Franchising Showing Continued Success

Despite uncertainties and reports of a slowdown in the nation’s economy franchising in the UK has been shown to be going from strength to strength.

In an economic climate where many businesses are facing closure British franchises are continuing to be successful. The number of people employed in franchising increased by 3% last year. This figure is in comparison to a UK wide growth of just 0.1%. It is predicted that by the end of 2008 there will be over 35000 franchise units operating in the UK. Overall over the last year the economic contribution of the franchise sector grew by 15% up to £12.4 billion.

A number of explanations have been given for the continued success of franchising. One perhaps unusual explanation for the growth is that an increased number of redundancies can actually be good for franchising. Redundancy payments can provide the funds needed to invest in the franchise and since jobs are harder to find in a recession buying a franchise will likely become an attractive option.

Also in many ways franchising could be considered to be recession proof. Since franchises operate on an established and proven business model for people that want to manage their own business, franchising is an attractive option. The failure rate of franchises is just 5% a much lower figure than the 65% rate of failure of new business start ups. For this reason it can be easier for new business owners to raise finance as banks and lenders recognise franchising as a safer option particularly in times of recession.

A further strength of franchising is the high amount of diversity and therefore choice. People wanting to start a new business will likely find a franchise to suit their particular skills and experience. This factor is further strengthened by the fact that many franchises include training and support as part of the investment.