Frustrated entrepreneurs seek franchise fortunes

Published on Saturday 16 May 2009 14:21

THE recession has sparked a surge in the number of Scottish entrepreneurs turning to franchising as a way of setting up their own business, according to figures from the British Franchise Association (BFA).

The BFA says the problems with securing credit for conventional start-up firms has made franchising an attractive option for many aspiring entrepreneurs as they are able to start a business beneath the umbrella of a parent company.

Established business-owners have also found it a more secure method of expanding their companies in the current economic environment.

Employment in the franchise sector in Scotland has risen by 1,500 in the past year against mounting unemployment in the wider economy. The annual turnover of Scottish franchise operations now stands at 800m, shared between 476 brands such as McDonald's, Domino's Pizza and Toni & Guy, the hairdressing chain. In the past year there has been a seven per cent increase in the number of franchise brands operating in Scotland.

"The economic climate is tough but our members are reporting steady enquiries from potential franchisees," said Brian Smart, director general of the BFA.

"Many people are realising the benefits that ethical franchising can offer, such as being less risky than starting on your own as the business model has been proven and the franchisor offers a great deal of support to help the franchisee succeed in business."

The BFA will hold a series of events to encourage further growth in the sector during Scottish Franchise Week between 1 and 5 June.

Scottish businesswoman Denise Hutton-Gosney, who set up a children's theatre business after raising 50,000 from Duncan Bannatyne on BBC's Dragons' Den in 2007, has signed agreements with 22 franchisees to expand her chain.

Hutton-Gosney's Razzamataz Theatre Schools now has 30 branches throughout the UK.

She said: "We saw there was huge demand for what we were offering as we were doing something different. However, the problem was there was just one of me. It quickly became apparent that franchising offered a good way to expand the business."