2005 was a bumper year for franchising according to the latest NatWest/ British Franchise Association survey, which shows that on key turnover and employment measures, 2005 was a record-breaking year. For the first time in franchising history, the industry’s annual turnover broke the £10 billion barrier, rising 13% to £10.3 billion.

The number of franchise systems is also growing at its fastest rate since 1999. There are now 759 active franchises identified in the UK, a net increase of 6% over the last 12 months. Over the last ten years, the number of active franchising systems has expanded by an impressive 60%. From 1995 to 2000 the annual growth averaged at 7%, before slowing to 3% for the remainder.

More importantly, 92% of franchisees claim to be trading profitably an increase from 88% in 2004 and business confidence remains reasonably optimistic. Almost 9 in 10 franchisors and 61% of franchisees expect their own business to improve over the coming year. This is fuelled by the fact that faith in the wider economy has bounced back, possibly after fears of higher interest rates, a house market slump and a collapse in consumer spending proved to be largely unfounded.

In the last ten years, the turnover of the franchising industry has grown 75% from £5.9 billion to £10.3 billion and franchising now employs 141,000 more people (from 223,000 to 364,000) than it did a decade ago.

The average turnover for franchised businesses broke through the £300k barrier in 2005, as turnover rose to £318,000, an increase of 9% (£27,000) from 2004. Due to the diversity of franchising, over a quarter of franchisees (27%) report an annual turnover of £50,000 or less, while at the other end of the spectrum a similar proportion claim a turnover in excess of £500,000 and 4% more than £2 million.

Mark Scott, National Franchise Manager for NatWest, said: "This has been a tremendous year for franchising and shows how the industry has gone from strength to strength, experiencing growth with all of the key indicators, such as turnover, profitability and growth. This success is a true testament to the people involved in making the industry so dynamic."

The latest survey further cements the position of franchising as a vital contributor to the UK economy as a whole. Brian Smart, Director General of the BFA, said: “In passing the £10bn mark the industry highlights something that those within it have known for some time - franchising is big business.

"Ten consecutive years of growth in the number of franchised businesses, together with record levels of employment through franchising and a new high for the industry turnover means that more businesses are generating more turnover than ever before through franchising."