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Franchising Flourishes in the UK

Although there have been indications that the economy in the UK (and worldwide) is facing uncertainty, franchising in the UK has been growing! According to the NatWest/British Franchise Association Survey released recently, in 2007, the franchise sector was worth a record £12.4 billion (up from £7 billion in 1997 and £10.8 billion in 2006). That means a growth of 15% last year!

Three People WorkingFranchisors and franchisees continue to be optimistic about their businesses, according to the survey. With approximately 809 franchise systems in the UK, and the figure increasing by about 3% every year, optimism seems only natural.

Not only that, but in a climate when businesses are closing their doors, franchise systems are still opening new units! Predictions have been made that by the end of 2008, 35,500 operating units will be active in the UK. Franchisors are also expanding internationally, with 33% of franchise systems having operations outside of the UK (which increased 27% from last year!).

This bodes well for the franchising sector as well as the UK's economy as a whole: employment in franchising increased 3% last year, as compared to 0.1% nationally.

Why Is Franchising Doing So Well?

That's the question on everyone's minds and we'll try to throw out a couple of answers here:

  1. Redundancies can be good for franchising. You may be thinking to yourself, "when are redundancies ever a good thing?" But historically, when the economy is floundering and there are lots of redundancies, more people choose to go into franchising because they have money to invest and nothing else to do.
  2. Franchising is about as recession-proof as you can get. Because franchises often operate on a proven business model, it's a safer bet than a brand new, untested business. This means it's easier to raise finance (banks love franchising when the economy is uncertain, especially since the rate of failure of franchises is about 5%, as compared to 65% for new business start-ups) and some might say its easier to succeed.
  3. Choose from a plethora of options! You'll be able to use the skills and experience you already have to find a franchise that suits you perfectly.

Keep in mind, however, that you will generally need a substantial sum of money to initially invest in the franchise (and there may be ongoing fees, depending on the opportunity). However, these fees are what allow you to get what's so unique and helpful about franchises: the support and training available from the franchisor and fellow franchisees.

So keep this flourishing sector in mind as you think about self-employment in this uncertain economy!

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