Franchises challenge the recession

The sandwich chain Subway has announced plans to open 600 stores in Ireland and the UK and pizza delivery service Dominos believes that the sales have increased by as much as 10 per cent. KFC, a fast-food chain is planning to create 9,000 new jobs. At such times a question that comes to our minds is that how are these fast food chains surviving the current financial crisis.

David Tuck from the British Franchise Exhibition believes that as some industries are hit by the economic downturn, sectors surrounded by franchise industry are demonstrating noteworthy growth from car repairs, security companies, second hand stores and fast food chains.

He also said that banks have committed to their ongoing lending and in a few cases have also increased their commitments to lend to these potential franchisees because they provide a standard business model. According to the franchise survey by NatWest/BFA, about 91 per cent of the franchisees claimed that their businesses in the past year traded profitably.

The head of franchising since 1994 at HSBC, Cathryn Hayes, stated that the failure among the franchisees is lower than stand alone start-ups. This is mainly because the franchisee gets support from their franchisor and other franchisees that are in the network.