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Franchising bucks the economic trend

By: Dave Robbins
13 June 2012


Slow growth? Double-dip recession? Rising unemployment? No worries!


That’s the message from the latest NatWest/bfa (British Franchise Association) franchise survey. In 2011, a year in which UK GDP grew by just 0.7%, the franchise industry increased economic contribution by 8% as turnover rose to £13.4billion. At the same time, whilst other sectors contracted over the year, 9 out of 10 franchise businesses posted a profit.


And, looking ahead, there’s even better news, with 76% of franchises surveyed expecting business to improve in the coming months (compared to only 44% of all SMEs). Most (80%) believe that franchising gives them a competitive advantage over other small businesses as they have the support of a larger brand.


Franchising is also doing its bit to reduce unemployment. In 2011 franchising created 73,000 jobs, in sharp contrast to a UK-wide rise in unemployment of 180,000. This comes as the number of franchising systems operating right across the UK increased to 929, with 40,100 franchise business units employing 594,000 staff. The number of larger franchise units employing more than 11 staff increased by 30% in the past year according to the survey.


Brian Smart, director general of the bfa, said: “The last few years have put crippling pressure on businesses, creating some of the toughest trading conditions that many have ever seen. However, yet again we see the franchise sector proving its value by generating new sustainable business start-ups, jobs and revenue for an economy that desperately needs them. For those who are considering franchising this is obviously an encouraging sign, but we also stress the importance of thorough research and consideration before making any commitments.”


Strong export activity for goods and services may also have helped franchising weather the economic downturn better than most, with one in three already trading overseas. Franchising also looks to be setting the pace for future export growth, of those non-exporters, 38% plan to do so in the future compared to only 22% of SMEs not already trading abroad.

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