Franchising flourishes as revenues rocket

British franchising businesses contributed more than £15 billion to the national economy last year, according to new figures from the industry’s trade group.

A survey by the British Franchise Association (bfa) shows the industry’s turnover grew by 10.2 per cent over the past year and generated revenues equivalent to the cost of Europe’s largest construction project Crossrail.

The figures are even more impressive when you consider that franchising represented less than £1 billion back in the early-eighties, but has been boosted by higher profitability and improved levels of awareness by UK plc.

Huge franchising opportunities

The success of the industry has been sufficient to attract some big hitters. Trevor Brocklebank,  chief executive of franchise care provider Home Instead Senior Care, says: “The bfa’s research confirms our own experience that there are huge opportunities in the franchise sector.

“Over the last decade, I believe some of the stigmas around franchising in the UK have started to fall away as the sector has matured and, with a UK recession, the importance of investing in a trusted business model has grown.

“Once perceived as something of a dirty word, due to cheap franchising schemes and non-reputable franchisors, I believe opportunities with ethical franchisors are now being recognised and embraced by prospective franchisees.”

As the government aims to breed new entrepreneurs through various startup schemes, franchising is also offering young businesspeople another route. According to the bfa report, 20 per cent of franchisees, who launched their business in the past two years, were under 30.

Franchising covers a massive range of industries. The Post Office, for example, is perhaps the best known of all franchising operations, with 11,000 of its 11,500 branches operated through franchises and agreements with agents and partners. But there are smaller scale success stories too.

Domestic housekeeping group Bright & Beautiful is a very different model. This eco-friendly business started out just before the economic downturn was about to hit in 2007. Today it is a £5-million-turnover business with 425 employees and 50 franchises across the UK.

Rachel Ray, founder of Bright & Beautiful, says she is not at all surprised at the growth in popularity of franchising over the past decade.

There remains a need for greater collaboration between training providers, business leaders and politicians

She says: “In 2015 alone we received over 100 inquiries per month from people interested in our franchise opportunities. This is double the figure for 2014 and we are seeing a definite growth in women and men, who have had professional and very high-flying careers, and who want to escape their unsociable, long or inflexible hours.

“Our 2015 franchisees include solicitors, teachers, senior retail managers and police officers; indeed three of our franchises have been taken on by female ex-police officers. Franchisees are driven by a desire to become their own boss, take control of their working hours and avoid the commute to work.”

Government awareness is key

Franchising is no longer a negligible player in the national economic ecosystem.  Collectively, the industry employs 621,000 people with an estimated 44,200 franchised units currently in operation.

Despite this, there remains a need for greater collaboration between training providers, business leaders and politicians, according to those in the industry.

Sheilah Mackie, partner at law firm Blake Morgan, explains: “The lack of knowledge or misinformation discovered among some politicians is quite concerning, especially those who have themselves operated in the business sector, and, while this is improving, more can still be done to expand knowledge of the impact of franchising on the economy.

“This could include things such as ensuring it is taught within business courses in schools, colleges and universities, but also striving to ensure franchising is recognised as a sector in its own right. Often it is ignored, and its constituent parts and success stories are attributed to sectors more readily recognised, such as retail, leisure or healthcare.”

Ms Mackie is an acknowledged authority on UK franchising and her views are echoed by those at the coal face of the industry, with many asking the government to do more to promote the sector.

Driver Hire is a franchising business that specialises in providing staff for the transport and logisitics industry.  Its franchise sales director Graham Duckworth says the success of the sector could be boosted if more were done on the national stage.

He says: “There is a clear disconnect if the government does not fully commit to supporting such a substantial sector and it will be vital for industry bodies such as the bfa to engage further with policymakers, promoting the benefits of franchising in a proactive way and lobbying for more support.

“With a greater awareness at government level, the potential impact franchising can have on the UK economy is more likely to be recognised and acted upon.”

Despite this the government is making progress. It has consulted with the industry on numerous strategy documents in recent years, including the future of UK retail, the Enterprise Finance Guarantee scheme and various women in business programmes.