New insights into the UK franchising sector in 2010

I last looked at the size and structure of the UK franchising sector back in 2008 when several exam boards added franchising to their new business specifications. In subsequent exam papers it is clear that the examiners like franchising too - not surprising given how relevant franchising is to key topics such as generating a business idea, financing a startup, choosing a growth strategy, branding etc.

I have revisited my sources this week and picked up the latest statistics on UK franchising which I have summarised below.

General

* The UK franchise industry is now estimated to be worth £11.8 billion
* The overall number of separate business format franchises in the UK is 842
* There are an estimated 465,000 people employed in franchising in the UK
* The average (mean) turnover for a franchised business is £353,000
* The average cost of opening a franchise is £46,700
* Property Services remains the largest sector. Personal Services is the second largest.
* 77% of franchise systems in the UK are operated by a UK based owner.
* One in five franchisees operates multiple units
* 84% of franchisees are satisfied in their relationship with their franchisor

Franchise recruitment

* Franchisors state the greatest hindrance to franchisor growth is the lack of financial capital. Franchisors also report that finding suitable franchisee candidates remain an issue.
* Franchisor’s own website is the most useful from of recruitment; 78% of franchisors recruit through their own website. This is followed by word of mouth and franchise websites.
* On average, franchisors interview 7.2 people before they find the right candidate for each opportunity.
* Main reason for not granting a franchise is “insufficient capital”, “lack of business acumen” and “lack of enthusiasm”.

Profile of franchise owners

* 79% of all franchisees are married.
* The average age of for a franchisee is now 47. The average age of new entrants is 42. Only 6% of franchisees are 30 or younger, whilst 9% are over 60.
* 61% of new franchisee recruits are male. Over a third of new recruits are therefore women.
* The number of graduates operating franchise units is 32%.

Source: BFA / NatWest Franchise Survey 2010