Weathering the Economic Storm with Franchising
Joel Caws - Technical Director, Select Your Franchise
With the Prime Minister warning that the economic storm may not yet be over and with the Budget just a few weeks away its still a difficult time for many. Although reports show that the UK’s emergence from the recession has been a little stronger than previously thought, it might be little comfort for those still struggling to find work or feeling the pinch of wage cuts or unrealised bonuses.
In spite of this, franchising in the UK still appears to be a growth area. Interest in franchising still remains active with new franchise business start ups. Some of this growth could be attributed to the following factors:-
Proven Business Model
Franchise opportunities should be based upon an already proven business model. This makes it an attractive proposition for those interested in start up their own business since they know its been tried and tested.
Franchising has a great track record
Historically, around 90% of UK franchise businesses trading in any given year are profitable according to annual BFA/NatWest National franchise surveys.
Financing
Banks can tend to look favourably on a franchise business start up since it offers more security than a conventional self-employment. This is often down to:
- The fact that a franchise business should be based on an already proven business model (as mentioned above).
- The bank may have prior knowledge of the franchise and have lent already to other franchisees which it can seen have been successful.
It appears we are not out of the woods yet; you only have to read the latest financial and business news to see that. However, there are still ways to ‘weather the storm’ and franchising may well present just such an opportunity for many.
Tags: Economic recovery, franchise business, franchise opportunities, franchising, joel caws, recession
Franchise Views: UK emerges from recession
Joel Caws - Technical Director, Select Your Franchise
I was reading with interest the latest news on the UK economy emerging from the recession. The economy grew, even if not by much, in the last quarter of 2009 signaling the end of the longest recession in over 50 years. It might not be by much but there is a positive outlook at least. It’s promising news for the franchising industry, for both franchisors and franchisees alike.
Franchisors
As the economy begins to grow again it should spark renewed confidence and interest in new business start ups which is good news for franchise recruitment. The extra security and support of a franchise business vs. conventional self-employment should also help bring added confidence to potential buyers especially with the insecurities of the recession still clear in their minds.
Franchisees
For existing franchisees, a confidence returning to consumer spending would of course be a welcome increase in turnover. This in turn has a knock on effect for Business-2-Business franchisees as their customers begin to see increased cash-flow from consumers further down the line.
But we are not out of the woods yet…
Its easy to sit back and think ‘thank goodness its all over’ but we are not out of the woods yet. Businesses can fail coming out of recession due to increased demand for products and services but lack of sufficient cash-flow (caused by reduced business during the recession) to sustain the demand. This can be especially true for business-2-business where there is delay between providing goods and/or services and actually getting paid. Good management of cash-flow, stock and labour is essential to make it through these times.
We can be positive that things are moving in the right direction, but be sure to take a sense of care and diligence to ensure you don’t become trapped through, what is predicted to be, a slow economic recovery.
Economic growth helps franchise business
Franchise blog Nick Strong
Economic growth is now reality for a number of countries that were hit by the global downturn. Japan has come out of recession after its economy grew by 0.9% in the April-to-June quarter.
Recent figures show economies coming out of recession, including Germany, France and Hong Kong, a sign the global slowdown is easing.
Notably the economy in Japan has achieved growth mainly due to large governmental financial stimulus into the national economy. This may be a good sign for the UK which has taken similar action to boost our domestic economy.
Franchise growth
Clearly this news is good for franchise business in the UK and for franchisors trading or considering trading overseas. Consumer confidence grows on the back of good news and sales follow.
There is little doubt that the recession and its fall out will be with all for some time. The key is now to start building confidence with business and consumers. This will help accelerate growth for franchise owners and all business.
Economic growth is better than expected
The French and German economies both grew by 0.3% between April and June, bringing to an end recessions in Europe’s largest economies that have lasted a year.
Analysts had not expected the data, suggesting recovery could be faster than previously expected. That data was also better than had been expected, with the government subsequently increasing its forecast for growth in the whole year.
Tags: economic growth, Economic recovery, France, franchise business, Germany, Hong Kong, Japan, nick strong, uk economy
