UK franchising worth £10.8 bn

Franchising is now worth a record £10.8 billion in the UK, according to the latest NatWest/British Franchise Association survey.

The sector has now grown 44 per cent in recent years, taking the total number of franchise outlets up to nearly 34,000 and the number of systems up to 781.

As the sector grows in size, so does the strength of its success, with an impressive 93 per cent of franchisees in profit, while turnover per franchising unit is up to £323,000. During the last 10 years, industry turnover has rocketed by 83 per cent.

Says Mark Scott, National Franchise Manager at NatWest: “With figures like these, it’s hardly surprising that the number of franchisors showing confidence in their own business remains very high, with 80 per cent positive about their prospects. In addition, an impressive 84 per cent of franchisees continue to feel either motivated or highly motivated.

“This year we’ve seen an increase in franchisees looking more for growth potential or affiliation to a well-known brand. This certainly mirrors what we are seeing at NatWest with regards to new customers coming through our doors.”

The growth in the sector in the UK means that franchising now employs 371,600 people. Says Dan Archer of the bfa: “The franchise sector remains a significant employer and last year alone created 7,000 more jobs in the UK.

“Whilst we continue to hear about redundancies in the media, it seems that franchising is not only helping people realise their dream of self-employment, but also has an impact on job creation, helping to plug the gap created by corporate redundancies.

“The growth in turnover by £500 million is testimony to the position of franchising as an important contributor to the UK economy. There are more people expanding their business through franchising, more starting their own business through franchising and more people employed because of franchising, signifying the impact the sector has both at a national and local level.”

The report also found that franchisees are getting older, with their average age rising six years in the last decade to 46, suggesting the industry appeals as a second, or third, career.

That said, the industry still attracts young entrepreneurs, with graduates operating nearly a third of all franchises. But a higher education has little impact when it comes to profitability, according to the survey, as those without qualifications account for 52 per cent of franchisees reporting the highest profits.