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UK Franchises with International Presence

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While dozens of new franchising companies are founded in the UK every year, not all of them will ever become profitable; and of these, only a handful will ever expand outside of the UK, opening franchises abroad and thereby becoming multi-national corporations (MNCs). In the course of our work in Franchise Direct, we continually observe trends of which companies originating in the UK tend to gain an international presence, and which industries they tend to operate in. These trends can provide a useful insight into ongoing economic trends in the UK and beyond, and could prove helpful in considering which industry within which you might choose to invest in a franchise. Below, we will discuss the most popular industries in which companies founded in the UK have spread internationally, why they have been able to do so, and what lies ahead for these industries in the coming years.

Financial services

Financial services
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The financial services sector is a popular one for British companies to expand internationally, and three of the top European financial services companies were founded in the UK. These companies are Auditel, a strategic cost management company with 204 consultants across the British Isles; Expense Reduction Analysts, a company consisting of procurement consultants who advise companies on how to minimise costs in their businesses, with consultants in locations ranging from the US to New Zealand; and TaxAssist Accountants, a network of tax accountancy firms serving small businesses, with roughly 200 locations across the UK, Ireland and several other countries. All of these companies have profiles on Franchise Direct: if you are interested in becoming a franchisee with one of these companies, click here, here or here for more information and to submit an enquiry form.

It is easy to see how companies offering financial services, especially of the B2B variety, have been so successful in the UK and beyond in recent years. Various old stalwarts of the British financial services sector, such as Lloyds, Barclays and BlackRock, maintain a respected international presence. Following the beginning of the 2008 recession, companies of all kinds scrambled to find ways to make their businesses more efficient and cost-effective, whether in terms of their procurement expenses, payroll, their tax returns or other areas. The financial services sector forms an enormous part of the British economy: it accounts for 12% of the country’s economic output, and employs 2.2 million people, a figure which has been on the increase since 2010. It is very easy for a British financial services company to make the jump to opening franchises in Ireland, owing to the similar financial legislation between the two countries. By the same token, access to the EU single market has afforded many British financial services companies the option to open branches within mainland Europe, dependent on a scheme called “passporting”, in which UK firms are given a license to operate in another EU member state, or vice versa.

This last point, of course, is recently of great concern to UK companies in general, and to financial services companies in particular. Following the Brexit referendum in June of 2016, the future of British financial services firms and their ability to serve clients within the EU are in question. In the event of a “soft Brexit”, British firms will be in principle capable of accessing the European single market (although the EU may restrict this access in order to penalise the UK and discourage other member states from leaving the EU); whereas if the British government decides to pursue a “hard Brexit”, as currently seems to be the case, access to the single market will be removed altogether. It remains to be seen whether or not Brexit will have a significant impact upon the ability of British franchisors to sign agreements with franchisees within the EU. On the other hand, in the event of a “hard Brexit”, several leading UK politicians have suggested that the UK might significantly lower its corporate tax rates in order to attract foreign corporate investors, which could potentially provide a boon to British financial services franchises, as foreign companies open branches in the UK. As of January 2017, these questions are still very much open.

Commercial hygiene

Commercial hygiene
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Another popular economic sector for British companies to grow internationally is in commercial hygiene products. Three British companies operating within the commercial hygiene products sector are FiltaFry Plus (part of the larger Filta Group), a company which provides environmentally friendly kitchen solutions to commercial kitchens, and which operates over 300 franchises in 17 countries ranging from South Africa to Lebanon; Autosmart International, a manufacturer and distributor of vehicle and food processing cleaning chemicals, founded in 1979, which currently has over 200 branches across Europe and Australia; and Ovenu, a commercial oven cleaning company which was set up in 1994, and now offers its services across Europe, operating nearly 150 branches. FiltaFry Plus and Autosmart International both have profiles on Franchise Direct: if you are interested in becoming a franchisee with one of these companies, click here or here for more information and to submit an enquiry form.

It is not difficult to understand how the commercial hygiene sector has been such a popular one for UK franchises. Quick-service and fast-casual restaurants number in their tens of thousands across Europe and beyond, and with public hygiene standards growing ever stricter over the past few decades with the advent of food safety standards such as HACCP, companies such as these (and eateries of all kinds) need access to safe, reliable disinfectants and detergents to ensure their equipment and surfaces are adhering to local hygiene standards. Many such hygiene standards are EU-wide legislation, so it would make sense for British companies to open branches in other European countries: if their products are suitable for one EU member state, they will be suitable for all.

What can we expect for the commercial hygiene industry in the coming years? In parallel with trends we have observed in other industries such as quick-service restaurants or coffee, it is likely that the environmental friendliness of cleaning products will be of paramount concern to consumers, and not merely their efficacy. In 2015, 76% of British consumers agreed with the statement “Brands and companies have to be environmentally responsible these days”, so there will be increased pressure placed on the commercial hygiene industry to ensure their products are produced and disposed of in an environmentally friendly manner. As mentioned above, FiltaFry Plus place a heavy emphasis on their “green” kitchen solutions, offering environmentally-friendly alternatives to traditional kitchen products, and taking extensive efforts to reduce waste and promote recycling of kitchen products and output. Autosmart International likewise emphasise the steps they take to reduce their environmental footprint.

Children’s education

Children's education
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One sector which has seen several UK companies making international inroads is in extra-curricular children’s education and related disciplines. These companies include the LCF Clubs, learning clubs in which children can learn one or more different languages in an appealing and fun way, and which is the 22nd-biggest franchise in Europe (active in regions including Australia and South America); the Helen Doron Educational Group, a private tutoring company which teaches multiple languages and mathematics to children from a young age, and operates over 800 franchises in thirty countries; and Stagecoach, which offers classes for children in performing arts disciplines such as singing, acting, dancing and public speaking, and which operates over 600 branches in ten countries. LCF Clubs have a profile on Franchise Direct: if you are interested in becoming a franchisee with them, click here for more information and to submit an enquiry form.

It need hardly be stated that we are living in an increasingly diverse, multi-cultural world, in which national borders are no longer the ironclad barriers to migration they once were. The advent of free movement of people among EU member states, for example, presented massive opportunities for Europeans to seek work in member states other than their home country. There is a growing awareness around the world that emigration might be a necessary component of seeking employment, for people of all backgrounds. More than half of European countries saw a net increase in migration in 2015, while both migration into and out of the UK have been on a gradual upward trend since 2004. Against this backdrop, it should come as no surprise that parents in a variety of countries might be keen for their children to begin learning a foreign language from a young age.

For UK citizens, these circumstances could mean having their children learn French, German or Spanish so that they would later be qualified to seek employment in one of these countries, or further afield. For non-native English speakers in Europe or elsewhere, the fact that, for example, 77% of Britons believe that immigrants to the UK should learn to speak English within two years of residency or face deportation means that the ability to speak fluent English from a young age could present a huge advantage to one’s future employment prospects (although as with the other aforementioned sectors, the Brexit vote could present significant effects for migration in and out of the UK). Regarding the popularity of Stagecoach, we have observed a rising popularity of third-level performing arts and media courses in recent years, which may be fuelled by children learning performing arts at a young age. The democratization of popular culture such as music and film by the Internet and user-generated content platforms such as YouTube has had a profound impact upon entire media industries, and it seems parents are recognising this and encouraging their children to develop performing arts skills from a young age.

Beauty and cosmetics

Beauty and cosmetics
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The beauty and cosmetics industry has seen significant success for British franchise companies expanding into Europe and further afield. Three of the top European beauty and cosmetics franchise companies originated in the UK: The Body Shop, a subsidiary of L’Oreal, which sells hair and beauty products, fragrances, body washes etc., and currently operates in 66 countries with over 3000 branches; Lush Cosmetics, which offers a similar range of products to The Body Shop and emphasises the distinctive aromas and scents of their products, which has franchises in 47 countries; and Toni & Guy, an upmarket hairdressing salon franchise which also sells haircare products and eyewear, and which operates in over 40 countries.

Given the size of the worldwide cosmetics industry, it should come as no surprise that British companies have found success within this particular sector. Globally, the industry is worth a staggering $160 billion, and has only grown from strength to strength in recent years – in 2015 alone, the industry grew by 4.9 per cent over previous years, while Goldman Sachs analysts estimate that the industry could grow by an average of up to 7% year-on-year. Within the UK, 2016 marked the first year in which the beauty industry topped £4 billion. Commentators attribute British companies’ success in expanding abroad to the emergence of new middle-class markets in erstwhile developing countries such as India or Brazil: it is no accident that both The Body Shop and Lush Cosmetics have opened franchises in Russia and South Korea, two such emerging market regions. Meanwhile, the rise of the Internet and social media have played a huge role in popularising cosmetics products around the world.

So what’s in store for the beauty and cosmetics industry in the coming years? Just as with the aforementioned commercial hygiene sector, many commentators in the cosmetics industry are anticipating an increased consumer focus on environmental responsibility and organic production in the cosmetics they purchase. Lush Cosmetics are ahead of the curve in this regard: all of their products are friendly to vegetarians, and they make a point of not stocking products from companies which use animal testing. The Body Shop, meanwhile, place a heavy emphasis on environmental friendliness, under the slogan “Enrich not Exploit”.

Other coming trends include the increasing popularity of premium beauty products (which saw a 7% increase in 2015, and accounted for £2.4 billion of the UK industry’s value in 2016), and the increasing popularity of online shopping as opposed to brick-and-mortar shops. As with the financial services sector, companies in the cosmetics industry are concerned about the potential impact of Brexit: it remains to be seen, for example, whether or not the UK will remain part of the European Free Trade Association, which will have significant effects on the cosmetics industry. As with the financial services sector, this question remains very much open.

Summary

British companies that have succeeded in gaining an international presence operate within an enormously diverse range of sectors, and this article has only discussed some of the more popular ones; other sectors include coffee, clothing, recruitment and home services. It may be the case that the more popular sectors are ones in which British firms tend to excel, or provide the most cost-effective solutions for clients. While any of these sectors could prove worthwhile to invest in this year, economic trends can be very difficult to accurately predict, and the future in many regards is still very much uncertain. What is indubitably clear is that environmental issues are more important than ever to consumers; that the role the Internet and social media play in consumer choices is impossible to deny; and that companies in all sectors must increasingly think internationally rather than regionally in planning their business strategies. All of this is important advice to bear in mind for any prospective franchisee.

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