The franchise opportunities marketplace: Q4-2011 snapshot


 

 

A greater chance of survival is overwhelmingly the most popular reason for buying a franchise, according to the latest quarterly survey from FranchiseSales.com.

The perception that franchises are less likely to fail was cited as a major motivation by nearly two thirds (64%) of respondents to the international survey.

Asked for a maximum of three reasons for buying a franchise, 36% said they wanted to “concentrate on what I do best and leave marketing etc, to the franchisor”. Thirty-five percent said they “prefer to follow a proven system” while 29% indicated that avoiding stress and long hours associated with the non-franchise start-up phase was important.

Despite year-on-year rises in demand for online services, only 14% of those polled were considering buying an internet franchise. The most popular sectors, the poll of hundreds of franchisees revealed, are fast food (37%), followed by food generally (34%), distribution (34%), home-based (28%) and retail (28%).

Asked what they looked for in a franchise (maximum of three reasons again) the biggest imperative was the recognition factor. “The brand name must be well-known” was cited by 61%, while 50% said the sector must be fairy recession-proof. 47% agreed that “it must have the potential to make me very wealthy”, and 33% wanted control over their working hours.

On the whole, franchisees were more impressed than unimpressed with the franchise opportunities they had researched. Fourteen percent were very impressed and 27% were fairly impressed, while only 11% were fairly or very unimpressed. However, 31% were neither impressed nor unimpressed.

Any notion that franchising appeals to people at a particular time of life is refuted by the latest results. The spread of aspiring franchisees was equal across age groups, with roughly one fifth of respondents belonging to the 26-33 (19%), 34-41 (22%), 42-49 (21%) and 50-55 (19%) age groups. However, over 55s accounted for 14% of the sample, while 18-25s, totalled just 4% of the total polled.

As with the third-quarter survey, 85% of respondents were male, suggesting women are as underrepresented in franchising as they are in business buying (82% of buyers were male, according to BusinessesForSale.com).

Franchisors

The most common reason for choosing franchising as a model for growth, according to the franchisor section of the survey, was the perception that it was most conducive to rapid growth.

Asked to pick a maximum of three reasons, around two thirds (67%) cited “Low capital expenditure, so easier to grow rapidly” as a driving motivation, with greater efficiency and customer satisfaction the second most persuasive reason, cited by forty percent.

A belief that franchisees are more motivated than managers was the joint-third most compelling reason to franchise a business, along with the perception that it is “less catastrophic for a unit than a company-owned store to fail”, both chosen by 23% of franchisors. The least significant motivation for franchising was the belief that the franchise model suited their sector, cited by 13%.

A positive attitude was seen as the most important attribute in an aspiring franchisee, chosen by 48% of respondents. Asked to pick qualities they sought in candidates, 38% of franchisors cited experience in running businesses – perhaps surprisingly given the support given by franchisors.

The third most important attribute in prospective franchisees was sales skills (35%), followed by sector experience (31%), customer service skills (24%), a talent for suggesting improvements (17%) and administrative skills (10%).

Finally, four in five (80%) franchisors believe rising unemployment and redundancies are boosting the pool of potential franchisees.

Jump to franchise buyer results

Jump to franchisor results

Profiling Questions

Please select your age group

 

Answer Options Results
18-25 4.1%
26-33 19.2%
34-41 22.3%
42-49 21.1%
50-54 19.0%
55 and over 14.3%
 

What is your gender?

 

Answer Options Results
Male 85.3%
Female 14.7%
 

What country do you live in?

 

Answer Options Results
Australia 6.9%
Canada 10.2%
France 0.7%
Greece 0.3%
India 25.8%
Ireland 2.4%
Malaysia 0.7%
Mexico 0.4%
New Zealand 0.7%
Portugal 0.4%
Singapore 0.3%
South Africa 8.7%
Spain 0.1%
Thailand 0.1%
UAE 1.5%
UK 20.1%
USA 8.6%
Other 11.9%
 

Are you a franchisor or franchise buyer?

 

Answer Options Results
Franchisor 8.3%
Franchise Buyer 91.7%
 

Franchise Buyer Results

What are the most important factors in choosing to buy a franchise rather than start a business from scratch?

 

Answer Options Results
Lower risk of failure 63.7%
Easier to raise finance 30.0%
To avoid stress and long hours of start-up phase 29.1%
Can concentrate on what I do best and leave marketing, etc to franchisor 36.0%
Prefer to follow proven system than having to make tough decisions 34.5%
 

Which sector(s) are you interested in?

 

Answer Options Options
Advertising/marketing 8.3%
Automotive 19.3%
B2B 7.9%
Beauty 10.5%
Care 4.2%
Childrens 8.1%
Cleaning 6.1%
Consultancy 13.2%
Distribution 33.8%
Finance 11.2%
Fitness 9.2%
Fast Food 37.3%
Food 34.4%
Green 8.8%
Home Services 12.1%
Home Maintenance 10.7%
Internet 14.3%
Leisure 11.4%
Master Franchises 19.7%
Printing/Copy/Design 7.2%
Property 16.4%
Retail 28.1%
Travel 13.6%
Van Based 8.1%
Work From Home 28.3%
 

Which of these statements applies to you when choosing a franchise?

 

Answer Options Results
The brand name must be well-known 61.2%
It must have the potential to make me very wealthy 47.2%
I must have a significant degree of control over my working hours 33.4%
I must have some experience in the sector 27.6%
The sector must be at least fairly recession-proof 50.3%
 

How impressed have you been so far with the franchise opportunities you’ve researched?

 

Answer Options Results
Very impressed 13.8%
Fairly impressed 27.0%
Neither impressed nor unimpressed 30.9%
Fairly unimpressed 8.1%
Very unimpressed 3.1%
I've only just started looking/haven't formed an opinion yet 17.1%
 

Franchisor Results

Which sector(s) do you operate in?

 

Answer Options Results
Advertising/marketing 10.0%
Automotive 6.7%
B2B 13.3%
Beauty 3.3%
Care 3.3%
Childrens 0.0%
Cleaning 6.7%
Consultancy 16.7%
Distribution 16.7%
Finance 16.7%
Fitness 3.3%
Fast Food 16.7%
Food 16.7%
Green 3.3%
Home Services 10.0%
Home Maintenance 3.3%
Internet 10.0%
Leisure 3.3%
Master Franchises 6.7%
Printing/Copy/Design 6.7%
Property 0.0%
Retail 6.7%
Travel 16.7%
Van Based 0.0%
Work From Home 20.0%
 

What are your most important reasons for choosing franchising as a model for growth?

 

Answer Options Results
Low capital expenditure, so easier to grow rapidly 66.7%
Greater efficiency and customer satisfaction 40.0%
Franchisees are more motivated than managers 23.3%
Less catastrophic for a unit to fail than a company-owned store to fail 23.3%
Franchising model suited sector 13.3%
 

When assessing a prospective franchisee, what are the most important attributes?

 

Answer Options Results
Experience in the sector 31.0%
Experience running businesses 37.9%
Enthusiasm and a positive attitude 48.3%
Sales skills 34.5%
Customer service/people management skills 24.1%
Administrative skills 10.3%
Good at suggesting improvements to business model 17.2%
Strong capacity to finance the purchase 20.7%
 

To what extent are soaring unemployment and redundancies boosting the pool of potential franchisees?

 

Answer Options Options
Significantly, both in terms of numbers and quality of candidates 23.3%
Significantly, in terms of numbers but not quality of candidates 20.0%
Significantly, in terms of quality but not number of candidates 13.3%
To a modest extent, both in terms of numbers and quality of candidates 20.0%
To a modest extent, in terms of numbers but not quality of candidates 3.3%
Not noticeably 20.0%
 

For detailed survey information plus further infographics please contact [email protected].

 

About The Author

Adam Bannister Writer
Adam Bannister writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.