Posted:27-March-2014
Card Connection: Be part of the franchise industry's growth
By Michael Johnson, Managing Director, Card Connection
Industry research taken from the 2013 Natwest sponsored British Franchise Association Franchisee Survey has found that the franchising industry has grown at a ‘far higher pace’ than the economy as a whole. The figures which looked at an 18 month period prior to the 29th annual research survey conducted in the summer of 2013, estimate 20% growth over the recession compared with the economy in general, which shrunk by 2.5% during the same time-frame.
The estimated size of the sector is now £13.7 billion compared with £13.4 billion previously. This represents around 1% of annual GDP. There are now an estimated 930 franchised systems in the UK.
Franchising is becoming increasingly popular for several reasons. By choosing a franchise this risk is said to be reduced significantly compared with starting up alone, as you are buying into a proven business model. The survey reported that 92% of franchisees questioned were trading profitably. However, the survey also reported that this figured dropped for franchisees trading for less than two years. Here, 20% of franchised businesses do not record a profit until their second year.
The franchise model is associated with less risk because as well as using a successful business idea, the support network also helps to get you up and running quickly and continues to help you manage your business on an ongoing basis. You will get assistance with any issues you encounter and your franchisor will advise you about best practice. In this way although you will be new to the business, you will have access to the years of experience of your franchisor and network of franchisees. This can help avoid expensive mistakes as the franchisor will already have worked out the most efficient ways of doing things and, by buying a franchise, you purchase this expertise.
From a purely financial perspective, you can look at the books of a current franchisee to see how the business is doing which is not possible when starting up alone. If you are purchasing a re-sale territory, a detailed sales history will be available for the franchise and although future income is likely to be slightly less due to the inevitable learning curve, it will give you a strong indicator about likely income potential.
In addition, critically, all your training will be provided and much marketing and brand building work will have been already completed.
However, although franchising is associated with less risk than other start-up routes, the biggest challenge facing franchisors is recruiting quality franchisees. According to the Survey the main reason for not selecting an applicant was lack of capital (68%). With the average initial investment for a new franchisee of £52,000 or £64,500 for a resale, it is clear that potential franchisees need to be aware of the many advantages that buying into the franchise industry offers and what these benefits are likely to cost.
Interestingly, the second most prominent reason for franchisors no to recruit an applicant was their performance at interview (62%). For an industry which often looks for people who do not need any previous sector experience this is surprisingly high. Franchisors are usually looking for a particular combination of personal attributes such as enthusiasm, motivation, drive and commitment which are the main elements needed to succeed.
So if you are keen and can demonstrate your enthusiasm to run a franchise, plus you can access the required capital necessary to invest, then perhaps you can look at becoming one of the 22,400 franchisees in this growing industry?
Card Connection is part of UK Greetings, which is a subsidiary of American Greetings Inc., one of the largest greeting card publishers in the world and has limited vacancies for franchisees that are keen to run an expanding business.
Interested and want to know more about Card Connection?
The Card Connection profile outlines all aspects of their franchise opportunity and allows you to contact them for further information or to ask a question.
