Franchising outpacing rest of the economy

The franchise sector has outstripped the rest of the economy, with franchisors growing revenue by 12% last year, according to new research.

PwC’s Franchise Sector Indicator found that the industry had outperformed other types of businesses for the second year in the row.

Individual franchisees also did well, with revenue growth of 7% and a 6% leap in profits.

However, 80% of franchisors said that finding suitable franchisees to run their outlets was the number one challenge.

More than two-thirds said that 30 to 44 was the desirable age for franchisees, although just 42% of current franchisees are in this age bracket.

Around four in ten franchisors increased their marketing spend last year, although 60% admitted that accessing debt finance was a problem.

Expectations for the year ahead are strong, with franchisors reporting an expectation of 13% revenue growth. Forecasts for the following three years are healthy too, with franchisors expecting to boost profit by a total of 50%.

Greg Hodson, partner at PwC, says, “Growth in the franchise sector has been nothing short of outstanding. In the past 12 months the sector has proved to anyone who ever doubted it the strength of franchising as a business model.”

“Realistic franchisors told us though, that like any business sector, franchising is not without its challenges.”

“The successful franchises of the future will be those that can turn the challenges into opportunities that they can capitalise on.”

“The franchising brand needs to stand for being a dynamic sector where business savvy individuals can build personal wealth and work in a dynamic team environment.”