Bringing a Franchise into the UK and Irish Markets
The UK franchise market is probably the most active and developed in Europe. According to a NatWest/British Franchise Association survey conducted in 20091, the British franchise industry accounts for £11.4 ($17.1 or €13.6) billion annually (in comparison with £1 ($1.5 or €1.2) billion in 1984). There are 838 franchisors actively operating in the UK, with an estimated 34,600 franchisees.
As neighbouring countries with a shared language and cultural similarities, the Irish and UK markets have become somewhat intertwined. Dr. Stephen Anderson, Commercial Counsellor with the US Commercial Service in Dublin, Ireland explains, “until the 1990’s, America companies often went to the United Kingdom as a gateway to Ireland thus the potential of the Irish market remained undeveloped. The reverse is happening today with ambitious Irish companies acquiring the rights for both Ireland and the United Kingdom. The reason why these companies have a better chance of succeeding is that they refine their plans as they establish a franchising network in Ireland, and then are ready to introduce it to the larger U.K. market.”2 As a result, the UK and Irish economies, while not completely the same, can often be considered side by side.
According to the NatWest/BFA survey, a significant amount of franchise research is conducted online with 43% of potential franchisees consulting the franchise’s website when considering a franchise opportunity. With a significant downturn in the British economy and an increase in the amount of skilled workers becoming unemployed, the quality of potential franchisee leads has improved. Previously the lack of suitable franchisees had been the biggest complaint among franchisors, this slipped to third place in the survey, behind a lack of business due to a downturn in the economy and a lack of financing options.
Food franchises in particular, transfer well into the UK and Irish markets, as both markets are large food consumers and there is a demand for a variety of eating options with the UK multicultural society in particular, while the Irish culture is becoming increasingly interested in new food options. However, as Bill Holohan of Irish based Holohan Solicitors warns, “make haste slowly […] there are some things that will sell in Ireland, and some things that don’t, for example, we [the Irish people] are one of the biggest consumers of ice cream per capita, yet frozen yoghurt doesn’t do it for us”. Entering any foreign market cannot be done successfully without first carrying out a significant amount of research on the economy, market and society.
When considering legal differences, Élise Billy of EXB, a UK based franchising consultancy says “there is no franchising specific legislation in the UK and no need for registration or formal disclosure documents, which makes franchising easy in some ways for franchisors although there are general contract and competition laws that apply. Franchisors will however need to have their franchise agreements adapted or rewritten to conform to UK laws and also to UK franchising norms if they want to have their agreements accepted by the market.” The UK market has a well developed network of legal professionals specializing in franchising, so finding an experienced legal professional should not be too big a task.
Another UK based franchise consultant, Dugan Aylen of Franchise Recruitment Services Ltd. says “the biggest problem for outside brands looking to invest in the UK is a lack of local knowledge. This can include the correct placement of advertising in order to generate the target number of enquiries at an acceptable cost per lead. One of the most important aspects of franchise recruitment in the UK when being handled by foreign brands, is to either work closely with an experienced franchise recruitment consultant, who can handle and prequalify the enquiries and deal with them on a day to day basis, or to directly employ a UK based franchise consultant who understands the culture and decision making process of British and Irish Nationals.” A franchise consultant based in the UK is a reliable choice for foreign franchisors and is likely it increase the likelihood of the brand’s success in its target market.
As its economy exits recession, the UK franchise industry will continue to grow. While the Irish economy has not yet exited its recession, it will hopefully experience some growth as a knock on effect from the increasing optimism in the UK. The UK franchise market remains a first stepping stone for many US franchisors entering the European market, and will most likely remain for years to come.