Member Article

Franchising focus ? A very bright outlook

With some key exhibitions just round the corner it seemed like an appropriate time to explore the “F” word in more detail addressing misconceptions and setting the record straight.

Of course we’re talking about franchising (what else?) and whilst there are detractors, let’s first look at some industry facts, which should go some way to addressing any thoughts that franchising is something to steer clear of.

Fact 1 - Annual turnover in the franchise industry last year was £12.4 billion. That figure represents 5% growth compared with the previous year. It’s no surprise that t/o increased as this follows the same trend we’ve seen in the sector for several years. But what’s most interesting about this fact is that it was accomplished during the worst economic times we’ve experience since WW2!

Fact 2 – We saw a 6.5% increase last year in the number of franchised systems bringing the overall figure to just short of 900 different franchises.

Fact 3 – Failure rates in franchising remain static at around 5%. Compared with 80% failure rate in the typical self employed model.

There’s several more compelling facts further adding weight to the argument for the savvy entrepreneur investing in a franchised business and hopefully the above points demonstrate the health of the sector despite the turbulent economic conditions we’re currently suffering.

You’ll also find that the banks are very pro-franchising and are very often (subject to status and a robust business plan) far more forthcoming with financial backing for entrepreneurs investing in franchised business, in some cases loaning upto 70% of the capital required. Why is that you ask?

It’s simply because of those stats we mentioned earlier. In essence, franchised business carries far lesser risk than your typical business model and for obvious reasons the banks like this feature. They’re in the money making game after all, so the safer bet for them is always going to garner greater support and buy-in. Interestingly, one of the main high street lenders just last year set aside a £100 million fund solely for franchising activity. Several of the other banks have also recently followed suit offering their own franchised business related investment initiatives.

So as you can see, far from being the poor cousin in business circles, franchising is thriving and is certainly something well worth exploring if you’ve a yearning for self employment. Budding entrepreneurs should be aware of these forthcoming events in the franchising calendar.

• 24th, 25th Feb London Excel Franchise show http://www.thefranchiseshow.co.uk/
• 24th, 25th Feb Birmingham NEC Franchise Show http://www.franchiseinfo.co.uk/exhibition-sub/birmingham-spring-2012-why-visit/

As the North East specialist consultancy Be Franchising also host regional workshops on all aspects of franchising for budding Entrepreneurs and SME owners exploring growth strategies. For more information call us on 0845 6502799 or visit us at www.befranchising.com.

This was posted in Bdaily's Members' News section by Scott Galloway .