BFA / NatWest Franchising Landscape Report 2018

Franchising continues to be a recipe for long-term, business success

The BFA and NatWest recently released their 2018 Franchising Landscape Report and I was extremely encouraged by their findings, which I would like to share with you in this week’s blog post.

Record growth in 2018

Overall, UK franchising appears to remain in good health as the sector continues to expand and mature. The report states that there has been record growth in many areas, with the total contribution of franchising to the UK economy being in excess of £17 billion, representing an increase of over £2 billion since 2015. There has also been a significant increase in the estimated, overall number of people working within the sector, with over 700,000 people employed, around half of which are in full-time employment.

More females and millennials joining the sector

I was particularly pleased to see that, although over 70% of franchisees are male, there has been a significant, 20% increase in the number of females becoming franchise owners. The percentage of female business owners is much higher than the national, SME average, proving the franchising sector’s ongoing commitment to empowering women in business. It’s also great to see that more millennials are turning to franchising, with 18% of all franchisees now under the age of thirty.

Further evidence suggests that the number of franchises in the UK has literally doubled in the last twenty-five years, and there are now an estimated 48,600 franchised units in the UK, with around a third of franchisees owning multiple units.

International operations are on the rise

It also appears that, despite issues such as rising inflation, a weaker pound, and of course our imminent departure from the EU, international activity is experiencing healthy growth in the franchising sector. One in three UK franchisors have international operations and, of those who currently don’t operate internationally, 4% have a definite business plan to do so and a further 30% are considering it as an option.

Personal services and hospitality franchises are on the increase

Within the franchising sector, more systems were added within each category, with the biggest growth industries appearing to be personal services and hotel and catering. Store retailing has shown slight growth, despite a challenging environment for retail as a whole.

Many more profitable franchises

Profitability in franchising remains high, with 93% of all franchisees claiming profitability, and the proportion of those claiming to be highly profitable is the largest on record at 14%.

Chance of failure is significantly reduced

Franchises are continuing to be far more resilient than independent start-ups. Approximately half to two-thirds of new businesses fail within the first three years of trading but, because franchisees have the benefit of a tried-and-tested business model and access to a support network, failure rates remain extremely low, with only 1% per year closing due to commercial failure. Looking at the more established franchises that have been running for more than five years, two in five are highly profitable and only 2% are loss-making.

So, in summary, it seems from this report that the sector is flourishing more than ever and continues to provide a wealth of opportunities for smart, savvy entrepreneurs who want the best of both worlds – to run their own businesses with the support of an established brand. Would you like to join them and make 2019 your best business year yet?

If you’re interested in getting into franchising, you can find a wealth of opportunities on the AFA website from our members, who have all been evaluated by the AFA and are fully accredited to use our Seal of Approval.

Click here to start your search for your new franchise opportunity!

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