£15bn franchise sector reaches record highs
January 06, 2016
New research has shown the UK’s franchise sector is operating at record levels with all-time highs reported in turnover, employment and numbers of franchisee-owned businesses.
Franchising contributed £15.1bn to the economy last year and employs 621,000 people, according to the independently researched British Franchise Association/NatWest Franchise Survey 2015. Both figures are up more than 10 per cent since 2013.
The number of franchisee-owned businesses topped 44,000 in 2015, over one-third of which are run from home. The performance of those businesses also set new benchmarks, with 97 per cent reporting profitability and over half turning over in excess of £250,000.
A long-term trend of very low commercial failure rates continued, with less than 1 per cent of franchisees closing their business for this reason in the last 12 months. Franchisee-franchisor relationships are correspondingly at their strongest recorded level, with nine in 10 franchisees declaring satisfaction.
Home-grown success is converting into export success: four out of every five brands in the UK are domestically owned, with 38 per cent expanding their business model overseas and a further 11 per cent considering doing so in the future.
Brian Smart, director general of the bfa, said: “Good franchising continues to deliver serious dividends for Britain’s economy, creating businesses, jobs and wealth for local communities across the country. Established trends of strong profitability and very low failure rates over the last 20 years highlight the benefit of self-employment through franchising, a path that more and more individuals are taking.
“The outstanding performance of the sector, in good economic times and bad, shows the power of the franchise model and its impact on the UK’s business landscape increases each year.”
Andrew Taylor, NatWest head of leisure, retail and franchise, commented: “Franchise offers a truly compelling alternative to start up operations with global and national brands, tried and tested operating systems and processes, and huge marketing support so it is no wonder we have seen a steady growth in entrepreneurs investing in franchises. This survey paints a picture of a sector in good health, with great potential and ambition and our dedicated franchise teams based across the UK remain committed to supporting the industry in the best possible way.”
The report also suggested that more younger people are entering the franchise sector, with one in five franchisees that started their business in the past two years being under 30 years of age. The ongoing business support enjoyed by franchisees means it is a sector well-suited to younger aspiring entrepreneurs, who may not have previously gained substantial business experience.
The full bfa/NatWest Franchise Survey 2015 can be purchased from the bfa bookshop.