by Dean Madsen

last updated 22/06/2022

Dean Madsen retired in February 2022 after 40 years with Westpac – including over 20 years specialising in franchising. He is a keen ocean swimmer, ironman contestant and surfer, as befits his Gisborne roots, and we thank him for staying out of the water long enough to write this article.

Lessons Of A Lifetime

by Dean Madsen

last updated 22/06/2022

Dean Madsen retired in February 2022 after 40 years with Westpac – including over 20 years specialising in franchising. He is a keen ocean swimmer, ironman contestant and surfer, as befits his Gisborne roots, and we thank him for staying out of the water long enough to write this article.

Recently-retired Dean Madsen shares experiences gained from over 20 years in franchise banking

Ironman and ex-banker Dean Madsen recognises the traits of high-performing franchisees

I’ve recently finished up at Westpac New Zealand after 40 years, spending more than half that time specialising as a franchise banker. But I wasn’t allowed to escape that easily – the editor asked me to reflect on what I’ve learned about franchising. Here are some thoughts I hope you might find useful.

My first introduction to franchising came about in the late 1980s when I met a fellow Westpac employee, Pat Everest. Pat was New Zealand’s first specialist franchise banker, and as we chatted over a coffee, he explained that his role was looking solely after franchise businesses – in particular, major brands like McDonald’s, KFC and others. I was immediately fascinated, and visited my local bookstore in Newmarket where I purchased an Australian franchise magazine (it was so long ago, over 30 years, that Franchise New Zealand didn’t even exist!). 

I soon discovered there was a lot more to franchising than I had thought, with many brands that I was familiar with, but had never realised were franchises. I also learned some good reasons why franchising was growing so fast. The value of a franchise can be attributed to the strength of the brand, as well as the collaborative buying power of being part of a larger group. I discovered that franchises often had either a technological edge or a process and systems edge over their competitors that allowed them to expand and go on to dominate their specific markets – just look at McDonald’s, which is synonymous with fast service and product consistency, or Pizza Hut and Domino’s, which were delivering meals long before UberEats.

Another key benefit for a franchise chain was that it could grow more quickly using franchisees’ capital to open more stores or operations. Speed of growth can be an important factor when you are trying to gain market share or dominance.

Having worked with a lot of businesses over the years, I could see how all these advantages added up. And, later, when I joined the specialist franchise team at Westpac myself, I was able to help others make use of them – both franchisors and franchisees.

When knowledge plus experience equals success

As a banker, I found one of the major benefits of franchising was the ability it gave us to fund a new start-up business off the forecasts, based on the strength of the benchmarking information provided to the bank about the performance of other franchisees in the same brand. I recall funding an Eagle Boys pizza franchisee in Wellington. He had applied for finance through his usual bank, which had declined him on the basis that he would never be able to sell the forecast number of pizzas in a week. Luckily, the potential franchisee was determined, and contacted me. We spoke on the phone and he sent through his business plan and projections.

I was already aware of Eagle Boys’ growth strategy, and knew that when they opened a new store it picked up some of the customer base from adjoining areas as calls automatically diverted to the 0800 number for the new, closer store. Eagle Boys also carried out a significant marketing campaign when a new store opened, benefitting all the local stores. Based on this specific knowledge of the franchise system, we expected that the store would not just meet the projected figures the other bank doubted – it would probably exceed them. 

Sure enough, shortly after opening the new store it achieved sales of around 150 percent of budgeted levels. The franchisor indicated that the franchisee was actually missing a lot of customer calls, and advised them to slow down marketing until another oven and extra phone lines could be added. This was completed a few months later, and the store went on to achieve around twice the original projections. This was a real lesson not just in ...

In the rest of this article, Dean talks about the ability of franchise brands to grow fast and dominate markets; shares some thoughts on what franchise buyers get wrong; ideas on how to get it right; keys to success; and the franchise community.

This article appears in full in Franchise New Zealand magazine (Year 31 Issue 2). You can read it in the digital magazine here or request a free print copy here.

Dean Madsen retired in February 2022 after 40 years with Westpac – including over 20 years specialising in franchising. He is a keen ocean swimmer, ironman contestant and surfer, as befits his Gisborne roots, and we thank him for staying out of the water long enough to write this article.

Order a Print Copy
Order a Print Copy
1