An industry that has enjoyed economic growth for many years, franchising in the UK umbrellas a broad range of services, from car rentals to coffee franchises. A report by The British Franchise Association (BFA), in partnership with NatWest, takes a detailed look into the UK's franchise industry.
Franchise Business Growth in the UK
Overall, the report shows that UK franchising remains in good health. Many of the figures show that franchising is a robust and reliable investment in the current market. The following article takes a brief look at some of the key statistics.
Contribution to the Economy
Calculated by the average turnover of franchisees, multiplied by the number of units, it is estimated that franchising contributes over 17 billion pounds per year to the UK economy.
Profitability
As of 2018, 53% of franchisees claimed to be quite or highly profitable, with only seven per cent being loss-making. The former increases to 66% for franchises that have been running for five years or more. Furthermore, it showed that there are no significant differences between smaller and larger businesses in terms of profitability. Although as a rule, those who invested higher amounts see higher profitability. The report estimates 96% of hotel & catering franchises, such as Esquires Coffee, are profitable; this figure is three per cent over the average across all sectors at 93%.
Industry Growth
There are now over 48,600 franchised units in the UK. This figure has more than doubled in the last 25 years. Research shows that consumers are more likely to choose a franchise if they are familiar with the brand and its quality and consistency.
Growth of Hotel and Catering Sector
Compared to figures from 2013, the report shows that hotel and catering had the second-largest sector growth in 2018, with a rise of six per cent. In the last ten years, the number of units in this sector has risen by 55% with an estimated 15,700 individual units; demonstrating significant growth. In addition, there has been a 77% annual turnover of over £250k amongst franchised businesses, the highest across all six sectors analysed.
Esquires Coffee is a proven and reliable franchise model that benefits from the growth figures stated in this report while maintaining the spirit and feel of an independent coffee shop. Do you think you’ve got what it takes? Grow your empire with us and apply today.
Diversity of Franchisees and Recruiting
The UK franchise industry currently employs over 710,000 people, representing a growth of almost 90,000 since 2015. These positions are both full and part-time, which benefit a variety of working requirements. 30% of franchise owners employ a team of six or more. Diversity levels are also rising, with 37% of new owners being female.
Franchisor/Franchisee Relationships
Franchisee satisfaction with franchisor appears to be high, with a third of franchisees reported to have daily contact with their franchisor. 79% rated the support provided good-excellent, with only 5% rating it as poor. The top three benefits of franchise systems listed by franchisees are the support provided, the customer’s pre-existing perception of quality and having standardised products and/or services.
To find out more about the kind of resources typically provided, see our guide on the support franchisees can expect from franchisors.
Future Security
The current ubiquitous presence when talking of the economy is Brexit. A survey of franchisees and franchisors shows that while confidence in the economy is falling, confidence in their own business continues to rise. Historically, franchises have recovered quickly after times of economic hardship.
New franchisees also benefit from peace of mind. While an estimated half of all non-franchised new businesses fail in 5 years, only 0.9% of franchised start-ups end in commercial failure.
In summary, the report describes the UK franchise industry as 'very positive, with record growth in numerous areas'. For excellent coffee franchise opportunities, Esquires Coffee offers a turnkey investment, within, what has been described, a 'quirky' and 'indy' setting whilst retaining the buying power and brand awareness of an established franchise. Take a look at our coffee franchise opportunities for further information.
