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Press Room

Lack of Suitable Franchisees Thwarts Growth
(30 November 2005)

A lack of suitable franchisees continues to be the biggest barrier to growth in the franchising sector, according to the 2005 NatWest/BFA survey. Over a third of the UK's franchisors cite finding a good person to run a franchised operation, as the biggest ongoing problem facing them.

What's more, once a franchisor finds a franchisee that they believe is suitable to run a franchised operation, 14% then struggle to find a suitable site for the new business to be located. Over a quarter of franchisors admit that they find it difficult to attract new franchisees. The top reasons for this being; finding potential franchisees with the right skills, with sufficient funds and getting the message to potential franchisees through advertising.

When looking for a future franchisee, most franchise owners have set characteristics that they look for, both in terms of experience and attitude. Self-motivation (59%) remains the most important attitude sought whereas sales and marketing (45%) is the most important type of experience required.

With the average cost of launching a franchise business in the UK being 70,000, an increase of 53% on 2003, finding a suitable franchisee with sufficient funds can be difficult. In order to help with this, 64% claim to assist their franchisees in raising their initial investment and 82% give guidance on where to get financial assistance.

Typically, 2 in 5 franchisees need to borrow money when starting out, with the average amount borrowed being 43,600. Most of the borrowing is financed through banks (86%) however other sources include relatives and friends (12%) and building societies (2%).

Mark Scott, National Franchise Manager at NatWest, said: "It is important that both franchisors and franchisees find the right fit with each other, as it could be the difference between success and failure. Franchising can be challenging however with the right support and guidance, it can be one of the most rewarding things that you do.

"At NatWest we have over 100 specialist Area Franchise Managers, who are on hand to help new and existing franchisees by discussing their plans and identifying solutions for all their financial needs."

Sir Bernard Ingham, Chief Executive of The British Franchise Association, said: "The difficulty of recruiting the right kind of franchisee is almost certainly the greatest obstacle in the way of the development of franchising in Britain. It is not a new problem. It has existed for years. Franchising has nonetheless steadily expanded. But it would grow faster if those who very much want to go into business on their own account made franchising their first option. I don't think many would regret it."

Notes to Editors:

  • This is the 21st annual survey conducted on behalf of the British Franchise Association (BFA) and sponsored by NatWest. Copies of the survey are available from the BFA, Thames View, Newtown Road, Henley-on-Thames, Oxon RG9 1HG, telephone 01491 578050 or visit the website - www.thebfa.org
  • The British Franchise Association (BFA) is the only voluntary accreditation body for franchising in the UK. Its remit is to develop and continuously improve the standards of good practice in franchising and to accredit franchisors who meet these standards. The BFA now represents some 280 UK franchise brands each vetted against a strict code of business practice.