Investing in a Franchise? You Need to Read These Five Franchise Facts

23/10/2014

By Sam Butterworth, Tubz Vending Franchises

If you’re thinking of starting a business, you’ve probably considered buying into a franchise. It’s an attractive proposition. Marketing support, legal stuff sewn up already, and a proven business model.

But are franchises really that good? What does the research and figures actually say?

Here are 5 interesting stats about franchises that you might not already know:

20 years ago the franchise industry was worth £5bn. Its now worth £13.7bn (2014 figures)

This fact demonstrates steady growth in the sector, and also longevity. This is a sector that has stood the test of time and stayed resilient when many others have come and gone.

Once a franchise becomes established, the marketing and purchasing power of that company benefits its franchisees. By joining a franchise, you can get better margins than going alone in most cases.

Franchises are growing faster than regular businesses. The 45 largest franchise stocks gained at nearly twice the rate of the Standard & Poor’s 500 in 2012 – 23.2% versus the S&P’s 13.4%, according to FranDATA

In recent years the economic turmoil has no doubt put off potential entrepreneurs from taking that initial leap of faith. This is especially true given that many businesses are predicted to fail within their first year (20% according to business zone)

The beauty of franchising is that the success of a business and brand are already there, waiting to be replicated by a talented individual. The above statistic should be an attractive prospect to any would-be entrepreneur.

The number of people employed in franchises in the UK is 561,000 (2014)

This figure offers a flavour of the success of franchises. The fact that franchising is contributing so substantially to the overall employment rate of the UK, shows that it is a strong and valid sector for consideration.

Franchise employment has gone up 20% in the UK in the last 5 years (2014)

So we’ve briefly touched on the employment figure. But as a stand alone fact that might not be enough to entice the would-be entrepreneur. This statistic of 20% growth in the last 5 years, however, shows up to date proof that franchising offers scalability and growth that might not be there with independent start ups.

92% of UK franchises are profitable

This is the most important and staggering stat of all. To put this in context, according to the Bank of England, a third of UK businesses are not profitable.

It may be surprising to learn that a franchise is a clear winner here. To start a franchise knowing that you have a 92% chance of making profit suddenly makes the business start-up process seem less daunting.

These facts were compiled by Tubz Vending Franchises - a leading provider of vending machine franchises for entrepreneurs interested in stocking popular snacks.