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Franchising Market Report 2003
Key Note Publications Ltd, April 2003
This report examines the UK market for franchising: a business relationship wherein a third party is provided with all that is required to replicate a company's business, including its trading name, in return for a licensing fee. An important and thriving sector of the UK economy, franchising is especially strong in retailing, food and courier services. The industry's total turnover was valued at £9.5bn in 2002 - a 3% increase on the figure for 2001. The total number of non-dairy franchises in the UK is now 30,795.
Franchising is an important route into business for many people. Franchisees are able to run their own businesses, but the risks are reduced because they are investing in known brands that have been tried and tested in the market. Franchisees come from all backgrounds and age groups, but they tend to have had some prior experience of business - often on a self-employed basis. The majority are male, but the British Franchise Association (BFA) is trying to encourage more women into the sector and is launching a series of workshops and seminars in 2003 that will be aimed mainly at women.
The franchising sector continues to attract new entrants. Food, retailing, domestic services and personal development appear to be the most popular sectors for newcomers. Other growth areas include training, commercial services and executive recruitment.
The UK has the second-highest number of franchised systems in Europe. Although certain foreign franchised brands, such as McDonald's, are prominent in the UK, around 80% of the franchisors in the UK are in fact of domestic origin. These companies are increasingly looking to expand overseas: already, around a third of UK franchisors have established an international presence. One of the most successful of these has been The Body Shop, which had 1,247 franchised outlets outside the UK and the Republic of Ireland by March 2002.
When this report was published (April 2003), the UK's economic outlook was a little less certain than it appeared at the end of 2002, when the major economic forecasts were compiled. The franchising industry is strongly affected by consumer spending, which may well grow at a rate below expectations in 2003. Consequently, We forecast modest growth for the UK franchising market in 2003 and 2004. Growth is expected to improve between 2005 and 2007.
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