after all, they are our customers."

Ceri looked at various other property franchisors but Castle Estates offered a larger territory, were friendlier and more open during his research phase and gave more freedom to their franchisees. Another big factor in Ceri's decision to join Castle Estates was the potential availability of having early business in the bag via the corporate department and even now in his 6th year as a Castle Estates franchisee Ceri confirms he still gets more business introduced to him from the centre than the renewal fee he pays for the franchise.

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PETER BROOMHEAD and LIZ BAMBOROUGH – SOUTH COAST & WEALD

Peter Broomhead and Liz Bambrough are Castle Estates longest established franchisees having started trading initially from a home based office in May 1994. With a large family in the same premises it is all the more remarkable and a credit to Peter and Liz that they were able to build such a solid business and as Peter reflects the lettings industry was a very different proposition in 1994.

"The Housing Act 1988 although enacted 5 years earlier was only just starting to have its intended impact on the property market and of course there was far less competition so in that sense new starters today might bemoan the fact they didn't start 15 years ago when on the face of it at least it might have appeared easier to establish a lettings business."

"But equally" observes Liz "the market was much smaller and the Statute intended to make residential property so much more attractive as an investment for the Corporate and larger private investment landlords had made very little impact and of course Buy to Let was unheard of. So if there was less competition to fight against there were also less Landlords and properties to fight over too!!"

"And don't forget there were also a lot less tenants with renting seen very much as the poor relation and family wondering if there was something financially wrong with you if you didn't get onto the home ownership ladder. So even after we had won the battle to take on the property in those days we often then had to work a lot harder in some instances to let it for the Landlord."

But secure Landlords and Tenants they did and as their family grew so Liz's was able to spend more time running the back office functions while Peter got out into the market place more and more developing the sharp end of the business.

Peter continues "A key moment for us, pivotal really, was the move we made into retail premises in 1997. We opened up in ex estate agent premises right in the heart of Battle and virtually opposite our main competitor. Must have given them quite a shock when they saw the Castle Estates shop fascia going up!! Although we took the usual bottom line hit that usually follows such a move after 15 months we were making progress again and we haven't looked back since."

Peter and Liz have indeed not looked back and as well as both of them now being fully involved in the business they also employ 4 staff. So how do they see the future in these credit crunch times and above all the continuing benefits of being Castle Estates franchisees?

"Well we are in a unique position in Castle Estates being the senior franchisees and that is reflected in the various approaches we receive. Prospective franchisees for example normally want to speak to the longest established franchisee so we get regular calls from prospective franchisees doing what we did 16 years ago – researching the franchise!! Plus we tend to exchange notes on the Franchisor and their latest business development proposals for the network which is what senior franchisees do between themselves and what more junior franchisees like to see."

"As each year goes by and each renewal comes up I am sure all franchisees in all businesses take stock of where they are and question the value of fees then being paid for what the Franchisor is still giving them especially in the light of your own increasing experience."

So how do Peter and Liz see their position and relationship now given that it has lasted over 15 years?

"I think what you do just as a new franchisee does when deciding whether or not to join a franchise network, is look at what you get in terms of training, support and brand etc that you could not get on your own. So you do the same as an experienced franchisee, you look in particular at added value and what the franchise continues to give you. Brand is the main thing plus ongoing support and especially research and updating in terms of new developments and in lettings especially, the myriad of rules and regulations that get thrown at us.

Steve Roulstone the new Franchisor since June 2009 has involved us in his plans for the business from the start and we are pleased with what we hear from him on his intentions for the business and are giving him our support. It is almost like a fresh start and a re-launch for the Castle Estates brand and positioning within the industry and we are happy to go along for the ride."

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Castle Estates Franchising Ltd, Marston Road, Stafford, ST16 3BS
Tel: 01785 336 111 Fax: 01785 336508 Email: franchise@castle-estates.co.uk

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