Franchises Robust in Recession
Franchise businesses stayed robust during the recession with the average franchise’s turnover increasing by three per cent in 2009, research from the British Franchise Association (BFA) has found.
The BFA’s annual survey revealed that the sector did well overall last year despite the downturn, contributing £11.8 billion to the UK’s GDP ― an increase of £400 million on 2008. In addition, the total number of franchisors in the UK rose to 842 in 2009, up from 835 on the previous year.
The poll also found that fewer franchises are currently trading at a loss compared to a decade ago. During the 1990s recession, only 70% of all franchise businesses were profitable, compared to 89% in 2009.
“Franchised businesses have weathered the recessional storm extremely well, which we should not be surprised about if we look at how franchising has proven itself over the years,”
said BFA director general, Brian Smart.
“The combination of the wider business support, training and economies of scale, with the determination, enterprising nature and local business focus makes franchise businesses a very robust offering.”
BFA spokesman, Tom Endean, added that the franchising model was typically “less risky” than a start-up, with the combination of a proven brand and established working methods eliminating many of the common hurdles associated with new ventures.
“Franchisees are buying into something that has already been shown to work well. The fact that many franchisees have undergone a fairly rigorous recruitment process before they go it alone also helps to ensure success.”
Graeme Jones, head of franchising at NatWest, which supported the BFA survey, said the bank was continuing to see growth in certain franchise sectors, such as personal services like dog walking and cleaning, which have grown by 38% in five years.
“The main indicator at the end of 2008 was that the outlook for franchisees and franchisors’ own businesses and for the economy as a whole was grim. Those questioned in 2009, though, were a good deal more optimistic than they were 12 months ago, with fewer mentions of redundancy or shorter working hours.”