Scotland has a strong tradition of entrepreneurship. Scots invented the television, telephone and radar technology, while the country also boasts a whole host of big business names from steel magnate Andrew Carnegie to, more recently, Michelle Mone and Tom Hunter. But one type of business ownership has not always proved popular north of the border, with the number of franchises remaining low compared to much of the UK. Fortunately this is finally beginning to change. So what is now driving Scottish people towards franchises? Where is the growth and how is it funded? And how might Scotland’s franchising scene look in the future?
From small beginnings
Currently, Scotland has one of the lowest rates of franchise ownership in Britain, with just 5% of the UK’s units based in the country, according to the latest figures from the bfa. Only Wales and Northern Ireland fall lower in the rankings. However, the franchising landscape is shifting in Scotland – and quickly.”
Franchising contributed £800m to the Scottish economy last year, a 14% increase over five years. And the bfa predicts this figure will hit the £1bn mark by 2020, reflecting a growing appetite for franchise systems among the Scottish population. There are more than 2,200 franchises in the country at present, employing about 32,000 people and representing more than 500 brands. And experts suggest the relative immaturity of the franchising industry in Scotland represents a tremendous growth opportunity – one that many enterprising Scots are beginning to realise.”
This is one of the reasons the bfa held Scottish Franchise Week from May 16 to 20, the 12th such event celebrating the country’s existing franchising successes, as well as encouraging others to invest. But the question remains: why is franchising only now flourishing so far north? And what is the state of the Scottish business ecosystem?
Geography is certainly a factor. Evidence shows that franchises tend to cluster in urban areas. While Scotland has significant conurbations in the south, it also has one of the lowest population densities in Europe, with many inhabitants scattered between villages, isolated towns and islands. On the upside, the country’s birth rate is now growing and it has increasing levels of inward migration – all good news for the economy. However, the economic effects of fiscal devolution – Scotland recently gained control over its own income tax as part of its deal with Westminster after 2014’s Scottish independence referendum – have yet to be seen.”
A mood of optimism gripped the country after the success of the Scottish National Party in the 2015 general election but falling oil and gas prices have dented business confidence, with small firms in Scotland recently found to be at their lowest ebb for three years. Add to this a further possible vote on independence following the referendum where Britain opted to leave the European Union and it’s understandable why Scottish businesses are a bit uncertain about the future.