Sorry, we are currently experiencing technical difficulties with calls - please email or use the live chat facility, thank you

NatWest Notes on Franchising

Winning Franchise Formula Still a Safe Bet (3 March 2003)


View our Franchise eBrochure

Franchising is still a safe bet for many budding entrepreneurs, according to the 2003 NatWest/British Franchise Association (BFA) survey, with 91% of franchisees claiming that they made a profit in 2002. 

The industry now has an annual turnover of £9.5 billion and the average franchise generates £299,000, an increase of 2% from 2001. The amount of turnover however, varies greatly depending on the type of franchise operation. 

As the franchise industry is maturing, so are the new franchisees, with nearly 70% over the age of 40, an increase of 20% since 1992. The average length of time for which franchisees have held their business has also increased from 3.9 years in 1992 to 6.3 years in 2002 and the average initial cost of starting a franchise is now £59,200. 

Franchisors remain positive about the future and prospect of expansion, with 79% of franchisors and 62% of franchisees expecting their business to improve in 2003. The average number of franchises operated by a franchisor increased by 9% in 2002 to 49 and this year growth expectations are again high, with the average number franchises predicted to increase by 15% to 57. Training is also now provided by 99% of franchisors, a huge increase from the 68% reported in 1992. Despite their optimistic outlook however, two in five franchisors state that they may not be able to realise these high expectations due to a lack of suitable franchisees. 

Mark Scott, National Franchise Manager, said: "These figures underline the immense contribution that franchising makes to the UK economy. It is encouraging to see that the industry is both profitable and is maturing in terms of both length of service and age of entrepreneur." 

Sir Bernard Ingham, President of the BFA, said: "Two facts from the 19th annual NatWest/BFA survey show how important this sector is. First, the sector is a major employer with a record 326,000 people earning their living in it. Second, its turnover is at a record high £9.5 billion. 

"What is more, franchisors and franchisees alike are very optimistic about the future of their business. With 91% of franchisees reporting they are profitable, franchising would clearly be growing faster if only franchisors found it easier to recruit suitable franchises with whom to develop their businesses."

Key Findings - NatWest / BFA Survey 2003

General

  • There are an estimated 677 franchise systems in operation in the UK.
  • There are an estimated 326,000 people employed in franchising.
  • The initial cost of starting a franchise is £59,200 on average.
  • 91% of franchisees claim to be profitable.
  • On average franchisees pay an estimated 7.2% of their turnover in recurring fees to their franchisors.

Relationships

  • 40% of franchisors report that a lack of suitable franchisees continues to thwart their plans.
  • Relationships between franchisees and franchisors continue to be healthy, with 87% reporting satisfaction in their dealings.

Profile of franchisee

  • It is becoming less common for franchise development managers to specify particular characteristics when looking for franchisees, with 83% not specifying an age range and 94% not specifying gender.
  • Self motivation remains the most important attitude sought (57%), although there has been a marked increased in the number of franchisors looking for candidates who are hard working (20%) and have a hands on approach (13%).
  • 85% of all franchisees are married.
  • 74% of franchisees are male.
  • The average age for a franchisee is 45.
  • Two thirds of franchisees were in salaried employment before taking out their current franchise.

Other

  • Training is now provided by 99% of franchisors, a huge increase from the 68% reported in 1992.

NatWest franchising checklist

  • Take a critical look at your strengths and weaknesses - are you sure you have the capacity, temperament and skills to run your own business? Marketing and selling skills are becoming more important in running a franchise.
  • Make sure you have the full support of your family - the additional responsibilities and demands on your time will inevitably cause some strain.
  • For new franchisors, check they have run a pilot, how long did it operate, is it still trading and what has it achieved in financial terms? If no pilot was operated, how does the franchisor know the franchise and therefore will you be successful?
  • Examine how well known the franchise and its service/product are. A good reputation is a head start in business.
  • Look at the market as a whole - find out who your competitors are and how strong their position is.
  • Examine costs closely, in particular the franchise fee and monthly management fee, and whether they are reasonable and value for money; will the margins be sufficient to support the business after payment of regular fees to the franchisor? As a guide, the average franchise fee is £20,000, although this is skewed in view of a small percentage of higher figures. Ongoing fees average 11.4%
  • Is the training provided by the franchisor sufficient to enable you to run the business successfully?
  • Seek professional advice from an accountant about income and profit projections and from an accountant about income projections and from a solicitor about the legal agreement. Both should have a good understanding of franchising and preferably be affiliated to the British Franchise Association.
  • Talk to the NatWest Franchise section about the financial aspects of running a franchise and ask them to put you in touch with your nearest area franchise manager.


Now take the next step - get more details by receiving our franchising brochure

View all 1303 testimonials
Beehive Playgroup & Buzz Club
Jan Fenson - Jul 12, 2019
"Always a good professional service from John and staff. Always polite and helpful. Good quality."


Jamies Gymnastic Academy (JGA)
Holly Freeman - Jun 30, 2019
"What a fantastic team of people!! By far the best company that we have ever used and I will be using again every year."


Wigan Gymnastics Club
Liz Yarwood - Jun 29, 2019
"I would recommend Mark and Lilya for any event - they are complete profressionals - super efficient, extremely polite and knowledgable. Thank you so much!"


Ryde School
Vicki Willett - Jun 25, 2019
"Fantastic service as usual and we have already booked for next year."


Herington House School
Harry Simpson - Jun 25, 2019
"Yet again an excellent service. We look forward to having DE Photo at our sports day next year."


Goslings Nursery School
Claiire Richmond - Jun 25, 2019
"Parents were really impressed with the set up and print quality and that they get orders literally straight away. "


Highfield Grange FC
Gary Pennington - Jun 22, 2019
"Peter & his team were 1st class and provided a great service over the 2 days they were on site. We would like someone to get back to me with regards to booking them again for next year."


Brambletye School
Dawn Atkinson - Jun 21, 2019
"Parents were once again very happy to go home with framed memories of a very special day."


Waltham Wolves FC
Crystee Faithfull - Jun 15, 2019
"Waltham Wolves held their first tournament in years and asked DE Photo if they could cover it. Got an instant reply regarding this and communication up to the event was very good. Staff on the day were happy, polite and you can see they love what they do. Will be using DE Photo for any future football events we hold."


Dover College
Mel Mills - Jun 14, 2019
"DE Photo once again provided the photography for our annual sports day, great communication before the event, was set up and ready to go when we arrived. Staff all friendly and helpful. Would recommend and use again."


Book your Event Photographers

UK and Ireland's largest school, sport, corporate and events photography company

Since its establishment in 2002, DE Photo has captured the best from more than 40,000 school, sport, corporate and other events.

Book
Or, call us: 0333 600 1020
All our staff are DBS checked
(formally CRB)
100% Satisfaction Guarantee