The most recent Irish Franchise Association Survey (2010) reveals an increase to €2.4 billion in revenue and 42,927 jobs in the Franchise Sector
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The Irish Franchise Association today announced results of the latest all-Ireland Franchising Survey; An Assessment of the Irish Franchising Market in 2010 conducted by UCD Michael Smurfit Business School in association with Ulster Bank. The survey highlights a marked increase in turnover for the Franchise sector to €2.419 billion representing an increase of 15% since the last survey in 2006. In total the Irish franchise industry has delivered 4,086 operating units on the island of Ireland and has generated 42,927 full-time equivalent jobs to the economy. As well as generating employment directly there are also additional indirect jobs created due to the existence of the sector. In a time of economic downturn the franchise sector has increased job creation figures every year since 2006 year and positively contributed to the Irish economy in the form of job related taxation.
The type of franchises that exist in Ireland are varied with over half in the service sector, one-third in the retail sector and the minority being van based. In terms of the business sector in which franchise owners operate, the food and drink industry is the most popular comprising of over one-fifth of franchise owners. Nearly one-third have held a master franchise for three years or less, indicative of the continued growth in the sector. Indigenous Irish franchises account for nearly one-fifth of the franchise market. Although this may be a small percentage currently, growth is evident as this has increased from 14 percent in 2006. When looking at the origin of franchise systems operating in Ireland, the UK has overtaken the US as the dominant player, accounting for over one-third of the market. An interesting finding is that new entrants from other countries such as Australia, Spain and the Far East have established themselves in the Irish market in the recent past;
The research showed that the average initial franchise fee is €24,638. This represents little to no change from the 2006 report. However, there was a significant difference in terms of the average working capital and total set-up costs. The research found that the average working capital is €21,873 which is comparable to €39,300 in 2006. Similarly there has been a significant decrease in total set-up costs which have dropped from an average of €226,000 in 2006 to €124,330. The average management services fee charged to franchisee in Ireland has increased from an average of 6.5 percent in 2006 to 8.1 percent in 2010. In relation to the advertising contribution franchisees make to the central marketing fund have decreased from an average of 2.2 percent in 2006 to 1.9 percent. It is also interesting to note that one-fifth of franchise owners do not solicit any marketing contribution from their franchisees.
Nearly all franchise owners provide an operating manual for use by the franchisee. The majority provide this information in a hard-copy format, with nearly two-thirds providing an online format and a significant number providing both. This may suggest that the trend in operating manuals is moving online. All franchise owners provide training to franchisees; this includes introducing new skills, products, methods and procedures. Half of these provide training on a short-term basis, lasting less than two weeks. This represents little to no change from the 2006 report. In terms of the length of training, it is evident that there is an increasing trend for short-term training, with half of franchise owners opting for a training period carried out in two weeks or less, which shows little to no change from 2006. However, the other two categories have changed with an increase of franchise owners opting for two weeks to a month and moving away from training that lasts over one month, shorter training periods are becoming more favorable in the industry.
Irish Franchise Association Chairman, David Killeen said "We are delighted that this survey confirms the continued strong growth in the franchise industry here despite the adverse economic conditions since our last comprehensive survey in 2006. We have no doubt that there has been a slow down in the rate of franchise development over the last year, however the sector continues to grow despite the economic situation we find ourselves in. Recessionary times are normally good for franchising and we have see a huge increase in enquiries about franchising in the sector in recent months. We look forward to our annual EXPO and Awards on February 25th and 26th 2011 in Croke park. It will give people an opportunity to see what exciting business opportunities franchising can provide. The findings of the 2010 survey clearly demonstrate the vibrancy of the franchise industry in Ireland, and its capacity to generate jobs and wealth and we would like to thank Ulster Bank for their generous assistance in supporting both the survey and our annual EXPO & Awards event
Franchising is now a significant contributor to new business start-ups throughout the country, a trend that Ulster Bank confirms in the profile of many of its start up customers. There is nothing to suggest that this upward trend won’t continue. On the contrary; franchising is making its mark around the world, as established brands, and some newcomers, expand further and further into international markets, creating global brand awareness for themselves in the process. |
