Over the years, there has been a steady global growth in franchises. Though this has eased slightly as a result of the general uncertainty in the world economy caused by the Covid pandemic, the trend continues. In the UK franchises contribute an annual £15 billion to the economy. In the past decade, franchises have increased by 46% and employ over 621,000 people.
Sectors such as accountancy and fast-food restaurants are almost bywords for franchising, wherever you travel in the world, you’re likely to be confronted by that familiar “M” logo in the high street. Yet they continue to show solid growth. For example, a niche Californian operator recently opened its first restaurant in London, and now plans to expand across Europe.
The educational sector may, at first sight, seem an unlikely sector for franchising until we consider how more and more English secondary schools are being transformed into independent “academies,” licensed and funded by the government. Brazil is just one country where the lucrative language school sector is increasingly dominated by franchises. In both the UK and other western countries, school closures caused by the pandemic have led to a significant rise in home tutoring, as ambitious parents fret about the possible lasting negative effects on their children’s progress. Many individual teachers who possess abundant expertise in their specialisms, and enthusiasm to pass on their knowledge, but little experience or interest in marketing and the business world, have welcomed the support given by franchisors in growing their activities and their incomes.
Hospitality is a notable growth sector, most of the familiar global hotel brands are in fact based on franchises. Who hasn’t been surprised to see a familiar hotel in their locality suddenly bearing the name of a national or global brand? Name recognition, combined with coherent marketing, tends to result in an upsurge in turnover.
Rising affluence and leisure in the western world are significant factors in many growth areas. More and more people spend several hours a week in their local gym or swimming pool. The support enjoyed by franchisees, along with their larger budgets, enables them to offer a wider range of services than their public competitors. In some cases, well-known athletes and sporting personalities have lent their names to such enterprises.
The pandemic has led many families and individuals to acquire a pet, to provide them with much-needed comfort and solace at home during successive lockdowns. Though most Brits probably still turn to their local kennels when they need to board their beloved pooch or moggy, there has been a remarkable growth in businesses offering such services as pet-sitting, grooming, “luxury hotels” for pets, and “living portraits.”
We live in an ageing population. While senior citizens still tend to be looked after by their families elsewhere, their welfare is increasingly put in the hands of professional caring establishments in the west. With national and local governments unable to cope with the demand, franchising plays a growing role in this sector, and in hospital provision.
Franchising is also seeing significant growth in the developing world and in emerging markets. As home markets may approach saturation point, ambitious operators will cast their eyes towards virgin territory. Eighty percent of the world’s population live in countries regarded as emerging markets. The US Department of Commerce estimates that, as growth stagnates in the developed world, these regions are likely to account for 75 percent of the growth in global trade over the next two decades. Franchisors must expect to face different challenges there. They need to consider carefully whether they are able and willing to tackle them.
It’s been said that “franchising only works when franchisors get wealthy by helping their franchisees get wealthy.” In other words, the rewards and risks are mutual. Success isn’t a zero-sum game; everyone benefits. So what kind of person is likely to succeed as a franchisee?
They should start by asking themselves certain key questions. Firstly, am I being true to myself? Do I know my own strengths and weaknesses? And do I know those of the sector in which I plan to operate? Is it still on the rise or has it already passed its zenith? Am I willing to take advice however unwelcome this may be? Is a franchise really the best way for me to operate in this sector? Provided they can give themselves clear-eyed answers to such questions, franchising can lead to abundant rewards.