UK franchises grew in 2009

UK franchises continued to grow during 2009 despite touch economic conditions, according to the latest NatWest/British Franchise Association franchise survey.

The industry contributed £11.8billion to the country’s GDP last year, an increase of £400million on 2008.

Average turnover figures rose by just under three per cent on 2008 to £335,000, while compared to the recession of the 1990s, fewer franchises are trading at a loss today.

Estimated start-up costs declined in 2009 – fledgling franchisees can expect to pay £46,700 in franchise fees and other associated costs, down from £50,000 in 2008.

“It’s encouraging to see continued growth in specific sectors, such as personal services, where franchise systems have grown by 38 per cent in five years,” says Graeme Jones, head of NatWest’s franchise team. “We look after more franchises than any other bank and have seen far more optimism from our customers about the coming year in comparison to 12 months ago when confidence levels were low.”

Brian Smart, director general of the bfa, says: “Franchised businesses have weathered the recessional storm extremely well, which we should not be surprised about if we look at how franchising has proven itself over the years.

“The combination of the wider business support, training and economies of scale with the determination, enterprising nature and local business focus makes franchise businesses a very robust offering. This year has highlighted this particularly well with success rates of franchise businesses not dropping, even in the recent recessionary environment.”

Other survey findings include:
• The total number of franchise systems operating in the UK increased to 842 from 835 in 2008. 

• 94 per cent of franchisors are optimistic about future business conditions.

• Franchisors and franchisees are hopeful about the potential for growth, with franchisors on average planning for an additional 8.8 franchisee outlets.

• Franchised businesses dealt with the recession by focusing on growing existing customer bases and increasing spend on marketing and advertising.

• There’s been a decrease in the number of individuals employed in franchising over the past 12 months - from 467,000 to 465,000 - across a total of 34,800 franchised units in the UK. 

• More women are becoming franchisees. 39 per cent of recent franchisees have been women, compared with 21 per cent in 2003.