Franchising Statistics for The UK                         

When it comes to business, facts and figures matter. Whether you’re considering investing in a franchise for the first time, or considering your business options, it’s always helpful to know some key franchise statistics. Although they are taken from the 2018 Natwest Franchise Landscape report these reports have been produced regularly over a number of years (in conjunction with the British Franchise Association) and show a significant degree of consistency over those years and therefore are relevant today also.

A Significant Contribution to the Market which is growing

There is little doubt that franchises are profitable! The report suggests that, in 2018, UK franchises contributed around £17 billion to the UK economy up from about £15 billion in 2015 which indicates the sector is growing as a powerful economic driver.

Franchises Succeed

Tried & Tested is the franchise mantra and therefore one of the major reasons individuals buy a franchise rather than start their own business is because franchises have a much better track record of success. The Natwest figures back this up, indicating that over 90% of franchisees say that they are making a profit. In addition, less than 1% of franchises fail each year. By contrast, figures suggest that about 60% of non-franchise SME start-ups fail within five years.

Around 33% of Franchisees operate more than one Franchise

That statistic indicates that franchising works so well for a significant minority of owners that they are prepared to take on additional franchises. This is a further indication that franchises are an attractive proposition. Not only is the franchisor offering a tried and tested business model, they will also provide ongoing support and advice to franchisees.

The Number of Franchises has more than doubled over the past 25 years

Currently, there are around 48,000 franchise businesses in the UK. This is around twice the number that were operating a quarter of a century ago. Clearly franchising continues to demonstrate success.

The figures largely speak for themselves: in the majority of cases, franchise owners can usually expect to receive a good return on their initial investment

The franchising sector plays a key role today in fuelling employment and driving economic growth, in addition to providing aspiring business owners with a pathway out of the standard office job. In 2023, more individuals turned away from corporate work to follow their passions of starting their own business as a franchisee.

Now, more than ever, individuals in the current workforce evaluate their career on more than just income and upward mobility. The desire for a better work-life balance and flexibility has never been higher, especially after the Covid epidemic, and the self employed journey via investing in franchise ownership offers exactly that.

For all the positives the franchising sector saw in 2023, it encountered much of the same challenges as other industries throughout the year. Inflation and higher labour costs, particularly with a rise in the minimum wage. Higher interest rates also make it more expensive to invest in a business startup. Despite those obstacles, the franchise sector continues to grow with a promising outlook for 2024.

Maintaining Franchisee Standards

The competition to attract new and suitable franchisees will continue to be fierce during 2024. Recruiting only those prospects that meet the profile most likely to succeed should be awarded a franchise. And irrespective of the complexity of the franchise model or the funds needed to get started only prospects who recognise the tried & tested operating benefits and value of a franchise model should be accepted into your network.

There will always be more than one way to successfully achieve business objectives, but your franchise network must follow only the tried & tested way you have set out during induction training and as contained in your franchise operating manual.

No Room for Complacency

Success can never be taken for granted!

As we are more than a quarter of the way through 2024, some business models in the franchise sector are still adjusting from the impact of Covid and evaluating how new innovations might affect their franchise model such as AI. Cutting-edge technology such as Artificial Intelligence (AI) is having a significant impact on the business landscape.

Many business analysts are predicting that 2024 is primed to put a spotlight on the customer experience, especially in relation to how much they consider the products or services provided by franchisees represent excellent value for money. If that prediction proves to be accurate franchisors and franchisees must be alert to changes in the market place and adapt their approach accordingly to attract new customers and retain them by meeting their expectations time after time. Maintaining that connection with consumers is likely to be critically important in the coming year. Franchisors and franchisees need to be united in their marketing efforts to foster a stronger brand-consumer relationship.