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Big brands sustain franchise boom

More and more Britons are working in or even owning a franchised business. Perhaps that's not surprising since, at their best, franchises can combine the modern obsession with brands with more traditional concerns about personal service.

The problem is that franchises in Britain are not always at their best. Indeed, only one in three of them meets the standards demanded by the industry's professional body. According to the British Franchise Association (BFA) the number of franchised businesses in the UK has increased by 40 per cent to 655 over the past five years and their value has grown by 45 per cent to ?9.3 billion (US$13.5 billion).

Franchises account for 31 per cent of all retail sales in the UK. Familiar franchise operations include McDonald's, Pizza Hut, the Body Shop, Thornton's chocolates and the retail part of the Post Office.

Currently 35,600 UK franchised businesses employ 316,000 staff but that number is set to increase as the number of people working in smaller businesses increases. Already 44 per cent of workers are employed in businesses with fewer than 50 staff and the proportion is edging closer to half of the workforce every year.

According to Simon Wise, deputy director of the BFA, more and more businesses are using the franchise format to expand, with the result that franchising is no longer just about pizzas and burgers but is embracing more and different types of business. Pet-sitting, for example.

In 1999, Brendan Humphrey gave up his job as a chartered surveyor earning at least ?40,000 (US$58,000) a year and brought a franchise in Petpals for ?14,000 (US$20,300).

He now turns over ?70,000 (US$101,500) a year feeding and exercising pets in the Winchester area at anything from ?6 (US$8.70) to ?12 (US$17.40) a visit. He employs 10 part-time staff.

"A lot of people thought I was crackers," he says, "but I think I've got the best job in the world. I love pets and I have no more unpleasant Sunday-night feelings about going back to the office or about office politics. The only drawback is having to clear up pooh."

For his initial investment, Humphrey was given three days of 'excellent training', a pre-launch campaign in his area and all advertising paid for a month. He says: "People trust the name and there's always someone to turn to, either at head office or other franchisees, if there's a problem. Having said that, I've never had to borrow a penny and already we're so busy that we can only help one caller in 10."

But, given the growth in franchising, it is worrying that the franchising process itself is largely unregulated. Only last month, disgruntled franchisees threatened to sue the beleaguered Claims Direct franchise operation for allegedly misrepresenting the company's likely success.

Simon Wise of the BFA says: "Pyramid selling schemes are often described as franchises and, despite the Trading Schemes Act, which outlaws this, there are still some dodgy customers out there. The term franchising is used very loosely and there's not much to stop anyone saying they're selling one and making all sorts of promises."

"Another problem is people going into franchise selling when their business is in trouble. We try to ensure that our members are not depending solely on the sale of franchises for their money."
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