Franchising Maintains 90% Profitability

The Franchise Magazine:

The release of the latest survey figures on the UK’s franchise industry reveals that franchising is weathering the storm of the credit crunch.

The British Franchise Association/NatWest 2009 UK Franchise Survey has placed the total economic contribution of the country’s franchising activity in 2008 at £11.4 billion. With the start of the recession hitting during this period, this represents an eight per cent drop from the £12.4 billion generated the previous year but a still impressive increase on the £10.8 billion reported in 2007.

Despite this 90 per cent of franchise owners surveyed reported profitability, a comparable level to last year’s 91 per cent. Turnover levels have dropped by nine per cent, from £360,000 to £326,000, although two thirds of those surveyed achieved or over achieved on their projected turnover for that period.

The credit crunch failed to prevent a 3.6 per cent increase in the number of companies actively franchising in the UK, with the total number reaching 838. “It appears that 2007 was an exceptional year for the franchise industry, with rampant and above average growth in every respect,” reflects Graeme Jones, Head of NatWest’s Franchise team. “This level of growth isn’t sustainable in the current climate, and 2008’s performance is more in line with historical trends. It is still too early to tell how the full impact of the recession will impact the franchise industry, but NatWest remain committed to lending to the sector and maintaining our position as the leading bank for franchising.” Read full article.

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