Franchise group Filta (FLTA:AIM) has confirmed its strategy to crack Continental Europe. The £47m business has established an office in Holland to initially service Germany. Once successful, the same office will be used to service other European countries likely to include Denmark, Portugal and Spain.

To kick-start the strategy, deep fat fryer specialist Filta has bought back the master franchise for Germany from Dutch owner and successful entrepreneur Jos van Aalst. ‘We approach Jos,’ says chief executive Jason Sayers. ‘He’s now going to run Filta’s European business.’

Filta will replicate its US model which provides a centralised office, recruitment services and finds work for the franchisees.

Its franchisees clean fryers in restaurants, schools, casinos, hospitals, sports stadiums and offices among many other locations. They also provide oil recycling and drainage services.

Sayers reveals six existing German franchisees have each committed to adding more vans to their patch. He says the country has a lot of similarities to Filta’s existing focus in the US, UK and Canada, as well as having some local drivers. ‘For example, Germany has a lot of furniture stores with restaurants inside them, a bit like Ikea in the UK.’

European expansion will focus on cities and areas with lots of fried food such as the Algarve region of Portugal.

The company last month sold its refrigeration, heating, ventilation and air conditioning business for a deal worth up to £125,000. Sayers remarks that it was low margin and that Filta prefers to have high levels of repeat revenue and high margins.

In the US, Filta is taking on new franchisees and existing ones are expanding at an increasing rate, according to the CEO.

UK expansion is slower but Sayers is confident about the future thanks to last summer’s acquisition of Grease Management drain services business, a strong performance from its FiltaSeal business and improved management of the UK operations.

There are also good signs from its first franchisee in Canada. ‘They’ve now added their third van, all in the first three months of trading. It’s aggressive but not unusual.’

The company’s broker Cenkos forecasts 2017 results (set to be published on 17 April 2018) will show £2.3m pre-tax profit (2016: £2.1m), rising to £2.8m in 2018.

Revenue guidance from Filta of more than £13.25m in 2017 is better than Cenkos’ £12.5m forecasts. However, the number of mobile filtration units (MFU) per franchisee at 392 units is less than the 409 expected by the broker.

Cenkos says the revenue beat implies higher revenue per MFU. ‘This is consistent with the company’s focus on supporting and growing with quality franchisees,’ says Cenkos analyst Zane Bezuidenhout.

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