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Franchise Facts...
Turnover and Employment
The estimated annual turnover of the business format franchise sector is £11.4 billion. In 1984 franchise sector turnover was £1 billion.
Franchisees employ 467,000 people directly.
278 Franchisors have an operation overseas.
Franchisors
There are 838 franchisors in the UK. This represents an increase of 3.6% on 2008
On average, franchise systems have been operating for 11 years.
The cost to a business in setting up as a franchise in the first year ranges from £25,000 to £250,000, with the average being £155,000.
Franchisees
There are 34,600 non-dairy franchise units in the UK.
The average sales per unit was £326,000.
90% of all franchisees claim to be profitable.
5% of franchisees experienced a forced change such as ill health or financial failure. On average 50% of all new businesses fail in the first 3 years so franchising has a significantly better success rate.
The average age of a franchisee is 47.
Franchisees have been running their business for 7.5 years (up from 3.9 years in 1992).
17% of new franchisees come from an Asian background with a further 4% being black.
Finance
The average initial outlay for setting up a franchise is £68,300, though this varies dependent on the sector.
Around half of franchisees borrowed money to set up. Of these, 84% borrowed from banks (92% when over £20,000).
The average amount borrowed was £49,000, with 36% needing to borrow in excess of £50,000
The average ongoing management service fee is 8.2% (7.5% in 2008) and the average advertising levy is 3.9% (1.9%) of franchisee's turnover.
Ongoing costs increased from 10.1% to 12.65% in the year - mainly a reflection of the increase in the advertising levy.
Acknowledgements
Our thanks to the NatWest BFA Annual Survey and Business Link for the information above
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