Big Rise in Number of Failed Franchises; TOP TEAM: Terry and Liz Lucking, Right, Employ Cara Clarke and Luke Clarke

Article excerpt


FRANCHISING failures are on the up, with more than 1,300 changing handsbecause they were not working, were bought back by their franchisor, or wereclosed down.

About four per cent of the market failed last year, compared with just 1.3 percent the year before, according to this year's NatWest/British FranchiseAssociation survey.

Most often the franchisee was changed, but a large proportion were bought backand a similar number closed.

One factor could be the growing popularity of the sector, with more businessestrying to franchise, some of which will inevitably fail.

Pip Wilkins of the British Franchise Association says: 'People have to realisethat when they are becoming a franchisor they are not going to be so hands-onbut managing franchisees.' First-generation franchisees are also reachingretirement age and looking to sell or pass on their businesses.

But while more than four out of ten franchisees had discussed their retirementwith their franchisor, more than half had no firm exit strategy. Franchiseesneed to plan their exit with their franchisor at least three to four yearsbefore stepping down, advises NatWest's head of franchising, Graeme Jones. …