Franchising continues to outperform the economic downturn with turnover up by eight per cent to £13.4bn and nine out of ten units trade profitably, according to the 28th annual British Franchise Association (BFA)/NatWest survey for 2012.
The number of franchise systems grew to 929 and franchise units by four per cent to 40,100 employing 594,000, an increase of 73,000. Some 35 systems withdrew from franchising, but it was adopted by 64.
Some 90 per cent of franchisees reported satisfactory relations with their franchisor – the highest proportion for 10 years.
Two-thirds of franchisors made their start-up costs for franchisees more straightforward by rolling them into one single figure. This ranged from £14,000 for a personal services unit to £105,000 for a catering unit.
The mean turnover per unit increased by four per cent to £349,000 and a larger proportion of units reached over £500,000.
The mean age of franchisees reached 49, compared with 47 last year and 46 in 2005. The gender disparity continued to fall as women account for 38 per cent, whereas in 2006 the figure was 16 per cent.
A growing proportion of franchisees (27 per cent) had multiple units compared to 22 per cent in 2010. Half the franchisees with hotel and catering businesses had multiple units.
Brian Smart, BFA director-general, said: “The last few years have put crippling pressure on businesses, creating some of the toughest trading conditions that many have ever seen.
“However, yet again we see the franchise sector proving its value by generating new sustainable business start-ups, jobs and revenue for an economy that desperately needs them.
“For those who are considering franchising, this is obviously an encouraging sign, but we also stress the importance of thorough research and consideration before making any commitments.”
Graham Jones, head of franchising at NatWest and RBS, commented: “The franchising model offers the benefit of appearing to be a larger business with standardised products and quality expectation, advantages all heightened in a downturn.
“Expectations for growth are high in the sector, and we have invested in the largest specialised team of managers of any bank to ensure this growth happens.”
The survey continues to be conducted for the BFA by BDRC with the sponsorship of NatWest.
To purchase the full report, call 01235 820 470 or visit www.thebfa.org.