Franchise turnover spirals to €2.4bn

TURNOVER in the franchise sector has jumped 15% to €2.4 billion since 2006.

The industry delivered 4,086 operating units on the island of Ireland this year and has generated 42,927 full-time jobs, according to an assessment of the Irish franchise market conducted by UCD Michael Smurfit Business School and Ulster Bank.

The franchise sector has increased job creation figures every year since 2006, when the study was last conducted.

The research showed that the average initial franchise fee is €24,638, which represents little 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 compares with €39,300 in 2006.

Similarly there has been a significant drop in total set-up costs which have dropped from an average of €226,000 in 2006 to €124,330.

Irish Franchise Association chairman David Killeen said: “We have no doubt that there has been a slowdown in the rate of franchise development over the last year, however the sector continues to grow despite the economic situation.

“Recessionary times are normally good for franchising and we have seen a huge increase in enquiries about franchising.”

Over half of franchises are in the service sector, a third in the retail sector and the minority are van based. In terms of the business sector in which franchise owners operate, the food and drink industry is the most popular comprising more than a fifth of franchisers.

Nearly a third have held a master franchise for three years or less and indigenous Irish franchises account for nearly a fifth of the franchise market.

The research found that Britain has overtaken the US as the dominant player in the origin of franchises, accounting for over a third of the market.