Cashing in on the gold rush - Business Works

Cashing In on the gold rush

Gareth Thomas

U nless you have neglected to switch on your TV or open your local newspaper in the past 18 months, you could not help but notice that the practise of buying unwanted gold from the public has become, not only commonplace and socially acceptable, but also big business.

One of the practitioners in this new sector is Cash4Gold UK. Owned by two Northampton-based entrepreneurs Paul Scotney and David Faulkner, it began trading a year ago, working on the principle of face-to-face valuations and purchases of gold from the public. Opening gold buying units throughout England, the growth of the business was limited only by the number of hours in the day – the opportunity to expand was plentiful. At this point, the decision to open the business up as a franchise was taken and Cash4Gold Franchise Ltd was born.

I joined as Commercial Director and third owner of the franchise business and set to work developing the product for market. Having worked in the jewellery supply trade for many years, I’ve been stalked by redundancy several times. While the rising price of gold was catastrophic for suppliers, it meant that a new industry emerged with the same rate of growth that we had experienced in decline as suppliers. The opportunity for franchisees and ourselves was an irresistible reason to get involved.

Extensive high-profile advertising on TV by gold buyers working with the ‘postal gold’ business model has led to almost overnight awareness and acceptance of a trade that was previously restricted to the more traditional route of selling scrap gold to jewellers or pawn brokers. With high gold prices and an enormous stock of redundant gold in households across the country, the ingredients were all there for business people to act quickly and take their share of the market. Cash4Gold Franchise’s angle is to be the only business in the market which is making it possible for people outside the trade to join this growing cadre of gold buyers.

The model

The business model that Cash4Gold Franchise works with is very simple. Franchisees buy gold from the public and sell it to the company at a high percentage of the days gold value. Franchisees set their own buy prices, meaning that they have to be prepared to trade with potential customers. To prepare them for their new occupation, franchisees are trained in all aspects of setting up their own business, then the specifics of buying gold. Training encompasses six different buying strategies, from buying gold in shopping centre locations to organising gold parties, which means that there is a strategy to suit people from all walks of life with all types of ambition.


We are pleased to be the only company that we’re aware of who are making gold buying accessible to anyone from outside the trade who is of a mind to do it. We have people from all walks of life who make enquiries to us and we’ve got many franchisees on board who share one common trait, which is that they are motivated by the prospect of great incomes in a very short space of time. The people we have taken on have been a delight to work with because they have all just said to us, "let’s sign the paperwork and let’s get started". When you have people around you who are that motivated, it makes working towards our common goal a very enjoyable thing.

BFA accreditation

A key building block to the long-term success of the Cash4Gold Franchise business was gaining accreditation by the British Franchise Association. A franchise business would generally have to have a year’s worth of trading under its belt before it would be considered for accreditation, but we approached the BFA after just 3 months. Given the rapid growth of the industry, the BFA viewed the application as something out of the ordinary and agreed to meet the Directors.

Elaine Moseley

We set the business up with a view to gaining accreditation as soon as possible. Our preparation was thorough and we invited the right consultants in at the beginning of our enterprise to create a professional infrastructure so that we could bear any scrutiny. As a franchise business, we not only wanted to follow the principles of the parent company and make our business completely transparent and legitimate, we wanted to be seen to be doing so. Gaining accreditation with the BFA was a key to achieving this.

The franchise company was awarded Exhibition Accreditation which is the first step towards full accreditation and which allows it to exhibit at BFA shows. It also gives the company the equally-important legitimacy they set out to find in their industry to set them apart from the rest.

OFT investigation

Those of you who have experience in selling your gold to a company who send you a bag in which to post your property to them, may also be aware of the bad press that has been directed towards some of the companies involved in this side of the trade. The Office of Fair Trade has been commissioned to look into specific issues for companies who currently operate unregulated. The investigation centres around claims made by some postal gold companies in their advertising and whether consumers’ rights regarding the return of jewellery to them after rejecting a valuation are being honoured.

We are delighted that action is being taken to protect consumer’s rights. When we opted to carry out our business in a face-to-face fashion with our customers, it was with the principle in mind that we are again transparent, this time with our customers. Our franchisees evaluate gold in front of the people who own it and so that there is none of the risk to the consumer associated with sending gold off in the post. We make an offer to the consumer that we believe they’ll be happy to accept. Our business model is not under OFT scrutiny and we’re only likely to benefit from increased consumer awareness of the investigation.

The future

It could be argued that the circumstances that have led to the rapid development of the gold buying industry could disappear again as quickly as they arrived. For a business that has ‘all its eggs in one basket’ and is focussed solely on the purchase of gold, a reversal in fortune of this nature could be damaging.

In terms of longevity, our franchisees have an opportunity in the short-term to earn six figure incomes with ease. Given that our franchise costs less than £10,000, we have yet to encounter an opportunity that offers a return of this size in such a short period. Our first franchisee earned back her franchise fee in 3 weeks of trading. The name of the game, therefore, in the immediate future, is to maximise our share of the market, both as a franchisor and locally for our franchisees, but we would be naive to think that our business should stay exactly as it is over the medium to long-term.

We’re happy that selling unwanted gold is now normal practise for the UK public, so this will not change. The stock of unwanted jewellery out there may diminish in a few years, but we’re a long way from that yet. The price of gold may fall in time, but even if it does, we will still make a margin. If the gross margin is lower, it just means we have to buy more gold which I think will be achievable as other major gold buyers exit the market to look for easier opportunities. In effect the market will settle down to something more sustainable.

At this point, we will have introduced the additional services we are looking into now. We are planning for the future as we speak, investigating other financial- and cash-related services that our franchisees could integrate into their businesses. Making a business future proof is not a new principle, it is a practise that any responsible business carries out as a routine task. We’re heavily involved in that now and we’re confident that our franchisees have a viable long-term opportunity with us.

The Cash4Gold Franchise business is certainly making an impact in the trade. Prominent at The Franchise Show at Excel in February, the stand was one of the busiest there – which is not surprising given the unique trade that they work in. There is something inherently appealing about gold as it holds fascination in the eyes of the consumer for many reasons. It is used to store wealth, it is used to manufacture things of great beauty and ownership of gold is a symbol of status. Combining this with a winning business model is the foundation for Cash4Gold Franchise’s success and their franchisees are certainly enjoying their share of the gold rush.

For more information:
t: 00844 880 0007

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