Franchising profits defy downturn Posted by Matthew

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Franchising profits defy downturn

Posted by Matthew in Franchise on 29.05.2009 11:30:26 pm | 1515 views

The franchise industry has been largely unaffected by the recession, new research suggests.

 

The industry as a whole contributed £11.4bn to the UK economy last year according to statistics from NatWest and the British Franchise Association (bfa). The number of franchises trading profitably has remained at 90% which marks no change in the last 12 months.

 

Brian Smart, director general of the bfa, said: “There is little indication so far of the recession having a severe impact on the franchise industry. It seems franchised businesses are in a much stronger position as they have the additional protection of a proven business model and brand and, are a lower risk option for customers.”

 

The research found that 82% if franchisors expect their businesses to improve or remain the same during the next year, while only 18% are anticipating trading conditions to worsen.

 

Smart added: “It’s clear from this survey that the franchise sector is proving resilient to the economic downturn by investing heavily in activities to drive business forward and ensure future success.  It is a mark of the enthusiasm and commitment of franchisors and franchisees that they continue to drive new business and retain it with such vigour.

 

© Crimson Business Ltd. 2009

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Comments

fredosmith on 14.09.2009 1:08:06 pm | Reply

I agree with that franchise companies are not affected by recession.Its because of better management of that companies.That's why people are attracted towards the franchisee companies.

 

 
Jason Rager on 06.12.2009 10:31:28 pm | Reply

Franchising continues to do well in the market despite recession. This just shows how a good business system plays in the midst of economic challenges. Franchisees enjoy the comfort of having to make use of an already proven business system with more features to ensure success and profitability. What is important is for the franchisee to choose the right franchise opportunity to start right. To do this, I have shared important steps in my franchise guide at http://www.bestfranchisebooks.com which prospective franchisees can benefit from in order to make the right choice.

 
Andy Cheetham on 12.12.2009 4:23:46 pm | Reply

Hi everyone

having been in the franchise industry since 1990 I have traded in two recessions. The main point for franchisors in a recession is closely tied to their respective network saturation. If a franchisor is busy recruiting new franchisees then a recession is good news due to more prospective franchise owners and misplaced employees. If a franchisor is not actively recruiting its network then each franchise outlet is as vulnerable to the economy as any other well run business and if the economy affects the total network turnover then royalty levels drop and the franchisor suffers too.

 

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