Franchising: a Good Choice for Business Growth
Joel Caws - Technical Director, Select Your Franchise
Franchising is still the main choice for restaurant chains when considering growth. In a news article from QSR Magazine, Technomic reports:
“A focus on growing the franchise system allows franchisors to spend less on restaurant-level operations and redirect capital toward systemwide marketing and brand initiatives”
Their findings included a 1.6 percent nominal growth across the top 400 restaurant franchisors for 2009, which considering the state of the economy at that time, speaks for itself.
It’s clear the franchise model works well when it comes to companies who are focused on growing their business outside the scope of company owned stores or outlets. Once a new franchise outlet is up and running, it effectively becomes a self-sustaining unit in terms of its own administration and management, leaving the franchisor free to focus its resources on repeating the growth cycle. Of course, restaurants lend themselves well to franchising due to their focus on repetitive systems which avoid the need for highly qualified staff. Anyone with a willingness and dedication to learn the system could in theory start up and run a successful franchise outlet.
And its not just restaurants that can take advantage of the franchise model but any other industry where the core business tasks and procedures can be identified, documented and carried out by another just by following the formula.
Franchise Finance: Business of Recovery
Cathryn Hayes - HSBC Head of Franchising
A new HSBC report undertaken by Delta Economics, reveals that UK companies are emerging leaner and fitter from the recession but could endanger their own recovery by not seeking new finance. This obviously has implications for franchise businesses across the UK many of which rely upon the availability of financing for new franchisees in order to expand their network.
The report, called Business of Recovery, takes into account the input from 2,100 SMEs and 30 business and economic experts.
The report indicates that:
- Today’s businesses risk taking too short term a view and being too self-financing, with just 15% of UK-based companies currently seeking external investment
- Businesses need to be talking to their financial providers now to plan their approach to funding and finance. This will enable them to make the most of domestic and international opportunities as we recover from the effects of the recession
- If companies hold off from investing for too long they could miss out on opportunities to grow as the economy recovers
- 2% of businesses believe access to finance will be a key challenge in 2010, but 85% are not currently seeking external finance
- 80% of businesses said they “don’t need money” because they’re tightening their belts and running down their own resources, or financing themselves (53%). Just 17% said they weren’t seeking finance because “banks weren’t lending”
Noel Quinn, Head of Commercial Banking, UK said that as confidence returns, UK businesses should start taking a more long term view. He said: “I’ve met some very impressive companies recently who are driving their business forward and we’ve been working with them to get their finances right to allow them to grow. But, overall, we are still experiencing a lack of demand for finance from businesses, despite having made funds available. We believe that now is the time for companies to revisit financial plans and consider using different types of finance for the future.”
Noel added that more UK companies are looking beyond the UK domestic market to identify opportunities for growth through international trade.
A special 6 minute film, called ‘Business of Recovery hints and tips from business experts,’ is available on our Business Network site. The film features independent experts and customers providing practical advice and best practice on planning ahead and cash-flow management.
If you would like a copy of the report please email franchiseunit@hsbc.com.
Retail franchise sales growth
Nick Strong - Franchise recruitment advisor
UK retail sales rose 0.4% in July from June 2009.
Among the sectors doing well in July, clothing and footwear sales were up 10.3% from July 2008, while furniture and electrical goods also sold well. The strong 1.2% monthly rise announced last month for June was also revised upwards to 1.3%.
This is great news for retailers that operate franchise business outlets in the UK. Franchise retailers include well know brands such as Clarks Shoes, Bang and Olufsen, Costa Coffee, Apollo Blinds, United Carpets and McDonalds to pick a few from the many retail franchise brands benefiting from the upturn in sales growth during July.
This takes the annual gain in retail sales to 3.3%, according to figures from the Office for National Statistics. The annual figure from July was the highest since May 2008.
To read more about retail franchise opportunities in the UK visit -http://www.selectyourfranchise.com/uk/franchise-directory/Retail-Franchise.html.
For full story visit – http://news.bbc.co.uk/1/hi/business/8211315.stm.
Tags: Apollo Blinds, Bang and Olufsen, business growth, Clarks Shoes, franchise sales, McDonalds, nick strong, Retail franchise, United Carpets
