What is Franchising?

What is Franchising?

The term franchising covers a variety of arrangements in which the owner of a product or service allows someone to use it in exchange for payment. In its widest sense franchising rights are granted to run railways, bus companies, airlines, hotels and broadcast radio and TV programmes.

However the most popular form of franchising is known as 'Business Format' which started in the USA in the late 19th Century. In the UK 'Business Format' franchising has its roots in the mod-1960's with the success of Wimpy, Kentucky Fried Chicken, Holiday Inns and Dyno-Rod Look at any high street now and you'll see McDonalds, Burger King, Prontaprint, Kall-Kwick, Body Shop to name a few! In fact nearly 40% of all retail shops are now part of a franchise operation.

It's now an important, impressive and rapidly growing market sector. The annual franchise turnover is over £38 billion with 'Business Format' accounting for over £8.2 billion. The industry has its own trade body, The British Franchise Association, which set the standards for the business conduct of its members. It works very closely with the European and International Association in setting codes of practice. The government is supportive of franchising and has appointed a parliamentary advisory group to look after the interests of the franchise industry.

What does all this mean to you?

It helps illustrate very clearly that franchising is not new or untried. It is a proven form of business activity that arguably removes many of the elements of risk that are always involved in the setting up and operation of a new business.

In essence, that's what the Time For You franchises are all about, helping you enter a new career and business in the cleaning industry with the backing and support needed to help you minimise your risk and achieve the maximum income and job satisfaction whilst building a saleable asset, and giving you financial security for your future

Buying a franchise helps reduce the risks of business failure. You can:

use the proven business system of the company you've acquired the franchise from - the franchisor

use their know-how and trade using the franchise name, selling their products and/or services, to increaseyour business success

receive initial and ongoing support from the franchisor as long as you're trading under their name

NatWest/BFA franchise survey 2005

The annual NatWest/ British Franchise Association (BFA) survey monitors the performance, attitudes and opinions of the franchise sector and, thereby, builds up a larger picture of the contribution of franchising to the British economy.

The results from this survey are based on the previous year, in this case 2004, with fieldwork being undertaken during December. In recent years, it has shown steady underlying growth. The latest survey also highlights that the sector is maturing.
The estimated annual turnover of the business format franchise sector is £9.1 billion,
The proportion of franchisees reporting profitability in the survey was 88% (compared with 70% in 1991).
The average initial outlay for setting up a franchise is £79,300.
86% of franchisees regard their relationship as satisfactory. The majority of those who were dissatisfied unsurprisingly were also loss making.
The franchising marketplace as a whole is generally optimistic about their future, although less so about the economy generally. When asked about their expectations over the next 12 months, 92% of franchisors and 60% of franchisees forecast an improvement in their business.
222 franchisors have an operation elsewhere in the world.

Notes

The information in this document is extracted from the 21st annual research study sponsored by NatWest. Copies of the survey are available from the British Franchise Association, telephone number 01491 578049/50.