90% profitability maintained by franchising
The latest survey figures have shown that the UK franchise industry has withstood the credit crunch. The NatWest/British Franchise Association 2009 UK Franchise Survey has placed the overall economic contribution of the franchising activity of the country at £11.4 billion in 2008. With economic downturn hitting during this period, this means an 8% drop from £12.4 billion generated in the previous year, but is still an impressive increase on the £10.8 billion reported in 2007.
Around 90% of the surveyed franchise owners reported profits, which compares to 91% the previous year. The turnover levels have dropped by 9% from £360,000 to £326,000, though two thirds of those surveyed accomplished or over accomplished on their planned turnover for that period.
The economic recession however, failed to prevent the 3.6% rise in the number of companies actively franchising in the UK with the overall number reaching 838. Graeme Jones, Head of NatWest's Franchise team said that the year 2007 proved to be an outstanding year for the franchise industry, with an extensive and above average growth seen in every prospect. He also said that this level of growth was not sustainable in the present economic climate and the current performance is more in line with chronological trends.
It is too early to tell how the recession will impact on the franchise industry as a whole. However, NatWest stayed committed in lending to the sector while maintaining their position as the top bank for franchising.