Key franchising facts
See also the latest from the NatWest bfa Franchise Survey
The British Franchise Association
Established in 1977, the British Franchise Association (bfa) is the not-for-profit voice of franchising in the UK. It operates to accredit and promote ethical franchising and, therefore, differentiate the good operators from the not so good. For a franchisor to be a member of the bfa, they must pass a strict accreditation process which reviews all aspects of the franchise operation to make sure it is proven, protected, ethical, sustainable and free of ambiguity and misleading statements.
This work is not just a philanthropic exercise for reputable and responsible franchisors; it makes good commercial sense. The ability of franchisors to attract potential franchisees to invest in their systems depends crucially on their own reputation, and on the reputation of franchising in general.
Franchisors and professional advisors to the industry wishing to be accredited must put themselves forward to the bfa to be tested against its strict and extensive criteria. Only if they successfully pass accreditation are they then able to join the bfa as a member, gain access to the benefits of membership and become represented by the Association.
What is a franchise?
Franchising is often referred to as an industry in its own right. This is largely due to its scale and the common use of ‘business format franchising’ as a growth model by the businesses within. However, franchising spans many industries, from home-run domestic services to world renowned high street brands. Franchising is a business model used in the ‘business to business’ (B2B) and ‘business to consumer’ (B2C) fields, with both blue and white collar successes.
The term 'franchising' has been used to describe many different forms of business relationships, including licensing, distributor agreements and agency arrangements. In its most familiar sense, the term ‘franchise’ has arisen from the development of what is called 'business format franchising’.
Business format franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade as their own businesses under the brand of the franchisor, following a proven business model. The franchisee also receives a package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continual assistance on a predetermined basis (including a predetermined agreement length – with renewal options).
The following statistics are from the NatWest/bfa Franchise Survey 2012
Franchise industry statistics:
Industry annual turnover: £13.4 billion
Number of franchisor brands operating in the UK: 929
Number of franchisee outlets: 40,100
Number of people employed in franchising: 594,000
Percentage of units profitable (including new businesses): 91%
This has grown from an industry that 20 years ago had a turnover of just over £5 billion, had 379 different brands and represented 18,300 franchisee outlets.