How to start a business with a 93% success rate

The 2007 bfa/NatWest UK Franchise Survey reveals that franchising is outperforming the UK economy. Stuart Anderson looks at the survey's findings

If you're undecided as to whether to invest in a franchise or go into business on your own, the latest UK Franchise Survey provides some interesting statistics to sway you toward the franchising route. The 2007 survey, recently published by NatWest and the British Franchise Association (bfa), found that the annual turnover of the franchise industry last year was £10.8 billion, representing annual industry growth of 4.9 per cent compared to 2.7 per cent growth in the total UK economy in 2006.

The survey identifies 781 companies engaged in franchising with nearly 34,000 franchisees employing over 370,000 people. Average turnover per unit is revealed as £323,000, although this figure is a meaningless statistic when you consider the variety of business concepts and potential income levels of different franchises. Far more significant is the news that 93 per cent of franchisees claim profitability, a figure that would be astounding if it did not reflect the fact that the industry has reported unit profitability levels of between 88 per cent and 95 per cent over the last 10 years.

'With figures like these, it's hardly surprising that the number of franchisors showing confidence in their own business remains very high with 80 per cent positive about their prospects,' comments NatWest National Franchise Manager Mark Scott. 'In addition, an impressive 84 per cent of franchisees continue to feel either motivated, or highly motivated. This year we've seen an increase in franchisees looking more for growth potential or affiliation to a well-known brand. This certainly mirrors what we are seeing at NatWest with regards to new customers coming through our doors.'

The bfa's Dan Archer adds: 'The franchise sector remains a significant employer and last year alone created 7,000 more jobs in the UK. Whilst we continue to hear about redundancies in the media, it seems that franchising is not only helping people realise their dream of self-employment but also has an impact on job creation, helping to plug the gap created by corporate redundancies.

'The growth in turnover by £500 million is testimony to the position of franchising as an important contributor to the UK economy. There are more people expanding their business through franchising, more starting their own business through franchising and more people employed because of franchising, signifying the impact the sector has both at a national and local level.'