2010 Irish Franchise Survey Results

Financial
The 2010 All-Ireland Franchise Survey (undertaken by UCD Smurfit Business School in association with Ulster Bank) highlighted a 15% increase in turnover, since 2006 (when the last survey was completed). The Franchise Sector in Ireland now generates annual turnover of €2.419billion.

Jobs
4,086 franchise units operate across the island of Ireland, contributing 42,927 full-time equivalent jobs to the economy. Despite the economic downturn, the franchise sector has increased job creation every year since 2006.

The survey showed that the type of franchises operating in Ireland are varied with over half in services, one-third in retail, while a minority are van based businesses.

Sectors
The food and drink industry is the most popular sector, comprising of over one-fifth of franchise owners. Growth in franchising has been strong, in recent years - almost one-third of master franchisees have held their master franchise for three years or less.

Origin of Franchise
Historically, most franchises operating in Ireland, originated from the US. Since the last survey, the UK has overtaken the US as the dominant player, accounting for over one-third of franchises operating in the Irish market. In recent years, new entrants from other countries such as Australia, Spain and the Far East have established themselves in the Irish market.

Indigenous Irish franchises historically accounted for quite a small share of the market (c14% in 2006). Since then, indigenous franchises have grown, and accounted for 20% of the market by 2010.

Costs of Entry
The survey shows average initial franchise fee is €24,638. Average set-up costs fell to €124,330, from €226,000 in 2006. Average working capital invested in franchise businesses fell to €21,873 from €39,300 in 2006.

Ongoing Fees
Management services fees - ongoing fees paid by franchisees to franchisors averaged 8.1% of sales turnover in 2010 (up from 6.5% in 2006). Franchisees typically make a contribution to the central marketing fund of the franchise, of about 2%, in addition to the management service fee.

The average marketing contribution decreased from an average of 2.2% in 2006 to 1.9% in 2010. It is also interesting to note that one-fifth of franchise owners do not solicit any marketing contribution from their franchisees.

Source: The Irish Franchise Association 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.