Franchise market in Scotland booms as it embraces the business model of the future

Blog by David Kaye

In spite of the challenging economic times, the Scottish franchise market is flourishing as one of the most vibrant in the UK with the franchising sector boasting nearly 500 franchise brands, 2400 individual franchisee business and 36,000 jobs. The sector is continuing to grow and positively impact the Scottish economy as figures show from the annual NatWest/bfa survey. Not only is the number of franchise units indexed on the population increasing but also the implied turnover that franchising generates in Scotland.

Franchising appeals to those who strive for the independence of running their own business and being their own boss whilst being under the umbrella of a proven brand and system. The benefits of being part of the network of an established brand include the competitive edge working under an existing brand will give as well as the removal of the various difficulties and trial and error phases of starting up and running your own business from scratch. In effect franchising is about repeating success.

Franchising is also attractive to business owners as a way to grow their business and strengthen their hold in their relevant market by such expansion. It is a means to allow entrepreneurial talent to develop and grow by creating businesses under an already proven business structure and model with the support of a parent franchisor who is motivated by the potential to expand his business, both domestically and overseas, quickly and sustainably by someone buying into the success of his existing brand.

Another attractive aspect of franchising for both franchisors and potential franchisees is that franchisors, when looking to expand their brand and business, in the most cases, do not require their franchisees to have any specific skills or experience. However a combination of more general skills such as motivation, marketing, sales, business, drive and commitment are all something that a franchisor would look for in someone seeking to take on and represent his brand.

From the survey it was also noted that the relationship between franchisor and franchisee is key to the success of the business. For 2011, 89% of franchisees regard their relationship with the franchisor as satisfactory and those that were not so satisfied were unsurprisingly also loss making.

In Scotland, franchising is represented by the British Franchise Association (bfa) through its Scottish Forum. The bfa are due to run the Scottish Franchise Week 2012 from the 30th April to the 4th May. The week will include various events and seminars which are aimed to help raise awareness of franchising and highlight the great potential for growth. The enormous potential for growth is also highlighted with the bfa’s campaign for ethical franchising adopting the stated aim of securing 1000 new franchised unit businesses in the country in the next five years.

The power of franchising and the many benefits it can bring to both franchisors and franchisees in terms of business growth, creating new sales channels either domestically or abroad and also in terms of individual career opportunities can be seen in the latest NatWest/bfa survey. The survey estimates that the annual turnover of the business format franchise sector is £12.4 billion (a 5% increase on 2010) with the proportion of franchisees reporting profitability being 90% (compared with 70% in the last recession of the 90’s). The survey also found a third of franchisors have an operation elsewhere in the world which highlights how franchising can also be an effective and successful method of expansion overseas.

Generally the franchising community is optimistic about the future with 74% of franchisors and 52% of franchisees forecasting an improvement in their business when asked about their expectations for the next 12 months. This again highlights the strength of the franchising marketplace and the scope for continued growth.

This blog was originally published on the Herald website.

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