In uncertain economic times, the benefits of a franchised business model always appeal to entrepreneurial individuals.
Greater control and stability
With the UK having begun the year on the brink of recession, the possibility of layoffs and other job losses inevitably increase workers’ desire to secure their livelihoods. While starting your own business may be a clear way of restoring control over your finances, many will be concerned about how economic instability will impact any new venture.
For example, ongoing dissatisfaction with pay and working conditions has seen an uplift in franchise brands welcoming new employees, and investors exiting a range of frontline and public sector careers, observe Elite Franchise. According to the latest Elite Franchise 100 rankings data, in excess of 32,000 jobs have been created since January 2021 by over 120 franchise brands completing the survey. Also, 261 of those have been people from former positions in teaching and the NHS, who chose to invest in a franchise.
This year, the automotive sector excelled in the EF100 ranking, with Snap-on Tools taking top spot and Driver Hire second – titles each will hold for the duration of 2023. Since January 2021, five franchise brands completing the survey from the automotive sector have created 190 jobs, with 26 people from frontline and public sector roles opting to start a business with the support of a franchise. Unsurprisingly, franchise brands servicing the childcare and social care sectors saw huge growth, creating nearly 1,500 and over 9,700 jobs, respectively, in the past two years. These also naturally had the greatest pull for those leaving frontline and public sector roles, with 54 people joining childcare franchises and 28 choosing social care franchises to transform their careers.
Filling a fifth of the EF100 league table, the hospitality industry was a haven for those looking to commit to a new career. Having created close to 4,500 jobs since January 2021 across 19 franchise brands, the sector has welcomed over 150 former frontline and public sector workers in the past two years.
To combat the effects of an unsteady financial climate, many have found comfort and security in franchising. The opportunity to become a business owner and master of your own destiny, but with a strong support network, makes it a popular option for those who want to make a difference in both their professional and personal lives.
There are no guarantees in business, of course, but a franchise can offer a low-risk route to business ownership during challenging times, thanks to the backing of an established network, brand and model. Indeed, there are numerous reasons to be optimistic that a well-managed franchise can weather the storm of impending recessions as Justin Nihiser, CEO of the kids coding franchise Code Ninjas, reminds us. He points out that when done correctly, franchising can be a positive solution.
“Understandably, launching a business currently is nerve-racking; sadly, no firm is totally recession-proof. Nevertheless, taking the route of business ownership through franchising allows you to go into business for yourself, rather than by yourself,” said Nihiser.
“An independent owner may feel isolated in their predicament when the going gets tough. As a franchisee, however, you have the advantage of a system that can assist you in all areas of running your business, not just in difficult times. Due to the ongoing support a franchisee receives from the franchisor and wider franchisee network, franchises frequently have a greater success rate than independently owned businesses, regardless of market conditions.
“Anyone wanting to launch will unavoidably find it more difficult to secure funding during a recession. Lenders, however, look more favourably upon requests for money to support a franchise with a successful track record, rather than an independent initiative, which can be perceived as higher risk.
“Since all of the costly and time-consuming mistakes and diversions have already been made, franchisees benefit from a tried-and-tested business model that can get them on the road to success right away.
“Finding a franchise that is not only in your desired industry, but also established, will ensure you have the best possible backing, while making a living by doing what you love. Established franchises often have strong brand recognition and a positive reputation, making it easier to attract customers and generate revenue. They will have dealt with a range of economic conditions, with the expertise and knowledge to react quickly to evolving consumer purchasing trends. This expertise and the backing of a reputable brand give franchisees a likely advantage over competitors in the market.”
Even in the current financial climate, success stories are still commonplace.
“Although a significant percentage of the population has less disposable income nowadays, there are some commodities and services that people simply cannot live without,” Nihiser continued. “This means that if you do your research and select a franchise that is considered essential, there’s a market you can tap into. For example, the need for respectable and well-established coding education services for kids has grown exponentially as a result of the pandemic, when parents saw first-hand how screen time can give their children a rewarding and contemporary education. At Code Ninjas, our franchisees are successful because parents continue to value possibilities that benefit their kids’ professional and personal growth.
“Investing in a franchise can offer security, stability and support. By choosing a well-established and recognised brand, they can minimise risk and maximise chances of success. The franchisor’s experience, support and resources can help franchisees navigate the ups and downs of the market, providing a solid foundation. It may well be the right choice for you.”
Age no barrier
The appeal of becoming your own boss has seemingly never been greater. In fact, 30% of UK adults are considering launching their own business, of which 48% were between the ages of 18 and 24 – equating to more than two million budding entrepreneurs. But it is not solely those just beginning their career… as 60% of those aged between 45 and 54 claimed they would launch their own business alongside existing caring responsibilities (Enterprise Nation, 2023, An enterprising nation! A third of UK adults are thinking about starting a business in 2023).
Despite such large numbers having high business ambitions, 43% of aspiring entrepreneurs across all ages do not believe they will set up their own company (SME Loans, 2020, 64% of Britain’s workforce wants to set up their own business), suggesting business failure is still a huge concern. And this is where franchising can offer the ideal solution.