n e w s f o c u s
With an industry currently valued at
£10.8 billion and some 93 per cent*
of franchisees running a profitable
FEEL GOOD
business, is it really all doom and gloom?
ABOUT
Franchises, as opposed to independent
small businesses, can be better
equipped to deal with a difficult
FRANCHISING
economy, according to Cathryn Hayes,
Head of Franchising at HSBC Bank.
“Everlasting economic growth does
not exist and planning ahead is good
In his New Year speech, Gordon Brown’s
management practice. This is where
the strength of franchising comes into
economic forecast seemed somewhat
its own – most small business owners
bleak. He addressed the nation with the
would not be looking ahead to ensure
need to “steer a course of stability through
that their business is in good shape in
case of a downturn,” she asserts.
global financial turbulence”, describing the
international credit problem as “the most Standing strong
immediate challenge for every economy”.
There are various ways of strengthening
Vesna Siljanovska asks the financial experts
your armour, should there be a financial
crisis. Cathryn advises: “Have a clear
what does such an outlook mean for the
view of where the business is going and
franchise sector? what your aims are for expansion…
Keep good financial records and
forecasts as this way you can apply for
new finance before you need to use it.”
Cathryn adds: “Ensure you understand
how financial ratios work as they are
good indicators of a business’ health;
these are what banks use to assess your
financial health.”
Richard Holden, Head of Franchising
at Lloyds TSB, further asserts that
“commercial failure rates for franchisees
are significantly lower than reported
figures for independent businesses.
“There is a wide variety of franchise
opportunities available across a broad
range of industry sectors and some are
better placed than others to withstand
a downturn in the economy.”
Research pays
Planning for the future is a necessary
component for success, while
researching the market to ensure that
your product or service is in demand is
also essential.
* Figures quoted from NatWest/bfa survey 2007
Franchisor News | 22
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