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Review of Franchising in 2016

For 2015 and 2016, the franchise sector is expected to be valued at more than £15 billion in the UK economy, according to the bfa NatWest Franchise Survey 2015. That is a 10% increase from the 2013 survey and a 46% increase in the past decade. In 2015, 97% of franchisees reported profitability, a statistic expected to hold true for 2016 as well. The continued success and expansion of the franchise sector gives credit to the common claim that using a business’s tested, proven business model increases the likelihood of keeping doors open and reaching profitability quickly. Many franchisees enjoy this sense of stability and camaraderie as they start their business, as it enables them to be in control without going it alone.

Throughout the year, there have been huge successes within the franchise community, and major decisions that affect the future of the sector. As we reflect on the past year, here are some of the notable highlights.

AWARDS AND SUCCESSES

Ruth Brown of Home Instead Senior Care discusses winning awards from the bfa and the success of the franchise.

Each year the British Franchise Association hosts an awards ceremony to honour the best of the best with the bfa HSBC Franchisor of the Year Awards. It is a tradition they have been holding annually for 30 years, making it the oldest and most respected franchise awards in the UK. The top prize of the night, Franchisor of the Year, went to Water Babies, with Home Instead Senior Care placing silver and ERA claiming bronze. Home Instead, which specialises in care and companionship for older people, also won the Franchisee Recruitment Award.

Ruth Brown, Home Instead’s Head of Franchise Development said: “This has been an outstanding year for our brand and our entire franchise family, with royal recognition alongside awards from the BFA that signify franchise opportunities at their finest.

“We were thrilled to bring the BFA’s Franchisee Recruitment award home, it should speak volumes to potential franchisees that we are a credible, ethical and incredibly successful homecare brand to franchise with.

“We look for people who have an affinity with our mission: to change the face of ageing. We want franchisees who want to make a difference to society and run a successful business as part of our brand – a franchise that literally helps change the lives of seniors and their families.”

BREXIT

THe United Kingdom's decision to leave the European Union has caused changes in the franchising sector.

The biggest and most memorable moment in franchising for 2016 came halfway through the year on Thursday June 23rd as Britons voted to leave the European Union. It was a surprising decision, as polls had predicted the voting would go in favour of remaining by a slim but comfortable margin.

As surprise and uncertainty reigned following the result announcement, the value of the pound fluctuated. There was — and continues to be — much debate surrounding when and how the United Kingdom should trigger Article 50 to officially begin procedures to leave the European Union. Additionally, there was a shift in governmental leadership as David Cameron announced his resignation following the results: he stepped down in July and Theresa May took the reins. Since then, however, the pound has stabilised and businesses have found their footing again.

According to the bfa NatWest Franchise Survey 2015, four in five franchises in the UK are UK-based companies, meaning they stand to face much less disruption than may be commonly thought. Nearing the end of 2016, the value of the pound actually jumped up after PM Theresa May announced her intent to seek transitional deals for businesses during Brexit.

A recent report from the Evening Standard showcases some positive effects the sterling’s decline had on the economy. Trade, for instance, grew during the summer decline, as did business investments, which increased by nearly a percent.

TRENDS AND GROWTH

Mobile food

Mobile food options are becoming more common among UK franchises

From the staple food stands of London’s South Bank to the coffee carts that travel from office to office, mobile food sources are on the rise. In response to the hustle and bustle of cities, in particular, mobile food fits the needs of consumers who want to be able to grab a quick meal anywhere.

The trend also suits ‘foodies’ who want an atmosphere to accompany their meal. Oftentimes food trucks are along busy streets that have buskers, shopping, and the atmosphere many crave. Festivals frequently welcome mobile food vendors to serve audiences, as do markets and other special events. These gatherings tend to provide the ideal food photo for social media, which, to many, is just as important as the food itself.

Though the market hasn’t quite taken off the way it has in Asia and America, there is a growing move in the UK, especially in large cities. Streetfood.org.uk is working to create an even more expansive street food culture within the UK.

Franchises are beginning to capitalise on this trend, highlighting the on-the-go nature of their products and even offering mobile options in franchise packages. Mobile cafes, in particular, are taking off, with franchises like Cafe2U, Really Awesome Coffee and Coffee-Bike. Other franchises, such as Riverford Organic and Jasper’s Catering, have put a twist on the mobile food trend, and instead simply bring food to the consumers’ requested location, no wandering necessary. It’s a compelling marketing plan, the ease of procurement encouraging repeat customers.

Health — fitness and food

Health, both in terms of fitness and food, is a growing concern for UK consumers

In 2016, for the first time ever, the number of UK fitness centre members climbed over 9 million, according to the 2016 State of the UK Fitness Industry Report. One in every seven people residing in the UK now belongs to a gym. That is a membership rise of over five percent, which put the total market value at £4.4 billion.

To accommodate the increase in clients, many gyms offer 24/7 opening hours and complimentary or cheap group exercises classes. With so many options in fitness centres and increased demand, businesses are looking for small things to give them an edge over the competition, whether that means multiple locations, individualised training, nutritional guidance, or discounted rates. There is a fitness franchise to fit any entrepreneur!

Health food has been a growing trend for the past several years in the UK. After final figures have been examined for 2016, the organic industry is expected to have cleared £2 billion. Vegetarianism is also increasing, up to 5.7% of the UK population in some recent estimates. Food restrictions and health concerns have also prompted franchises to make changes to their menus: Subway has announced its intent to remove all artificial flavours, colours, and preservatives from items by the close of 2017; Papa John’s removed all high-fructose corn syrup from their food in April of this year; and when launching their franchise opportunities this year, Mexigo Burrito Bar advertised their low-calorie and low-carb options, as well as their dishes catering to vegans, vegetarians, and gluten and lactose intolerant individuals. Countless other franchises are implementing initiatives to reduce sodium, saturated fats, and sugars in their selections.

Going green

The use of wind and solar energy is becoming increasingly common among UK businesses and franchises

In the same mind-set of personal and external consciousness that has driven the health food industry, the sector of environmental issues, such as green energy, has seen growth in the past year. IT Business Edge estimates that at the close of 2016, solar power alone will have grown 7.9 percent since 2011. That’s an astounding improvement, seeing as it grew less than 3 percent from 2000-2011. Franchisors like SuperGreen Solutions and Green Unicorns have capitalised on this growing market to offer franchisees the opportunity to install and maintain solar panels.

With continued concern about global warming and sustainable living, it is highly possible that franchises centred on greener living will remain profitable.

 

With another year of growth behind the franchising sector, the start of the New Year is the perfect time to enter the industry.  With investments and employment rates within franchising predicted to continue rising, franchising offers a viable option during the somewhat unpredictable time of navigating an exit from the European Union. It’s time for a New Year, a new you, and a new business, so check out all our available franchises today!

 

Post by Anne Rowan

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