Can a franchised broker
network offer the best of both worlds, asks Liz
Bury.
Go deeper with GlobalData
To have grown
new business volumes each year since 2005-2006, and be predicting
further uplift this year, is an enviable performance for an asset
finance brokerage.
The unbroken growth
trajectory took place at franchised broker network Asset Finance
Solutions partly because it snapped up experienced sales people at
the height of the crisis in 2009.
“People were being made
redundant – or deciding to make a move,” says AFS director Nick
Simpson.
“When the crisis was at its
peak we took on more.”
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By GlobalDataSimpson, himself ex-ING
Lease, started AFS in 2005 with another former ING Lease colleague,
Justin Ford.
Simpson started in finance as
a small business banker at Yorkshire Bank, where he stayed for 10
years. In the mid-1990s, he moved to Hitachi 
Capital for
what he describes as his “formative years” in asset
finance.
“You could be
entrepreneurial, it was what you put into it that counted,” Simpson
says.
After four-and-a-half years
at the coalface of deal-making, he joined First National Asset
Finance in a management role. In the summer of 2004, that business,
now re-badged as Abbey, was sold to ING Lease.
“It was almost like a reverse
takeover. ING Lease was a niche, direct sales business and Abbey
was a volume, broker business,” he says.
A post-acquisition review
soon led to the decision to end the direct operation, and instead
to focus on the broker channel.
The franchise model was hit
upon in the first year, as AFS began to secure a number of credit
lines and looked to hire more people.
At its peak, the business had
about 35 lenders at its disposal; these days, the number is around
25.
The franchise model enables
AFS to support a good-size team, providing a high volume of deals,
and thereby attracting reasonable amounts of funding.
There is a formal arrangement
in place with franchisees, each of whom trade exclusively as
AFS.
Franchise
model
“They are all ex-colleagues
and come highly recommended. We keep in regular contact and we do
not take deals from people outside the network,” Simpson
says.
“Once the franchisees are up
and running, they are autonomous – we don’t meddle. They decide
which lessor to work with, and get to understand the
sweetspots.”
Also, a small group of
ex-Bank of Ireland sales staff recently signed up.
All deals are processed
through AFS’s main office, and it pays franchisees a monthly sum in
arrears, less a cut on each deal. In return, franchisees receive
support such as holiday cover and shared market intelligence, as
well as access to funding lines they might not otherwise get.
Regular meetings are held for the whole network.
“We keep in contact,” Simpson
says.
AFS recently formed a
relationship with a mortgage brokerage and a commercial finance
broker, offering equipment leasing products to their
customers.
Simpson says: “If it comes
through them, we always disclose it. And we deal directly with the
client.”
AFS’s business is mostly
general asset finance with average deals of around £30,000
(€34,166), although the network does include specialists in
construction, engineering, print, materials handling and
transport.
New business volumes have
risen steadily over the past five years, up from £10m in 2005-2006,
to £59m in 2009-2010 (see chart, above).
The franchise covers most of
England, including East Anglia, Essex and the South West, and
Wales, but not Scotland.
“The first three weeks of
January 2010 were wobbling a little as a result of the weather, but
it went on growing and growing and it was a very good year. It just
got better up to the end,” Simpson says.
Target of
£80m
With a target of £80m in new
business for 2011, further expansion is on the cards. AFS has taken
on three recruits in a sales office in Blackburn to help service
vendor accounts, as the business begins to forge relationships with
suppliers and manufacturers.
Another new recruit for the
Blackburn office is being sought, and a new franchisee may also be
taken on in Shropshire this year.
“We were up by 40% on volumes last year. If we can
maintain that, I’d be happy,” Simpson says.
