2018 British Franchise Association and NatWest Survey Results

The British Franchise Association & NatWest Franchise Survey results have been published.

The overall findings of the report are very positive, with record growth in numerous areas.

The total contribution of franchising to the UK economy is reckoned to be in excess of £17 billion, up over £2 billion since the previous stats in 2015. Furthermore, there has been a significant increase in the estimated overall number of people working in franchising, with over 700,000 people employed in the sector, with a little over half in full-time employment.

While around 70% of franchisees are male, the indications are that around 65% of those employed within franchise units are female. Furthermore, more females are becoming franchisees, with a 20% jump since the 2015 report. This looks likely to rise even further in the future, with 37% of franchisee recruits in the past two years being female.

More under 30s are also getting into franchising by becoming franchise business owners, with 18% of all franchisees now under 30. Of the new franchisees under 30, 52% are female, with 37% of all new franchisees in the last 2 years being female. Although there has been an increase in the proportion of under-30s becoming franchisees, the average age for newer franchisees remains consistent over time at around 40 years old. The typical franchisee is in their mid-40s.

There are an estimated 48,600 franchised units in the UK, the highest number ever and nearly two times more than 25 years ago, with the number of franchisees reckoned to be around 20,000. That’s because around a third of franchisees own and run multiple units.

One in three franchisors also have international operations. Of those who do not currently operate internationally, 4% have a definite business plan to do so, and a further 30% are considering it an as option.

The biggest growth areas for franchising remain personal services and hotel and catering, although store retailing also shows some growth, despite a challenging environment for retail.

Franchisees claimed profitability remains high at 93%, and over two-thirds of franchised units that have been running for five years or more report being either quite or highly profitable. 60% of franchised units turn over more than £250,000. Failure rates for franchises remain very low, with fewer than 1% per year closing due to commercial failure.

Profitability levels remain high and the proportion of those claiming to be highly profitable is the largest on record at 14%.

The saying goes that while turnover is vanity, profit is sanity. Looking at the more established franchises that have been going for 5 years or more, 2 in 5 are highly profitable and only 2% are loss-making.

Source: 2018 bfa NatWest Franchise Survey