Franchise Industry Research
Modern franchising is home to a vast range of business sectors covering B2B and B2C, blue collar and white collar; from home-based operations to some of the world's most recognised brands. In fact, most of us use the services of a franchise business every week – either personally or professionally – although we may not realise it at the time.
To understand the scope and range of businesses that franchise, click on the link to view a list of bfa Accredited Members.
In 2015, franchising set several new records as its performance continues a remarkable rise over the last decade. New benchmarks in turnover, profitability, numbers of franchisee-owned businesses and jobs created by the sector highlight the important and growing contribution of franchising to the UK's economy.
The term 'franchising' has been used to describe many different forms of business relationships, including licensing, distributor agreements and agency arrangements. In its most familiar sense, the term ‘franchise’ has arisen from the development of what is called 'business format franchising’.
Business format franchising is the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade as their own businesses under the brand of the franchisor, following a proven business model.
The franchisee also receives a package, comprising all the elements necessary to establish a previously untrained person in the business and to run it with continuous assistance on a predetermined basis – including a predetermined agreement length, with renewal options.
bfa/NatWest Franchise Survey
Instigating research on the franchising industry in 1994, the British Franchise Association (bfa), with the outstanding support of NatWest, has been building the most detailed long term franchise survey in the world. The full annual report can be purchased through the bfa’s Online Bookshop.
The last published report (January 2016) gives an overview of the UK franchise industry in 2015.
Overall, the picture is of an industry sector in rude health which continues to prosper:
The contribution of franchising to the UK economy is now reckoned to be £15.1 billion, an increase of 46% over the past 10 years and up 10% since the last survey in 2013.
The total number of people employed in franchising in the UK is 621,000, of which 321,000 are in full-time employment.
This equates to an increase of 70% over the past 10 years
The number of franchisee-owned businesses has increased by 14% in two years, to 44,200
On average, those businesses are also becoming larger as the sector matures:
Average turnover continues to rise and over half now claim an annual turnover of more than £250,000
Employment per unit continues its upwards trajectory, with one-third now employing 10 or more staff
A record 97% of franchisee-owned units reported profitability, with 56% saying they are ‘quite’ or ‘very’ profitable.
Ownership changes in franchisee businesses are correspondingly low (4.6%), with failure rates much lower than for other SMEs generally
Franchisees’ satisfaction with their franchisor has never been higher, with 91% saying they are ‘mainly’ or ‘definitely’ satisfied
Some 29% of franchisees now run multiple units
80% of franchise brands in this country are UK-owned and developed
One in five franchisees who launched their business in the last two years was under 30 years old when they did so
This has grown from an industry that, 20 years ago, had a turnover of just over £5 billion, had 379 different brands and represented 18,300 franchisee outlets.