23 Feb Franchising Marketplace: A Snapshot
Our sister website, FranchiseSales.com has published the results of its state of the marketplace quarterly survey.
The global survey of franchisors and franchisees, whose average age is 43 and 80% of whom are male, also revealed the most popular sector among franchise seekers as fast food, remaining recession-proof in times of squeezed incomes and unemployment.
Franchisees
Fast food’s popularity with franchise buyers – 34% of those surveyed are interested in the sector – is unsurprising given that franchise seekers are mindful of difficult trading conditions. Asked what they wanted in a franchise opportunity, 56% of would-be franchisees require a sector that is relatively recession-proof. Almost as important, with 56% affirmative responses, is the potential to become wealthy, followed by a well-known brand name (54%).
Work-from-home franchises, whose low start-up costs and overheads are attractive in tough times, were the second most popular sector – with 31% of respondents interested – followed by distribution (30%), and retail (26%) franchises. One in five (20%) franchise seekers are interested in master franchises – buying rights to sub-franchise within a given territory.
The survey suggests that many franchisees are searching for the wrong kind of franchise. While just 29% of franchise seekers would consider only franchises in which they have experience, 42% of franchisors say experience in the sector was essential. Only 7% indicate that it is unimportant.
Asked to rank in order of importance reasons for choosing franchising rather than starting a business, lower risk of failure was considered the most important, followed by franchisor support, enabling franchisees to focus on their core strengths.
Of those researching franchise opportunities, 47% are impressed with franchisors so far, with only 16% unimpressed. Around a third of franchise seekers use trade and print press to research franchises, while roughly the same proportion visit exhibitions and trade shows.
Franchisor
Franchisors from many sectors ranked in order of importance reasons for adopting franchising as a model for growth. The most important factors were greater efficiency and customer satisfaction, followed by low capital expenditure, enabling businesses to grow rapidly.
The vast majority of franchisors say sales skills, people management skills, administrative skills and ability to raise finance are essential or desirable attributes in prospective franchisees. That nearly half – 49% – consider it essential for franchisees to suggest improvements to the business model is surprising, given the perception that franchisees need only follow a proven formula to succeed.
Franchisors feel a positive impact from the recession concerning franchisee recruitment. Asked to what extent soaring unemployment and redundancies are boosting the pool of available talent, 77.5% say significantly, of which 32.5% say this applies to both the volume and quality of candidates, 25% in terms of volume but not quality, and 20% in terms of only quality.
Thirty-four percent of franchisors use online advertising such as pop-ups and banner ads, but this hasn’t eclipsed old media, with 39% still using trade and other print press and 29% exhibiting at trade shows.
