Name value tops £5bn

TURNOVER in the franchise sector has grown by 10 per cent to £5.5bn over the past year, according to a survey by National Westminster Bank and the British Franchise Association. The number of recognised business franchise systems increased by 18 to 414, supporting 26,400 franchisees.

The 11th annual survey also showed 87 per cent of the franchisees reporting profitable results, with 86 per cent saying they were profitable within the first two years of operation. The proportion reporting higher profitability than last year rose by 9 per cent to 52 per cent.

Asked about the year ahead, 89 per cent of the franchisors and 81 per cent of their franchisees said that they expected improved business. This was reflected in the finding that the proportion of definite loss-making franchisees had dropped to 3 per cent, which was less than half the figure for 1992.

Brian Smart, director of the British Franchise Association, cited the importance of the franchise sector to the economy, saying it provides employment for 200,000 people and has proved to be the most successful way of starting new businesses.

London, with 16 per cent of Britain's franchise units, and the rest of the South-east, with another 15 per cent, continue to dominate the sector, although the South-west and West Midlands, each with 12 per cent, and the North-west, with 10 per cent, are also important.

On the international front, nearly half of the franchise systems questioned said that they plan to be operating in Europe by the end of the decade.