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International Pull for UK Franchisors says New Survey
(25 April 2005)

Over a third of franchisors in the UK have set their sights further afield and now have an international presence according to the 2005 NatWest/British Franchise Association Survey. What's more, the proportion of UK franchisors operating in the US has almost doubled in the last year, which could be due to more favourable economic conditions, as a result of the weak dollar and the absence of any language barriers.

The biggest barrier to growth in franchised units outside the UK continues to be language barriers, with 34% citing it as their biggest concern, and 18% admitting that the legislation in some countries causes too much confusion to make a venture viable.

The franchising sector turns over approximately 9.1 billion and employs an estimated 327,000 people. Encouragingly, the number of franchise units being forced to close or change direction is at its lowest level in 21 years, at just 1.7%. There is also further evidence that the industry is maturing, with the average length of time that franchisees run their business, rising from 6.8 years in 1994 to 9.92 years in 2004.

A lack of suitable franchisees continues to thwart franchisors' plans, being identified by 39%, as the biggest barrier to expansion. Franchisors cite lack of sufficient capital as the main reason for not granting a franchise to prospective franchisees. Lack of business acumen and experience are also amongst key concerns faced by franchisors, as well as trying to find a person with the right attitude to run a franchise. In addition, once a suitable franchisee has been found, finding a site for the new franchise unit, is becoming increasingly difficult and time consuming.

Getting a franchise up and running is becoming increasingly time consuming. The length of time taken from first contact to commencement of operations has risen to around 7 months, a month longer than in 2003.

Mark Scott, National Franchise Manager at NatWest, said: "2004 has been a demanding year for franchisees in terms of start up costs and the overall profit made but signs are good for 2005, with 92% of franchisors expecting to see an improvement in their own businesses. In addition, the number of franchise units being forced to close is at its lowest level in the 21-year history of the survey and more and more franchisors are branching out overseas - both encouraging indicators of the resilience of the industry."

Sir Bernard Ingham, Chief Executive of The British Franchise Association, said: "One of the major points to come from the 2005 NatWest/BFA Franchise Survey is evidence that the UK's franchising industry continues to mature. This year's survey showed the average length of time franchisees have been running their businesses is 9.9 years, rising from 6.8 years in 1994.

"With an annual turnover of over 9 billion and a 3% increase in the number of franchise brands operating to 718, the UK franchise industry is a very important business sector."

Note 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.british-franchise.org.uk
  • 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.

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