EVNT: Building a Franchising Empire Starting at 25 w/ Safwan Adam | NFE 2023

Amardeep Parmar: [00:00:00] Thank you everyone for coming today. So we're going to now interview Safwan Adam, who's sitting here. So I'm from the BAE HQ.

Amardeep Parmar: He's just been a quick phone call in the meantime, um, busy guy. So what the BAE HQ is, it's a community of appreciation entrepreneurs. As you might know, there's a lot of Asians around who've done well in franchising space.

Amardeep Parmar: So here's one of them and we're just going to showcase what he's done. And we try to connect different people as well and help them to get their funding and get started. So, Saf, great to have you here. We both actually live 10 minutes away from each other in London. And we both drove up here to interview here, Sid Zedd.

Amardeep Parmar: So, Saf, like, if you let everybody know, like, what got you into franchising in the first  place?

Safwan Adam: So, I, I done an aeronautical engineering degree. Um, couldn't find a job in 2011. Uh, it was very difficult. Always been interested in business. And, but there was no one around to mentor me for, for business and franchising felt like the way to kind of go with South Africa, like we spoke about, learn about business, learn Nandos was a franchise, [00:01:00] which was never in Portuguese and it was a South African brand, which was mind blown, um, and tried to get a Nandos in South Africa until my dad told me I'll get shot because of my personality and to come back.

Safwan Adam: And now, uh, we came to the UK, wanted to find a franchise brand that was established. That was quite transparent, that would help me grow fast, and, and, I'd go into CEX.

Amardeep Parmar: Yeah, so what made you pick CEX as your first

Amardeep Parmar: brand? How many people already have a franchise here?

Amardeep Parmar:  We've got one there, so it's everybody kind of looking right now to get into their first one.

Amardeep Parmar: So it'd be really great for you to share, like, what made you pick CEX as your first one, and why it was  attractive to you.

Safwan Adam: I can't sell sand to the Arabs or the ice to the Eskimos, I'm really bad at sales, right? I'm not that guy. That goes on the apprentice and when it, I'll probably be, I won't even get to that stage, but I know that I can operate.

Safwan Adam: I know that I can serve people. I know, I know customer service. So I was looking for a brand that was busy, that kind of bought the customers and [00:02:00] that was, that was growing and, um, I do, and the customers come to me, I kind of do a great job at that, and then the repeat would keep coming. CEX had that, um, and then it was about, okay, do I, everyone goes into food franchising, practically everyone goes F& B.

Safwan Adam: I looked at a few F& Bs, went around, and some of them are transparent, some of them not. I have a, I have a limitation where I can only do halal food, I can't do alcohol, so that kind of ruled out half the brands. I looked at my choices. I love tech and CEX was quite transparent with the sales. So they talked about all the sales, all the rents, all the P& Ls of every single store.

Safwan Adam: And I went around the other way. I went around interviewing franchisors as opposed to franchisors interviewing me. And when I was speaking to these guys, CEX seemed to be the only one receptive to that. They wanted to answer my questions. They wanted to be absolutely transparent. They wanted to talk to me and tell me how great [00:03:00] the brand was, and not oversell and not undersell.

Safwan Adam: Some guys felt like, oh yeah, we're here. If you want us, take us. If you don't want us, we don't really care. We've got a hundred franchises lined up. Some of them kind of went, we make 10 million pound a year kind of stuff. And you know, they probably had one branch or something. Um, so that's why CEX made so much sense, and I guess that's why, that's why CEX.

Amardeep Parmar: And then once you got started as well, you grew it to a few stores quite quickly. And that surprised a lot of people who didn't expect that of you, right?

Safwan Adam: Yeah, so, um, when I started CEX, they kind of said to me that, um, You can't get a franchise, you're a fresh grad, you don't know how to manage people, You've got no experience in managing people, so we don't think you can do this, You don't think you're capable of running a franchise.

Safwan Adam: And that was like September 2010, and I went, no, no, no, I'm sure I can. And I would call him nearly every three days and be like, no, please, come on, let's do something. It had become this thing where now I wanted it. It was like, you know, the thing that you can't get, do you know how they make those false cues [00:04:00] so it looks busy kind of stuff.

Safwan Adam: So I had to get it because I went through a three day interview. One, I'd done it at, um, in the training center. There was two days in their actual, um, a shop. And there was one where you met the head of franchising for the UK. So I had two approvals, but the training guy said, well, this guy can't do it. So eventually after two, three months, the UK guy, I kept on calling him and I went, you know what?

Safwan Adam: Let me just speak to one of the directors. Let me see what I can do. So they came back to me and challenged me. They said to me, listen, come work for us for free. Let's see how you do. And if you do well, they will give you a franchise. So I ended up working in the Tottenham Court Road branch six days a week.

Safwan Adam: The seventh day I was on a double decker bus looking for a franchise, looking for a location. Um, and I worked for one year, I, I clocked around about probably a thousand hours over the space of six months and they were convinced I could run something. The growth happened because I had all that experience.

Safwan Adam: By that time we had already found one store and we were already looking at the [00:05:00] second, third. So the first day I opened the store, I wasn't at my opening, I was  the franchise manager looking at my second store and then I was looking at acquisition and, and my wife kills me for this. ‘Cause I don't know if you guys know Asian weddings, Asian weddings as you know.

Safwan Adam: They go on for a few weeks, right? I've had, I've opened my first store. About to get married now, midway through the year. Like, we're going to get married, have my engagement. And just on the week before one year anniversary, we've just finalized a deal to take over one of the stores, which is Ilford. So I've had my, I've done my wedding.

Safwan Adam: I've had my wedding that, that weekend. And I'm in Ilford store. And then we called something at Wilima, which is another, another party a week later. And all that week we have occasions and people come around and I'm just opening stores and then I'm in my Dagenham store on the day of my wedding. In the morning opening that store and then end up at my wedding.

Safwan Adam: So my wife always curses me for that. So we broke a [00:06:00] record where we opened three stores within 12 months. And then we opened another three. So it was quite, quite rapid growth. And we were right time, right place. CEX was on the right trajectory. We had the hunger and kind of fit.

Amardeep Parmar: You mentioned there as well how you went on the bus to find different locations.

Amardeep Parmar: And for someone who's trying to find their first franchise, that first location is make or break, right?

Safwan Adam: Yeah.

Amardeep Parmar:  You get the wrong location, then all of a sudden you look like you're a bad operator. And like, how did you pick that right location, or how do you go about that now as well?

Safwan Adam: So, CEX, the franchise manager was fantastic.

Safwan Adam: You know, we had Brian, Brian was amazing. And he had one rule, just point your finger and see how many people kind of walk past. And it's as simple as that, right? They just went, you know, forget it. Go next to McDonald's because kind of our customer base, or go put a finger and see how many people will pass out over a minute.

Safwan Adam: Do it maybe over a space of a, of a day, like, you know, morning, afternoon, evening, do weekends, do weekdays and understand. And that, and if you're [00:07:00] above like 30, you'll do good. If you do 45. You know, you break every seating possible. So before I got to that, the reason I was on the top of a double decker bus, because most London stores were kind of, it was saturated.

Safwan Adam: I sat on a bus kind of right in the front, whatever street was busy, I kind of just jumped out. I went, Oh, let me do this football count. And then I'm quite analytical because of the engineering background and last background. So I would plot over, okay, this is this high street, at this time, this much football, at this time, this high street, this much football.

Safwan Adam: And then I took that data, and the, kind of, capture of the area, how many people live in the area, and kind of plotted, kind of, like a little algorithm kind of thing going on, but it wasn't really one, but, yeah, my, my version of it.

Amardeep Parmar: And  in those early days, like, what mistakes do you think you made, like, as you were just getting used to running that first franchise?

Safwan Adam: Running the first franchise, um, cash flow, massive. Yeah. Choosing your location. Yeah. Absolutely. Right. Choosing your location. Just [00:08:00] touching on that because that kind of addresses this. After doing all of that, I found one location, which was Brixton. No one wanted to open in Brixton. They thought they're going to get shot for mobile phone or stabbed.

Safwan Adam: It was like, we're not going there. Worst crime area ever. And I went, well, we kind of operate in South Africa. Crime is a business expense. I I think I could do this. So I I kind of got Brixton about to sign heads of terms, etc. and franchisor came and went sorry mate, you know, two miles away this guy has got a franchise, he feels it's going to impede his business, we don't want you to open.

Safwan Adam: So although it kind of really, you know, maybe live it at the time, I was like, Oh, I spent all this time. It really gave me reassurances that the franchise wasn't going to cannibalize here. That was the first challenge. The second challenge was cashflow. We had, um, we buy it and sell. So our customer base is the public.

Safwan Adam: What that meant is CEX [00:09:00] always gave 100 over what Apple was selling phones for. It was like, it was crazy. Franchisees, which we might come on to, franchisees thought, some not all can donate, you know, it's recorded. But some franchisees felt that it was a bit ridiculous to, to pay over because their margins, they wouldn't make you, it was a lost leader.

Safwan Adam: Like it's like buying bread at the back of the supermarket. You're not going to make money out of it. And the franchisor, so I was in between a franchisee and the franchisor kind of, they only relied on the cash flow they had on the day from the safe. So I was in between like four or five stores right dead in the middle.

Safwan Adam: And they kind of went, I went, well, I'm buying, I'm going to follow the model, you know. And I ended up buying, and I bought the most amount the entire network did. So my cash flow was hit so hard. It was like, couldn't pay rents, couldn't pay some bills. Luckily, again, CEX Fantastic, they kind of allowed us to delay some of those, gave us a bit of credit, because they saw that we were following the model.

Safwan Adam: But what [00:10:00] that did, that catapulted me, right? It was a catalyst. Because I didn't have to do local marketing, all these stores, without realizing what they were doing, they were sending all their customers to me and telling them, well, this is a CEX store in town. Why don't you go to that one? Because they're buying.

Safwan Adam: And that kind of really hit, made me hit the ground running kind of stuff.

Amardeep Parmar: So you've done loads of different franchises as well, right? So what made you diversify? Why didn't you just stick with one?

Safwan Adam: A couple of reasons. And I hope my brother doesn't watch me, 

Amardeep Parmar:  but get it cut from the video.

Safwan Adam: so um,  my brother graduated, joined the business, we were both running it together, kept on head, butting heads a bit, um, and we went, oh, you know what, let's just do something different.

Safwan Adam: Not only that, it meant it was, to be quite honest, logically, it didn't make sense for both of us to do it. We had two brains, let's diversify, made a lot of money in CEX, and we wanted to kind of do something that was more meaningful, um, instead of just making money. We were young, had this thing about Oh yeah, we just don't want to be these guys that have [00:11:00] got a lot of money, driving nice cars, nice house, we can't give something back.

Safwan Adam: So we ended up getting into home care and these shows, I don't know what it is this year, these shows, every year there's like a little bit of a theme, you know, one year it'll be food, next year it'll be this, so that year it was just care franchises everywhere. Um, so we went around looking at care franchises and similar thing, um, Ken, who's an amazing franchisor, he basically went, well, You guys are too young.

Safwan Adam: How are you guys going to know? All my franchisees are, you know, just come out of work retired made their money in their careers and now they're thinking of franchising. How are you guys going to do this? No, Ken, trust me, we can do this. So Ken kind of appreciated how we worked as a family, how we worked as a network.

Safwan Adam: He always says to me, the first time he met me, I say to him, oh, you know what? We've got to go home and tell our dad what the hell we do for a living and what the sales are. So he'd always say, you know, I love that about you guys. And that's why I gave you a franchise. And again, We've done really, [00:12:00] really well there.

Safwan Adam: So we diversified into that and then it's kind of an itch. You always want to do something that you haven't done, which is kind of stupid because you always fish where the fish are fishing. So we wanted to do F& B because everyone was doing F& B. CEX had stagnated a bit because everyone after our growth, everyone kind of was growing at the same time.

Safwan Adam: And there was all these locations locked up. We didn't have any locations left. And if we did invest the same amount of money, we'd be in small tertiary locations. It didn't make sense. So we, we ended up looking at FNB, GDK had just come into the country, opened two stores, and we, we ended up taking, we didn't want that barrier of, oh yeah, fighting it about locations, trying to kind of go, no, I want that location, no, why are you giving it to him?

Safwan Adam: I can't believe you gave it to him. Oh, that's so close to me. And we didn't want to do all of that. So we kind of locked up 20 locations and, um, we went, okay, we're going to, we're just now going to do GDK and we're going to smash it out. And that's [00:13:00] kind of where, where that diversity, diversification came.

Safwan Adam: Then we went into a bit of donuts and coffee shops because that's what everyone was doing. And to us, what we knew is that CEX, when I opened my first store, we'd done around about 30, 30 to 40, 000 pound a week. So we knew large numbers, right? And we always, every time we spoke to a franchisor, they were talking about, Oh, we make four grand a week, five grand a week.

Safwan Adam: And at that time we became part of, um, what HSVC calls the super group. So it's sort of second generation franchisees that have got 50 of this, 100 of this, you know, 1, 500 staff. And we're there with our proxy, you know, six doors. But we're learning, right? It's all about learning. It's all about receiving.

Safwan Adam: It's all about knowledge. So they're going to us. Oh, yeah. Starbucks makes an average around about six grand. So, oh, wow. I didn't know you can run a business that makes six grand a week. So we thought, oh, if that's possible, let's now get into coffee shops. And then that's where we went into coffee [00:14:00] shops, went to a bit of an Indian restaurant niche, and then we diversified outside of franchising.

Safwan Adam: But that, that's a different story, I guess.

Amardeep Parmar: So you obviously got into franchising. So yeah. Was there anything that you wish you knew, like, right in those early days? Let's say, people in this crowd, right? They've probably done their research. What's something maybe they're missing that you can maybe shine a light on for them that they should think about?

Safwan Adam: With all due respect, everyone's got targets, right? Everyone's got to make you open the store, because that's what the Franchise Manager's there for. So make sure that, at least for your first one, because there's a lot of people trying to do the first one, um, at least for your first one, make sure that it's the right thing, because otherwise you're just going to be bogged down in trying to sort that one out, like you said, oh, bad franchisee, doesn't know how to run the model, it's you, it's not me, and stuff like that happens, we're all human, right?

Safwan Adam: Um, so make sure your first one is a smasher. After secondary, tertiary can be a bit, one can be a loss, whatever, but your first one's going to be a smasher, because then the franchisor will support your growth. You will have enough cash flow to support your growth, you will feel more [00:15:00] confident, all that kind of stuff.

Safwan Adam: It's very important. Um, it's very important that some franchise, some franchises, what they say is what, what you kind of, um, what it is. So it's important that you go speak to other franchises in the network. But it works both ways, right? I won't say the brand, which one it was, but when I, when I got into that brand, I went around to franchises and I went, Oh, can I, what'd you think?

Safwan Adam: Guy went, listen, don't you dare invest in a rubbish brand. I can't believe you did it. It's absolutely rubbish. Why don't you give me your 200 grand? I'll be, I'll, you know, invest here for you. And I don't really know what that brand is, and then sometimes it's the other way around where the franchise is amazing, but it's absolute rubbish because they don't want to tee off the franchise.

Safwan Adam: Also, you got to be very careful that if you're being told that it's doing 10, 000 pound a week, it's doing 10, 000 pound a week and you're just not getting sold the best. You're looking at the best, the worst, the middle, and you're taking everything into account. Data is [00:16:00] very important. I need to make sure data is, is king basically.

Safwan Adam: That's, I think that those are the two things that, although I knew it, over time you get confident and you don't weigh in it sometimes as much as you should and you kind of just let it lapse a bit, but just remember those should be your fundamentals, I think.

Amardeep Parmar: So, thank you so much for that. We're going to take some questions from the audience now as well.

Safwan Adam:  in between

Amardeep Parmar: Yeah, go you can go for the first one first. I think I've forgotten it. First question was, why did you pick the other franchise? So one was K is for society. Then you said..

Audience: I shoulda have emailed you.

Safwan Adam: You should have emailed me then, you should have.

Amardeep Parmar: And the other one you said..

Safwan Adam: I can't believe you just met me now and you don't have my email address.

Safwan Adam: Didn't have it two days ago. ,

Amardeep Parmar:  The other one's almost about  following the trends, right? With the coffee and..

Safwan Adam: It's not only +trends. So you know, it's about learning the difference between F& B, service based business, transactional business, all that kind of stuff, right? So, CEX, cash flow, again, you're always pumping your money back in.

Safwan Adam: When you're buying a new store, you've saved up 200, 000, 250, 000 pound, you think [00:17:00] you're the king of the jungle, and then you pour it back in to buy a new store, and then you start from zero again, and it's an asset, it's an asset rich business, but it's a depreciating asset rich business when you buy shops. Um, service business is purely cash flow.

Safwan Adam: What you earn is what you get. That's quite important. Um, and then food is just really weird. Sorry. I just, it's just coming to my head. What's really weird is that there's more pilferage in a food business than there is in a tech business. So you've got these 500 pound phones that no one dares to kind of, you know, take, but then everyone loves a bit of a Coke ten times a day.

Safwan Adam: It's crazy, sorry. But yeah, all those things kind of matter. And then the environmental thing.

Amardeep Parmar: Yeah, the second part of that was about how much of it is price based in terms of, in your stores, and how much you think it is around the mission and what you're doing and trying to do something good for society.

Amardeep Parmar: If in that tracks customers or  not.

Safwan Adam: I [00:18:00] think, um, I think it's not a, it's not a decision factor. I don't think like, you know, people go, I do think there are people that do that, but if you're looking at masses and just trends, I don't think people go, Oh crap, that place is environment friendly. That's where I'm going, but it helps tip people off the line in terms of your competition.

Safwan Adam: Right? So I don't think people come to see eggs because we're recycling phones. Only as opposed to going to Apple direct. I think price has a factor. I think being able to mitigate the money with your own stuff has a factor, but it helps that it's recycling and helping the environment.

Amardeep Parmar: The gentleman in the front row, they asked about how, how important is a team in order to keep growing, right?

Amardeep Parmar: Because you've got to get the right team in place so that you can then move on to other stores.

Safwan Adam: Yeah. So I went through that because I get my team up to do 10, 20 stores [00:19:00] and I was, I had a massive backend operation. I had my operations managers and I was anticipating this, you know, gold rush to come in of stores.

Safwan Adam: And what happened is it didn't go to plan because there wasn't locations, landlords, blah, blah, blah, blah, blah, blah, blah. And it just became a heavy bill. And I was eating into my cash flow, my profits, etc. So I went through that journey of building this amazing team and top heavy, but I realized that, well, actually, as long as you're doing the job and going back to basics, it should be more reactive.

Safwan Adam: And then add the tech piece on top that is much more cost efficient to manage your team and then backfill in that sense. And I know franchisors are going to be very angry with that, but that's basically how I kind of did it.

Amardeep Parmar: The question there was about how you've got multiple franchises. Is the plan to just keep growing them?

Amardeep Parmar: Or have you got an exit strategy where... You exit some of them and focus your efforts elsewhere, or what's your kind of long term thinking there? [00:20:00]

Safwan Adam: Yeah,  I think we do, except for CEX because it's like nostalgia, that's kind of, I went through a lot of blood, sweat and tears. But generally that is the strategy that, okay, because there's two reasons to that.

Safwan Adam: One, because it makes business sense that you can grow a group of stores. Some franchisors will allow you to kind of sell it to a PE, float, whatever the hell it is. Um, but there's also the fact that because I was quite young, it's learning, right? Instead of taking inputs, I kind of just took plunges and we'll work it out and it kind of lost me a lot of money, but I learned, um, and I paid a heavy price for university, I guess, um, but that's very important.

Safwan Adam: So exit is important. So now, now when we invest into a business, it's important for us to know what is the exit because the worst case scenario is what, um, so if I go by, I don't know, any franchise, I'm going to think, what is the demand for this franchise? If everything goes really bad, do you think I can flip it to [00:21:00] someone else?

Safwan Adam: Someone else is going to be interested in taking it. Um, if things go really well, do you think I'm going to be able to kind of create a group and kind of go, here you go, there's a group. And is that possible? So that is, that is a decision factor, 100%. And I learned that over time, I guess.

Amardeep Parmar: So, three biggest mistakes that franchises have made when they started out with your mistakes or mistakes you've seen other people make.

Safwan Adam: My mistakes, I think we covered some of them. One was cash flow. Didn't keep my finger on the pulse as much as I should have. Location, um, some we chose bad, some we chose good. Um, and I guess just trusting without research is a massive one as well. In terms of other people, I keep hearing franchisors say that, um, follow the model, follow the model, and it's quite important.

Safwan Adam: If you, if you thought you knew better, then you shouldn't be buying franchises, go do it yourself. Um, so do follow the model. If you don't agree with something, by all [00:22:00] means, go challenge your franchisor, but follow the model and try to get it changed. And there might be wisdom in what they're doing, and they'll advise you better, or they might say, actually, you know what, we never thought of this.

Safwan Adam: Thank you very much. And they'll try to change it, but follow the model. And as long as you follow the model, it will be the easiest path to kind of success.

Amardeep Parmar: So I think I'm going to wrap up there. Thanks so much for coming on, Saf, and just some of the key notes, I think, there. It's like, location is very  important.

Safwan Adam:  Yeah

Amardeep Parmar: And then it's also taking the time to look through the data, and not just making a decision based on your gut, but actually looking through it. So, it saves you a punch early early on. But, of course, some quick lessons, but also some mistakes that maybe you could have avoided.

Amardeep Parmar: And the diversification piece is just make sure that as something gets saturated, you don't keep trying to put all your energy into something where it actually has opportunity elsewhere.

Amardeep Parmar: But Thank you again so much for coming  on.

Safwan Adam: Well, thank you for having me.[00:23:00]

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