No business model can ever be guaranteed success, but the statistics show that franchising might be as close to guaranteed as you are likely to get. The British Franchise Association produces an annual report in partnership with Natwest, which gives a very positive outlook for the franchise industry.
Franchises now contribute over £17 billion to the UK economy, an increase of £2.1 billion since 2015. Not only that, they employ 710,000 people, over half of them full time. Franchises are a significant part of our high street and our economy, but what do the stats say about your potential franchise opportunity?
A person choosing to set up their own, independent, business from scratch is taking quite a risk. They have to be confident that they can beat the odds, after all around 50% of all new businesses fail in the first two years. The outlook for a new franchisee is dramatically different. Buying into a proven business model, with training, systems, and support available to them means the chance of success is far higher. In fact, less than 4% of franchises fail each year. Not only that, over 90% are profitable within those first two years and 50% of all franchises turn over more than £250,000 annually. This fantastic success rate means that banks are more likely to look upon new franchisees favourably and are more inclined to loan to them than other start up businesses.
Franchises aren’t always small businesses either. While 4 out of every 10 can be run from a home office, many are much bigger and quickly grow. In fact a third of franchise businesses employ 10 or more people, compared with only 4% of all UK businesses. Whichever way you look at it, if you want a business with the best statistical chance of success, profit and growth then the franchise model is a great place to start.
In an uncertain political climate people are naturally wary of moving in new directions but the statistics here are reassuring as well. While nobody can predict the future, the franchise industry has shown 90% profitability annually for over 20 consecutive years. Those years included a significant recession, showing that the franchise model is resilient, and it has been described as “recession proof.”
As a franchisor you will want to know that your franchisees are likely to succeed, but what of your business as a whole? Multi-unit franchising is on the rise at 36% (up 7% since 2015) and 25% of all UK franchises now operate overseas as well, with a further 11% hoping to open outside the UK soon. Whether or not you dream of changing the world, it’s certainly reassuring to see that the business model is proven to succeed.
If you want to know more about Franchising a great place to start is by downloading my free gift; 5 Things You Need to Consider Before Franchising and I am always available to answer any questions you have in the mean time.