The British Franchise Journal[1], published by the BFA (British Franchise Association) featuring the first franchise survey since 2018, provides powerful evidence that franchising is one of the safest ways to own your own business in 2024.
According to the survey, an incredible 99.5% of franchises succeed, in stark contrast to the 50% failure rate of independent startups, within their first three years[2]. This new survey data, sponsored by NIC Services Group, reaffirms that franchising offers a highly reliable route to self-employed business ownership in the UK using tried and tested business models.
Benchmarking success
John Spencer, Chairman of NIC said at the launch of the Journal: “As a former chairman of the BFA, I know how important these surveys are and I’m delighted to be sponsoring this Journal, giving us vital, reliable data we can benchmark the success and growth of the industry with, over the coming years.”
Who are the BFA
Founded in 1977 and with a strapline of ‘Discover Your Tomorrow’, the BFA is the hub of franchising in the UK. The association showcases the opportunities for businesses and individuals to transform their lives through franchising, whilst also providing an educational space and accreditations, governed by high standards and a code of ethics.
FSB – Small Business Index (SBI) report
Whilst our survey results make for heartening reading on their own, when compared to the latest FSB’s Small Business Index Report (SBI), they positively shine.
The SBI is a survey produced by the Federation of Small Businesses, that is completed by approximately 1,000 small UK businesses every quarter. The report provides key indicators in areas such as overall business confidence, revenue, growth, running costs and value of exports and late payments. The higher the figure, the more confident and buoyant the sector is, the lower the figure, the less so.
Low confidence amongst non-franchised business owners
So low is small business confidence currently, that their Q2 2024 report [3]recorded an index figure of -10.8, which is in stark contrast to the results of our franchise survey.
Franchising survey headline facts
Here are a few headline results extracted from the survey; full copies are available to buy from the BFA website.
- The UK franchise sector currently consists of 1,009 franchise systems, up (7.9%) from 935 in 2018
- And 50,421 franchised units, up (3.7%) to 1,800 units from 48,621 in 2018
- Franchising contributes £19.1 billion to the UK economy, a rise of 12% since 2018
- The average turnover of a franchise unit is £400,000
- 89% of franchise units are profitable
- 87% of franchisors expect to see an improvement in their franchise’s conditions
- 82% of franchisees are satisfied with their franchisor
- 50% of franchisees work from home
99.5% of franchises succeed vs 50% of start-ups fail
For years we have been very proud of our historically low, ‘commercial failure rate’ for franchise businesses.
A few people choose to walk away from their franchise every year, for a variety of reasons, retirement, ill health, dispute or realising their investment, but very few leave because the franchise fundamentally didn’t work, in fact our survey reveals that the ‘commercial failure’ rate has dropped from 0.9% in 2018 to just 0.5% in 2024, demonstrating what a safe place franchising remains for those seeking to become self-employed.
Added to that, when you compare our commercial failure rate with the well-known statistic that 50% of all start-up businesses fail within the first three years[4], you will immediately see why we are so proud of our sector’s results.
Growth – Personal Services
One part of the survey we must highlight is the growth of the ‘Personal Services’ sector. This includes franchises such as pet care, children’s activities, domiciliary care etc.
Personal Services have seen the most extraordinary growth since 2018, up by 53%, to 380 franchise systems, and they now account for half of all franchise operations in the UK.
Understandably, when you add this to the news that 92% of personal services franchises are profitable, it isn’t hard to see why this is such a popular choice for so many new franchisees.
Franchising for the future
Whilst we applaud all entrepreneurs who are brave enough to start up their own businesses, and let’s be honest, without them we would have no franchisors, the vast majority of people just want to take back control of their working lives, make a decent living to support themselves and their families, and build a business they are proud of, that they can sell on at retirement or hand on to their children.
With these goals in mind, it is clear to see why buying a franchise is such an attractive proposition to so many people and we expect to see a significant growth in the industry following this survey, as people read about the unquestionable success of business format franchising.
Resilient sector
As the survey results clearly show, the sector has proven itself to be resilient during the roughest of economic times and easily able to shift to suit changing consumer demands and deliver strong, reliable results.
Tried and tested models
The use of tried and tested business models, with expert support from an experienced franchisor, mean those choosing to invest in a franchise, are doing so with a huge head start on their competition.
The BFA – your friend in franchising
We are here to help you at every stage of your journey, so please, visit our website which is packed with articles and information to help you decide which franchise is right for you. We also offer a free online course for prospective franchisees, that will give you insights into how to choose the right franchise. We wish you well and look forward to welcoming you into the successful, profitable world of franchising.
[1] https://www.thebfa.org/the-british-franchise-journal/
[2] https://www.experianplc.com/newsroom/press-releases/2023/half-of-all-new-businesses-fail-within-three-years-of-opening
[3] https://www.fsb.org.uk/resource-report/small-business-index-quarter-2-2024.html
[4] https://www.experianplc.com/newsroom/press-releases/2023/half-of-all-new-businesses-fail-within-three-years-of-opening
