The concept of the franchise model has been around for hundreds of years, possibly even thousands of years. Fast forward to year 2021, more and more people are recognising the advantages of using it.
Original article on elitefranchisemagazine.co.uk
The concept of the franchise model has been around for hundreds of years, possibly even thousands of years. Fast forward to year 2021, more and more people are recognising the advantages of using it. The popularity of franchising is certainly on the rise. Let's have a look at why...
The franchise industry continues to grow year on year. Currently, the sector generates more than £17 billion in revenue in the UK. This was around £14 billion just five years ago, showing 15% growth in that time. Comparably, the number of people now employed in the franchise industry has increased by 14% since 2015. And there are now also 10% more franchise units in the UK than there were back then.
Furthermore, multi-unit franchising is considerably on the rise. Franchisees always historically owned a single business location. The number of entrepreneurs operating more than one location has increased by 7% over the past five years. Today, 36% of franchisees run multiple units.
Increasingly, we are seeing more women as well as much younger investors recognising the benefits of embarking on a franchise opportunity for themselves. In fact, 18% of franchisees are under 30 years old, and 37% of new investors are women. The number of women in franchising has risen by 20% since 2015. This makes it an exciting time for franchising as a whole.
So, why is the popularity of franchising on the rise?
The availability of more varied franchise opportunities
There was a time when the word 'franchise' was only associated with fast food groups and rapid large-scale expansion. However, in recent years, things have certainly changed. Franchising now extends into almost every industry and is applied to almost every type of business. While franchising remains a route to large-scale expansion, it is also popular as a means for developing smaller networks.
As a result, a large number of businesses have now adapted their structure to either become or to, at least, incorporate franchises. The industry's long association with fast food has been succeeded by an understanding that franchising can work for a wide variety of businesses in a range of different contexts. From cleaning firms to adult education companies and dog-walking businesses, there truly is something for everyone.
Brands are now more established
The fact that people can benefit from the impressive brand awareness of an established business is seen as one of the main reasons to start a franchise over a conventional start-up business. So, rather than worrying about building an infrastructure and getting their brand name out there, investors can simply concentrate on building and developing their businesses in their given territory.
For many years, we saw just a few big-name brands recruiting franchise partners; McDonald's, Burger King and KFC. But look at Pitman Training, it existed for 150 years in a traditional privately-owned business, until finally morphing into an entirely franchised business some 30 years ago. This evolution has allowed the business to expand into far more locations and reach new levels of success.
With an increasing number of businesses using the franchise model to expand and reaching impressive levels of consumer visibility, more and more prospective franchisees are drawn to the business model. Of course, this only serves to boost the opportunity for potential franchisees even further.
More investment options available
It goes without saying that, with more franchise opportunities comes more variation in investment options. Budding entrepreneurs on a budget can join a thriving business for just a few thousand pounds, while those with the cash to splash can invest millions. The sheer number of low-cost franchise opportunities have broken down these financial barriers for those who would never previously have been able to afford to start a business.
Also, thanks to the stability of the franchise model in general, more financial institutions are choosing to partner with established franchises and offer financing packages for their prospective franchisees. In some cases, banks will cover 60-70% of the franchisee's initial investment.
Most brands now offer comprehensive training programmes
Another reason the popularity of franchising has risen could be the improvement of franchise training schemes. The majority of franchised businesses offer excellent coaching programmes and thorough ongoing support. In this very competitive market, individuals do understand the advantage of relying on an experienced franchisor's advice, guidance and expertise.
These fantastic training programmes and operations manuals offer entrepreneurs a great opportunity to get into business ownership without spending years working their way up the career ladder. Nowadays, franchises help investors become proficient in business management, logistics or people management, providing them with the skills they need to go on to achieve entrepreneurial success on their own.
The statistics prove it works
Since the beginning, franchising has had unbelievable rates of success.
The franchise model has established itself in so many different industries, and there are now many successful franchisees acting as advocates for the franchise system. This has given more people than ever the confidence to try franchising for themselves.
The experienced older franchise professionals will often give newer franchise partners the guidance and support they need to be successful on their journey. With this array of impressive role models, the sector has attracted a new generation of entrepreneurs who are keen to become self-employed and grow their own business.
Even in this post-COVID world, the franchise industry is booming. Each time an entrepreneur recognises the benefits of becoming a franchisee and invests in a company, the strength of the industry goes up. In turn, this makes the sector seem even more appealing to would-be business owners. As you can see, there are many reasons behind the rise in popularity of franchising, but it speaks volumes about the legitimacy and profitability of the industry.
Would you like to follow your entrepreneurial dreams by becoming a franchisee?