Does franchising get the recognition it deserves?
Franchising has shown itself to be a resilient force through the downturn. With the economy in a state of turmoil, many were forced to seriously consider their entrepreneurial options. And whilst the recession brought about the untimely demise of many businesses, others turned to franchising because of the model’s reduced level of risk. For budding entrepreneurs with limited experience of running a business, having a model to follow and guidance from an experienced and capable franchisor can provide a promising start for their venture. Yet apart from supportive industry insiders, not much is seen from other sectors in recognising franchising as a viable, near fool-proof business option.
As an industry with an annual turnover of £13.7bn and employing over half a million people, some have argued that it is yet to gain the recognition for its contribution to the country’s economy. But how do those at the coalface really feel?
'Franchising should be on the curriculum', says Nigel Toplis, managing director, The Bardon Group
Franchising has constantly added value to the UK economy. Since the recession started in 2008, the economy has contracted by about 2.5%. And yet, franchising has grown by about 20%. It’s a very powerful economic mechanism but it does not get that recognition.
There are more people employed in franchising than the whole of the armed forces put together but there is no government department responsible for franchising and those in charge of regional expenditure do not promote the model. It would not be unreasonable for the government and even the opposition to have a senior member of parliament who is responsible for franchising.
Unless we get colleges and universities and management schools actually putting franchising as a core part of their curriculum, we’re always going to have a struggle on our hands.
In America, the word franchising is part of the vernacular. People there talk about franchising, they go into franchising, and nearly 50% of the retail sales in America are through a franchise operation.
The government, the education establishment and those working in local councils should look at franchising as a potential opportunity to regenerate the local economy.
The emphasis is always on invention – starting something new', Yasmine Siddiqi, director, FranchiseSales.co.uk
At some point most people dream of running their own business and being their own boss – hence the popularity of Dragons’ Den and other business-related shows such as The Apprentice.
Given that franchising is one of the safest ways into business for the first-time business owner, it does surprise us that we don’t see more information about the benefits of franchising being championed in these shows. It’s symbolic of how little public awareness there actually is for buying a franchise.
The emphasis is always on invention – starting something new. The narrative is rarely about buying an existing business. Most people don’t even know that many of the high street brands they buy from– Subway, McDonald’s, Pizza Hut, Timpsons, O2 and many other businesses – are franchises. Yet, we know from how the banks view franchising that you are far more likely to get a loan for this kind of venture than others.
With this in mind, it makes more sense for the media narrative that seeks to exploit people’s aspirations of business ownership to involve the purchase of an existing business or franchise opportunity. This is especially true for the first-time entrepreneur who may be thinking of quitting his or her job to go into business and may not yet have the skills for a start-up.