Current Trends in Franchising

Franchising has matured since Ray Kroc opened his first McDonald’s in 1955 in Des Plaines, Illinois. First-day sales at that restaurant were $316.12. In 2008, McDonald’s annual sales topped $23.5 billion at more than 32,000 restaurants in over 100 countries – with about 80 percent of those stores owned by franchisees. Daily sales per franchised store today? You do the math! Many other things have changed in franchising as well. In its earlier years, franchising was a place for single-unit owners, content to “buy a job,” be their own boss, and provide a modest income for themselves and their families. Today, more than half of all franchise units in the United States are run by multi-unit operators, some with hundreds of units and revenues in the tens of millions. These operators don’t work in their store making sandwiches or traveling from home to home to provide services. Instead, they manage a company, employing a professional staff of field and unit managers, while they focus on strategy and growth. Multi-brand franchisees (those with two or more brands) are also a rising trend. These franchisees often have maxed out their territory for their first brand and must take on a second or third brand to continue to grow. Others are seeking additional brands to provide cash flow for different day parts, or to diversify their risk by creating a hedge against market cycles, changing consumer tastes, and shifts in the economy. So what are the trends in franchising today? Where are the growth areas? And more importantly, where will they be in 3, 5, and 10 years? 1) Shifting Demographics Major...

We Talk to Alan Coote on Let`s Talk Business

Let’s Talk Business 190: How2Franchise, What Is A Business Anthropologist, Is Fast Growth Good On this week’s Let’s Talk Business: How2Franchise, What Is a Business Anthropologist, Is Fast Growth Good and Are, We On The brink Of a Second Digital Revolution and 50% of CVs Include Lies? Also Available on iTunes. We speak to an industry expert… We speak to an industry expert Rod Hindmarsh about franchising your business. Also if you’re thinking about breaking out of full-time employment, we’ll discover if you have the right aptitude to become a franchisee. Have you lied on your CV? Around 50% of CVs have been found to have false information on them. But what sort of lies are being told? Some businesses go from a start up to large organisations in a very short time, but there are very significant problems if this is your plan. You may be better off taking a longer term approach. We find out why. Have you ever heard of a business anthroologist? In this week’s business insight we learn that Microsoft is the second largest employer of business anthropologists worldwide. So what are they and why are they evidently so important to companies? And are we on the brink of a second digital revolution? It seems we are but 90% of businesses have no idea what is about to happen. by Lets Talk Business Click Our Link to below our interview were on about 6 minutes in...

Franchise Industry Research:

bfa/NatWest Franchise Survey Beginning research on the franchising industry in 1994, the British Franchise Association (bfa), with the outstanding support of NatWest, has been building the most detailed long term franchise survey in the world. The full annual report can be purchased through the bfa’s online bookshop. The following gives an overview from the last published report (January 2016) to give an overview of the UK franchise industry. Management summary Overall, the picture is of an industry sector in rude health which continues to prosper: The contribution of franchising to the UK economy is now reckoned to be £15.1 billion, an increase of 46% over the past 10 years and up 10% since the last survey in 2013. The total number of people employed in franchising in the UK is 621,000, of which 321,000 are in full-time employment. This equates to an increase of 70% over the past 10 years The number of franchisee-owned businesses has increased by 14% in two years, to 44,200. On average, those businesses are also becoming larger as the sector matures: Average turnover continues to rise and over half now claim an annual turnover of more than £250,000 Employment per unit continues its upwards trajectory, with one-third now employing 10 or more staff A record 97% of franchisee-owned units reported profitability, with 56% saying they are ‘quite’ or ‘very’ profitable. Ownership changes in franchisee businesses are correspondingly low (4.6%), with failure rates much lower than for other SMEs generally Franchisees’ satisfaction with their franchisor has never been higher, with 91% saying they are ‘mainly’ or ‘definitely’ satisfied. Some 29% of franchisees now run multiple units. 80% of franchise brands in this country are UK-owned and...

Has economic downturn affected Franchising?

Despite worries of an economic downturn, one sector is poised for another year of solid growth in 2016, according to one study.  Bolstered by trends including acceleration in business spending, the franchise industry is set to grow by 1.7 percent in 2016, according to the study by the International Franchise Association. The annual outlook follows a stronger-than-expected 2015, which saw an estimated 1.7 percent growth, according to the association’s Franchise Business Economic Outlook for 2016 that was prepared by IHS Economics. The 1.7 percent growth forecast for this year will bring the total number of U.S. franchises to 795,932. “BY MOST MEASURES, THE FRANCHISE SECTOR WILL CONTINUE TO GROW AT RATES THAT EXCEED THE ECONOMY-WIDE GROWTH OF INDUSTRIES, WHERE FRANCHISES ARE CONCENTRATED.”-International Franchise Association Among franchises, hiring and job creation trends are also expected to be strong. The IFA forecasts employment increases of 3.1 percent to 9.1 million franchise jobs, up from last year’s 8.8 million jobs. Plus, total GDP generated by the franchise industry will reach $552 billion, up from $523 billion in 2015, it said. The index has shown growth every year since 2010. “These [franchise] companies have cultures that tend to grow and rise because they meet consumer needs in various spaces, whether it’s dog walking or hotels you prefer to stay at,” said IFA President and CEO Robert Cresanti. “As a function of that, it usually scales up.” While potential risks include flat government spending, franchises could benefit as investors looks for options outside the oil patch, with crude oil prices plunging.  “The fundamentals of consumer spending are positive and business investment outside of the...

Franchising: your model for business growth?

Franchising: your model for business growth? Franchising has been lauded as a tried and tested way of growing one’s business by using the entrepreneurial skills and capital (without incurring debt or interest charges) of others. It has also sometimes misguidedly been promoted as a panacea for ailing businesses. By Manzoor Ishani, Sherrards solicitors. So, what are the advantages? Franchising is one of the most effective ways of enabling a company (the franchisor) to penetrate markets more deeply and more quickly, than if it chose to go it alone, with the minimum capital investment and with few of the sort of management problems it would otherwise encounter. In a franchise it is the franchisees who provide the capital and the management at the sharp end of the business. As the franchisee owns his own business, he will be keen to ensure the success of his business. By contrast, the manager of a company-owned outlet is more likely to be concerned with maximising his comfort. He will close the outlet at the appointed hour rather than wait until the last customer has departed. When not well, he will telephone head office for a relief manager and will himself stay at home and nurse his cold. An owner manager, on the other hand, will drag himself into town and open the outlet. In a retail operation, a large, well-run franchised network often gives the franchisor a captive market into which it can sell its goods. In a well-structured franchise the projection of a uniform marketing image helps to generate brand awareness, which in turn, increases the value of the franchisor’s brand and...

Women exerting ‘girl power’ in franchise market share

Women exerting ‘girl power’ in franchise market share Owner-Director of Bloxham Mill-based How2Franchise Rod Hindmarsh says that more and more women are either buying into franchises or becoming franchisors. With over 26 years of experience, Rod tells us why this is a good thing for business… Opportunities Women enjoy prominent roles in nearly every sector of franchising but are there barriers to bringing in more? Potentially. Now I don’t want to stereotype but not all sectors in franchising are naturally appealing to women. Would the oven cleaning sector have grown to the size it is now if we liked to clean our own ovens? And I for one see the great advantages of a number of other traditional owner-operator franchises but wouldn’t necessarily want to do that every day myself. There are however plenty of franchise opportunities that are aimed at women in every way. The colour scheme, language in marketing materials and brand identity are all put in place to appeal to women, not just to men. Then consider the fact that entire franchise networks are made up solely of female franchisees. But even so, women still only account for 30% of all franchisees. Interestingly, out of the seven people How2Franchise currently employs, five of these are currently women. Rachel Ray, founder and Managing Director of franchise network Bright & Beautiful, recently said: ‘One of the most attractive things about launching a franchise – for either sex – is the fact that you are in business for yourself but not by yourself. ‘Research has shown that in general women are more collaborative than men, so the support of...

Create your Legacy

We talk a lot about purchasing a business or a franchise as a way to become your own boss, have financial independence, give back to the community, and obtain flexibility to do more of the things you love. Indeed, it can do all of those things. However, we rarely take the time to ask, “What will my legacy be?” As part of my discussions with clients, I address this topic, from the start. If you’re in a career where you won’t be recognized or remembered for your contribution, or you’re not making or building something that will be utilized for years to come and provides a service that makes the world a better place, and some or all of these things are important to you—a franchise can provide you with all of this and more. Building your legacy through franchising starts with finding the right fit for you. Service industries are a good place to start. Once you’ve chosen the business, commit to running that business ethically and with a strong set of guiding principles. This translates throughout the organization—from the staff you hire, the accounts you acquire, and the customer service you provide. Next, as a franchisee, you can begin to collaborate with other business owners within and outside of your franchise brand and influence growth in your business and community (e.g. Chamber of Commerce), as a result of combining resources. All of these things will lead to the recognition you desire and deserve, with people acknowledging you as the architect. That inevitably leads to being sought after to speak, lecture, mentor, and share your success. Now, not...