KN67017 KEY NOTE FRANCHISING JUNE 1997

ISBN 1-85765-697-0

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Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

SIX KINDS OF FRANCHISING

EXAMPLES OF FRANCHISING TERMS

MARKET SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: Business Format Franchising Sectors by Market Share ( percent of estimated units), 1996

Market Size

THE TOTAL MARKET

AVERAGE TURNOVER

MARKET WITHDRAWALS

FRANCHISE SECTORS

Table 2: Gross Annual Turnover of UK Business Format Franchises (£bn), 1986-1996

Table 3: The Non-Dairy Sector of Franchising Activity (number of estimated units), 1993-1996

Table 4: The Non-Dairy Sector of Franchising Activity (number of systems), 1993-1996

Industry Background

RECENT HISTORY

THE ROLE OF THE BANKS

EMPLOYMENT

TRADE ASSOCIATIONS

TRADE JOURNALS AND PUBLICATIONS

Competitor Analysis

MARKET LEADERS BY SECTOR

Table 5: Selected UK Retailing Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 6: Selected UK Direct Selling And Distribution Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 7: Selected UK Commercial and Industrial Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 8: Selected UK Catering and Hotel Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 9: Selected UK Building Services Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 10: Selected UK Vehicle Service Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 11: Selected UK Domestic and Personal Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 12: Selected UK Cleaning Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 13: Selected UK Employment Agencies and Training Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 14: Selected UK Parcel, Courier and Taxi Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 15: Selected Leading Estate Agency Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Table 16: Selected Leading Quick Printing Franchisers by Number of Outlets and Total Investment Cost (number and £), 1997

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

CONSUMER PROFILE

PROFILE OF FRANCHISEES

REASONS FOR FRANCHISING

WHAT THE FRANCHISERS LOOK FOR

FRANCHISER/FRANCHISEE RELATIONSHIPS

Table 17: Characteristics of Franchisees ( percent), 1993 and 1996

Outside Suppliers to the Industry

INTRODUCTION

LAWYERS

ACCOUNTANTS

SPECIALISTS

TRAINING

BANKS

Current Issues

STATE OF THE MARKET

NEW FRANCHISERS

COMPANY NEWS

FRANCHISER MOVES INTO DIRECT-SALES

RESEARCH

FRANCHISE TRAINING

DISCLOSURE

SOLICITORS' INFORMATION EXCHANGE

TRADING SCHEMES ACT

Forecasts

FORECASTS 1997 TO 2001

OVERSEAS EXPANSION

DISCLOSURE

Table 18: Forecasts for the UK Franchising Industry by Systems, Franchised Units and Total Turnover (systems, franchised units and £bn), 1997-2001

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

In 1996, the combined turnover of the UK's business format franchises was £6.4bn. This was an 8.5 percent increase on the previous year's figure of £5.9bn. In 1986, this figure stood at £1.9bn.

Franchising is a modern business phenomenon. It is a business concept which can be applied to many different markets. In the broadest sense of the term, franchises are found in the rail, television, motor dealing and brewing industries; as well as in retail and catering. These latter markets are served by what is known as business format franchising, and it is this type of franchising which is the main focus of this Key Note report.

Business format franchising is based upon the granting of rights by a franchiser to a franchisee, to trade under a common brand or format. In addition to the retail and the catering markets, business format franchising can be found in 11 other markets, including dairy sales, direct selling and distribution, and quick printing.

Of the markets served by business format franchising, the dairy, or milk delivery, market is by far the largest. In 1996, dairy deliveries accounted for 19.8 percent of the total number of business format franchise units operating in the UK. However, this dominant position is increasingly being challenged by that of retailing, as demand for doorstep deliveries of milk has declined.

The future of business format franchising seems bright, with a forecast 31.2 percent growth in the number of franchisers between 1997 and the year 2001. Over the same period, the number of franchisees is forecast to increase by 22.7 percent.

Text © 1997 Key Note

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