Steve Jones – Managing Director, Select Your Franchise UK Ltd
Today I’m looking at what’s going on in the business world and how it might affect the franchise industry.
5 million people are paid less than the living wage
The ‘living wage’ is the basic amount that a person needs to earn to comfortably get by – in the UK at the moment this is calculated as £7.20 per hour, or £8.30 if you live in London. According to a survey by consultancy firm KPMG, one in five working adults in the UK are earning less than this amount. Advocates of the living wage, including London mayor Borris Johnson, claim that employees who earn the living wage, as opposed to the minimum wage of £6.19, are happier and better workers. KPMG state that as part of their research, they ‘have found that the improved motivation and performance, and the lower leaver and absentee rate amongst staff in receipt of a living wage means that the cost is offset and paying it is the right thing for our business.’
So, what does this mean for franchising? Those people who aren’t in receipt of a living wage are less likely to be able to scrape together the capital to pay a franchise fee, so they’re unlikely franchisees. Would you, as a franchisor, implement the living page for your employees and employees of your franchisees? It might mean higher costs to start with, but according to advocates, this can be offset by better employee results.
Work barely worthwhile for second earners because of childcare
So, you’re a two parent family with two children. Both of you work, and you both earn £22,000 per year. Strangely, due to a mixture of benefits, childcare costs, and taxes, you can end up only £4,000 better off than a similar family earning £20,000 less. The Resolution Foundation’s Counting the Costs of Childcare report shows that increasingly it pays to have one parent at home while the other works.
Franchising can offer ways around this – couples can, for instance, purchase a franchise together and work around their family commitments together. Alternatively, some franchises even offer the opportunity to take your child with you. One example of this is The Creation Station, who state that some of their franchisees bring their children to classes so that they can spend more time together. As the parents affected by this issue are generally of middle-income (earning between £17k and £42k) they would be in a resonable position to secure capital for investing in a franchise.
The economy’s on the rise!
According to Charlie Bean, deputy governor of the Bank of England, there is ‘reason for some optimism’ after recent GDP figures showed the economy grew 1.0% between July and December. We are taking his advice and not getting too excited, however, due to the possible ‘false positive’ induced by the fantastic success of the Olympics over the Summer.
Franchising has continued to thrive in spite of the recession, so there’s probably room for a spot of back-patting in the industry with news of national economic growth. Hopefully the growth will continue, and the economic climate will carry on improving.
