HSBC UK launches £500m SME fund to support franchise businesses

Members of the HSBC team

HSBC UK has launched its first ever £500m fund for franchise businesses as part of its commitment to help British businesses innovate and grow as the country looks to rebound from the Covid-19 pandemic.

The funding is part of HSBC’s broader £15bn lending fund to support small and medium-sized enterprises (SMEs) across the UK.

HSBC reports that franchising numbers are at a record high in the UK, driven by the rise in younger people wishing to run their own businesses and by existing franchisees expanding across sectors, from major food brands and coffee bars, to healthcare and phone shops.

According to research by HSBC it found that despite the challenging economic environment, 62% of UK businesses intend to increase investment in their business in the next year, with the focus on four fundamental areas – employee well-being, customer experience, cash flow/capital management and security.

In addition almost three quarters (71%) of UK businesses expect to have returned to pre-pandemic levels of profitability by the end of 2022 and a fifth by the end of this year, with nearly half of British companies (49%) projecting sales growth.

HSBC says that UK businesses looking at how they can expand, franchising is the third option to consider alongside organic growth and acquisition. While it requires training and supporting franchisees, it is capital-efficient and lower-risk compared to other methods.

Andy Brattesani, head of franchise, HSBC UK said: “2020 was a difficult year for businesses, with almost every sector impacted. Franchising is a great route towards expansion for an established, successful business looking to grow. Franchising hasn’t got the exposure it deserves, opportunities in franchising are varied. Our £500m fund will help businesses to develop, grow and drive investment.

“We know our customers are innovating and adapting at pace and British businesses tell us that through these uncertain times they need their bank to be flexible, provide funding when they need it most and to support future growth opportunities and that is exactly what the fund intends to achieve.”

Pip Wilkins

Pip Wilkins, chief executive of the BFA, said: “Through every economic downturn franchising has continued to hold a solid share in the market. We have seen networks unite and use collective resources to survive impacts of the pandemic, many are now stronger businesses as a result.

“However, the industry would not be where it is today without the funding institutions such as HSBC UK. The £500m SME fund for franchise businesses is a significant investment that will unlock the potential for thousands of people to grow in this diverse industry.”

HSBC explains that it has a dedicated franchise team that provides specialist knowledge and support focusing entirely on the franchise sector. Franchisees can benefit from a central helpdesk, offering advice and liaison with its local banking managers.

The bank also has an online resource hub, Tomorrow Ready, where businesses can access insights and resources to help them hone their cash flow management skills and view a programme of business events, webinars and articles to help them understand the implications of new ways of working, building resilience and exploring export opportunities.