For 31 years, the British Franchise Association (bfa) has run an annual survey in conjunction with NatWest to provide an in-depth view of franchising in the UK. The findings paint an impressive picture of a robust and resilient industry characterised by enterprising leaders and profitable businesses. Yet in many business-focused quarters, franchising is all but invisible.
A two-fold challenge
There are several factors restricting awareness of franchising. Of these, I believe a lack of interest and understanding within education and government are the two most serious.
With the notable exception of Lancaster University, universities and colleges teaching business related courses don’t cover franchising. It seems that they don’t recognise it as a primary tool for creating and building businesses. Instead, students only learn how to start up their own businesses. They’re taught about researching the market, investing in their brand, developing marketing strategies. This is all very important, of course. But it ignores the fact that there is an alternative system where all these matters are handled in advance, enabling a start-up businessperson to hit the ground running. What’s more, it fails to show potential entrepreneurs how the franchise model can be applied to facilitate business expansion.
At a national government level, there is some awareness and support for franchising. But it takes a low priority – as does anything related to small businesses. There are more than 4.5 million SMEs in the UK, yet there is no dedicated Minister for Small Business, let alone one for franchising.
The situation with local government should be better, but it is not. You would think that councillors would be keen to promote franchising as a means to regenerate towns and cities. The system is designed to empower ordinary people to build their own businesses within a proven structure and with a raft of enterprise-level support that individual start-ups don’t get. Unfortunately, I’ve found that all you get when you raise franchising at a local government level is a blank and confused look. Probably because so few representatives have ever managed a business of their own.
What’s to be done?
To maximise the untapped potential of franchising, we need to enlist the help and support of interested MPs. Together with a concerted, collaborative effort from influential members of the franchise community and the bfa, perhaps we can get more people interested. And ultimately, we need to aim high: my goal is to persuade the Secretary of State for Business to take a stand for franchising.
Let’s start by highlighting some of the key facts from the NatWest/bfa annual survey:
- While 80% of independent start-ups go out of business within two years, 93% of new franchises are still operating two years later.
- The UK franchising industry is worth £15 billion pa and employs more people than all the UK armed forces combined.
- There is huge growth potential for franchising in the UK: it currently accounts for around 10% of all sales in the UK, whereas in the US the figure is closer to 50%.
I am a franchisor and have been in franchising for nearly 25 years. I genuinely believe there is no better business concept than franchising for creating businesses, creating jobs and ultimately creating wealth.
We need to do more to show academia, local councils and government the many benefits that could be generated through purposeful support of franchising. Ultimately, it is down to us, the franchising community. We need to promote ourselves, champion the case for franchising and drive awareness amongst influencers and decision makers.