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Press Room

Franchising Grows Twice as Fast as UK Economy*
(14 March 2007)

  • 93% make a profit
  • 7,000 new jobs created
  • more looking to expand overseas
  • older franchisees attracted to industry

The latest NatWest/British Franchise Association survey reveals the industry is now worth a record 10.8 billion. Following on from last year’s exceptional performance, the industry has gone on to report steady, stable growth, as the market shows signs of maturity.

The sector has now grown a staggering 44% in 10 years, taking the total number of franchise outlets up to nearly 34,000 and number of systems up to 781. As the sector grows in size so does the strength of its success, with an impressive 93% making a profit. Turnover per franchising unit is up to 323,000. Over the last decade the increase in turnover for the industry as a whole has rocketed by 83%.

Mark Scott, National Franchise Manager, NatWest, the industry’s leading finance provider comments: “With figures like these, it’s hardly surprising that the number of franchisors showing confidence in their own business remains very high with 80% positive about their prospects. In addition, an impressive 84% of franchisees continue to feel either motivated, or highly motivated.

“This year we’ve seen an increase in franchisees looking more for growth potential or affiliation to a well-known brand. This certainly mirrors what we are seeing at NatWest with regards to new customers coming through our doors.”

The growth in the sector through the number of systems and units operating in the UK today means that franchising now employs 371,600 people. Dan Archer of the bfa comments: “The franchise sector remains a significant employer and last year alone created 7,000 more jobs in the UK. Whilst we continue to hear about redundancies in the media, it seems that franchising is not only helping people realise their dream of self-employment but also has an impact on job creation, helping to plug the gap created by corporate redundancies.

Archer continues: “The growth in turnover by 500 million is testimony to the position of franchising as an important contributor to the UK economy. There are more people expanding their business through franchising, more starting their own business through franchising and more people employed because of franchising, signifying the impact the sector has both at a national and local level.”

International expansion

The survey also showed an increase in the number of franchisors looking to expand their systems overseas. Half of those who don’t currently operate on foreign soil admit to having plans to do so in the future. With 27% now operating on the continent, Europe is increasingly favoured as the No1 destination for expansion. In contrast those operating in traditional English speaking markets such as the US, Canada, Australia have declined by 6%. Research into franchisors helps explain this downturn, showing the language barrier falling down the list of obstacles to growth overseas.

Profile of franchisees

Interestingly, the report also found that franchisees are getting older, with their average age rising 6 years in the last decade to 46, suggesting the industry appeals as a second, or third, career. That said, the industry still attracts young entrepreneurs, with graduates operating nearly a third of all franchises. Interestingly, a higher education has little impact when it comes to profitability as those without qualifications account for 52% of those franchisees reporting the highest profits.

Notes to Editors

  • *Annual GDP for the UK in 2006 was 2.7% compared to 4.9% for the franchising sector
  • This is the 23rd annual survey commissioned by the British Franchise Association (bfa), sponsored by NatWest and conducted by independent research house BDRC. The survey is 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 over 350 UK franchise brands each vetted against a strict code of business practice.
  • The survey also reaffirms NatWest’s position as the leading bank for franchising in the UK
  • The survey also reinforced the importance of the internet and the BFA’s own website in generating awareness amongst prospective franchisees as 45% of franchisees check the bfa website as part of their research process.