WATCHING a business grow rapidly into a recognised brand is every entrepreneur’s dream. Franchising is a popular route to turning that vision into reality. That’s what three former IT entrepreneurs did with the wine shop they launched in Limerick five years ago.

Having sold their previous venture, a technology firm, to an American multinational in the late 1990s, Michael McDonnell, Paddy O’Flynn and Darragh Moore decided to do something completely different. They opened their Wine Buff store on Mallow Street in Limerick just before Christmas 2000.

The aim was to concentrate on wines from small family-owned vineyards, primarily in France, where O’Flynn now lives and sources stock.

The success of the store led the trio to think about expansion. Rather than opening more shops themselves, they decided to bring in franchisees. Today there are seven Wine Buffs around the country, and scope for many more. The aim now is to have 40 franchised stores throughout Ireland before moving on to Britain and France.

“We opted to franchise because we had spent 2Å years building (the brand) up and had reached a stage where we were ready to expand,” said McDonnell. “This meant either opening shops ourselves or taking on franchisees. The main advantage of franchising is that it allows you to expand faster.”

There is another advantage that is just as important. “Our concept depends entirely on good customer service, the kind you used to get in Ireland 15 years ago,” he said.

“We’re not interested in having someone pop in for a bottle and then disappearing. We want them to stay a while and develop a relationship.”

He believes hired help is less likely to achieve this. “Because of staff turnover, the emphasis on customer service is harder to maintain if we were simply opening shops and staffing them with managers,” said McDonnell. “With a franchisee you get their passion to succeed. Nobody opens a franchise to fail, they all want to succeed and the overall business will benefit from that.”

Certainly there seems to be no shortage of franchisees willing to bank on the model’s success. A new store opens in Sligo this week, one in Newbridge next week and one in Waterford before Christmas.

Last year, the trio sold its Limerick shop to concentrate on building the brand. The trio receives €75,000 upfront from each franchisee, for which they provide a turnkey package including operating manual, training, shop fit-out and stock. They also receive a royalty fee of 5% of turnover annually from each store.

Interest in franchises has grown in the past decade. Total franchise turnover in Ireland in 2003 stood at €1.27 billion, excluding sales by retail symbol groups, according to a 2004 report. In 1995, that figure was just €250m. In the same period, employment in the franchise sector rose from 4,900 to almost 18,000. The Bank of Ireland estimates turnover in the sector is now €2 billion.

It has set up a €100m franchise fund to help businesses expand and new entrants to get started. This will involve consultations, discounts on products and services and membership of small business associations. New business clients need not pay fees for two years and will be offered special rates on loans.

The figures are encouraging, but small firms should not jump in too quickly, as only certain types of businesses are suitable for franchising, the experts say. “For a start, you have to have a profitable track record,” said Margaret Nolan, business manager at Bank of Ireland’s franchise unit. “The business has to be successful in the first place.”