89% of franchise units profitable in the UK in 2024

The franchise industry has faced a slight drop in profitability since the BFA’s 2018 survey, but new research shows significant growth in some areas

A majority (85%) of franchise units are profitable in the UK, according to the 2024 National Franchise Survey by the British Franchise Association and NIC Services Group.

The new research indicates an 8% drop on the 93% of franchisees who were showing profit in 2018, in the BFA’s previous survey.

However, this likely accounts for the impact of COVID-19 combined with the cost of living crisis which has caused changes in the industry. For example, 50% of franchisees now operate from home.

Meanwhile, the transport and vehicle services sector as well as the store retailing sector have taken a big hit, declining by 34% and 25% respectively.

Optimism and growth among franchises

Despite industry losses, franchisors are optimistic about the outlook of the industry, with 87% expecting improvement in their company’s condition and 53% expecting better general economic conditions.

This growth is already evident in the personal services sector and the hotel and catering sector, which have grown over the past six years by 53% and 34% respectively.

The number of franchise systems and franchise units has also grown this year in the UK. There are now 1,009 systems (an 8% increase since 2018) supporting 50,421 franchise units (a 4% increase since 2018).

As a result, the franchise sector now contributes £19.1 billion to the UK economy, which works out to a £400,000 turnover per franchise unit.

Pip Wilkins, CEO of the BFA, acknowledged the challenges franchises have faced over the past few years, while noting their resilience.

“Since our last survey in 2018, the UK’s economy has weathered some of the toughest of storms and, like many UK businesses, we have seen our fair share of losses, however as the survey demonstrates, we are bouncing back, with 65% of franchisors reporting better trading than pre-pandemic and 87% of franchisors are actively expecting an improvement in their company’s conditions,” said Wilkins.

John Spencer, chairman of NIC Services Group also commented: “The results highlight the fact that franchising continues to thrive, adapting as it does so well in times of economic adversity. The survey and journal provide a comprehensive overview of the UK franchise sector, and we hope it makes interesting reading for those both in and outside of the sector.”

Franchisees and franchisors were surveyed by BVA BDRC on behalf of the BFA and NIC Services Group. The full findings are available to read in the British Franchise Journal.