March 26, 2013
Stronger regulation would help challenge widely held misconceptions about the franchising industry, according to franchisors polled in a
The most widely held mistaken belief, say franchisors, is that 'franchisors take a slice of the franchisee's profits with franchisees receiving little in return'.
Ninety-eight percent of franchisors believe this view is commonly held, even though franchises provide training and ongoing support, national marketing campaigns, bulk-buying discounts and the right to trade under a recognised brand, among other benefits.
A majority - 71% - agree that inadequate regulation allows a minority of unscrupulous or incompetent franchisors to tarnish the entire industry. There are no laws specifically governing the UK franchising industry, whereas franchisors in
must comply with stringent, statutory regulation.
Of six myths, 'most franchises are in the fast-food sector' came second in the poll with 93%, even though fast-food franchises only account for 5% of opportunities on FranchiseSales.com.
'A franchise is no more likely to succeed than a start-up' polled 80%, despite nine out of 10 franchises classed as profitable and an annual failure rate of less than 5% (BFA/Natwest Franchising Survey).
'Franchisees earn very little' polled 79%. The likes of Dream Doors, a kitchen refit franchise where some franchisees generated £100,000 in the first 10 weeks, would strongly challenge such assertions.
, director of FranchiseSales.com, says:
"What is perhaps most surprising is the overwhelmingly affirmative response each statement received, with three-quarters of respondents agreeing with every statement to at least some extent. If this is a reflection on the way the franchising system is perceived by newcomers to the concept, it is understandably irritating for franchisors.
"Challenging these misconceptions at the earliest possible stage will go a long way to establishing the trust essential to making the franchisor-franchisee relationship work."