Might 2023 be the year of the franchise?

Franchising

11th October 2022

By richard

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There are many different statistics that point to why franchises are such a popular option for aspiring entrepreneurs and have higher success rates than running an independent business. In fact, according to a recent survey, 80% of new franchise businesses are still running after their first five years.

Franchising has always played a key growth role in the UK’s hospitality sector, but now there are many different brands looking to build a national and, in some cases, international presence through this route. While burgers, pizza and coffee still dominate the sector, dessert, bubble tea, craft beer, noodles and Indian street food are among those up-and-coming categories looking to gain market share.

For some, it has provided a chance to move from employee to entrepreneur, McDonald’s franchisee Dean Chapman, now operates four McDonald’s restaurants under franchise within his HFLC Restaurants business having previously been an employee at the head office.

Over the past three years Harrison have been working with Marugame Udon and Tempora and their investment teams, Capdesia and Torridol Holdings, using our Global Brand Transfer Methodology to translate this popular Japanese brand for the European consumer. To help support the roll-out plan Marugame has recently appointed a Head of Franchising to search for experienced franchise partners across Europe.

Likewise, Stuffed, the London stuffed gelato doughnut concept founded during lockdown by Ikram Hussain, is set to expand through franchising. It already has ten franchise sites lined up, including its debut regional site, while a second company-owned site is in the pipeline too. The first Stuffed opened in Shoreditch last summer, since when it has been exploring expansion through franchising. Two franchisees have now signed up to open five stores each, with the first of them set to open in High Wycombe before the end of the year.

The sector also continues to attract investment. Earlier this month, Soul Foods Group, a multinational quick-service restaurant franchisee with almost 400 sites across the UK and Canada, received a “significant” minority investment that will be used to double its portfolio in the next five years. A consortium of leading institutional investors, formed of Centerbridge Partners, Metric Capital Partners, and OpCapita, made the investment. The founding Janmohamed family, led by Aly Janmohamed, will continue to be the majority owner of Soul Foods Group. The capital will be invested in new site development, renovating existing site infrastructure and acquisitions. Since being founded as a family-run, single-store operator in the UK in 1985, Soul Foods Group has grown rapidly. It is among the top three largest franchisees of KFC and Starbucks in its chosen markets and manages restaurants for Burger King and Taco Bell.

And then there are those looking to repeat their initial success in the UK, overseas. Artisan dessert restaurant Heavenly Desserts is set to make its international debut in the coming weeks. The company, which opened its first store in 2008 and now has circa 45 UK sites, already has master franchise agreements in place for countries including the US, Pakistan and Denmark.

During periods of uncertainty, a franchise model can offer a low-risk route to expansion and ownership, offering the backing of an experienced network and brand and a proven business model. It is not surprising then that many operators and businesses have already started down this path, and several more are set to follow, giving themselves the chance to expand into more white space and weather the expected downturn to come.

Over the past 34 years Harrison have built up a wealth of expertise and know-how across the franchise sector, working with global brands such as Hard Rock Café, TGIF’s and Hilton to develop brand compliant, cost effective and commercially successful projects. Can we help you?

We are hosting an invitation only franchise event with our strategic legal partners, Fieldfisher LLC at their offices, Riverbank House, 2 Swan Ln, London EC4R 3TT on 17th November 2022 at 11am. Join us for an informative discussion on how to adapt and export your brand successfully though franchising into new markets.

Please contact me if you’d like hear more – richard@weareharrison.com

Is 2023 going to be the Year of the Franchise? We think it might be.

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