Franchises could hold the key to economic growth
PUBLISHED: 15:00 24 September 2011
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The government is being urged to do more to look at the potential of franchising as a means of creating new jobs and kickstarting growth in the UK as figures indicate more than 500,000 new jobs can be created through franchises in the next five years.
Prof Roy Seaman, managing director of Norwich-based Franchise Development Services (FDS), told a meeting of franchise experts, bankers and officials from UK Trade and Industry (UKTI) yesterday that franchising can provide a tried and trusted formula to delivering growth.
“We are talking next year of creating 100,000 new jobs through franchises,” he said. “Franchises are a solid foundation with which companies can expand and new jobs can be created.
“We are looking at about 2,000 new franchises over the next five years which means by 2016 it will mean an extra 70,000 new businesses. That means 500,000 new jobs and that’s being totally realistic. What would happen if we could increase that by 10pc?”
The meeting heard that FDS is to work with UKTI officials to encourage British companies to look at the potential of franchising overseas.
And Prof Seaman added that local businesses in the region looking to expand should also look to the franchise model as a tried-and-trusted option.
“Norwich is known throughout the UK for franchising, and we have 110 retail franchises in the city centre,” he added. “Now we want to use Norwich, Norfolk, East Anglia as a hub for franchise development.
“There are many Norfolk-based companies who want to expand but have never thought about franchising, but businesses that are scaleable and have got good profit margins are all franchisable. There’s an opportunity for brands that are profitable in Norfolk to expand outside of the county.”
Mark Scott, director of franchise development at Natwest, said all banks were keen to lend to support franchises, while a £100m fund set up by Natwest this year had already seen more than half of the funds drawn.
“We are definitely in this for the long-term, and we are very committed to the sector,” Mr Scott said.
“There are 37,000 franchise locations across the UK and a total turnover of £12.4bn. The failure rate in any one year is less than 5pc and nine out of 10 are profitable. It really is a strong place to be.”
Norwich South MP Simon Wright, who was also at the meeting said: “I see the importance the franchise model has and the impact it makes on the economy. I can assure you the government does want to support franchises.”