04 Franchise Brands plc Annual Report and Accounts 2018 THE FRANCHISING INDUSTRY “Franchising has been a tremendous success story over the past 35 years. In the UK, there are 935 franchise systems with around 20,000 franchisees employing over 700,000 people.” Julia Choudhury Corporate Development Director Franchising has been a great success story over the past 35 years. In 1984, when the size of the industry was first measured by the bfa/NatWest, the franchising industry was only £1bn in size and a relatively small number of sectors (such as automotive, food and hotels) had embraced franchising as a means to expand their businesses. Fast forward to 2018, and franchising is now a thriving industry with franchised businesses in a large variety of sectors, including household services, business and commercial services, retailing, fitness, transportation and vehicle services, children’s services and pet services. It's sometimes the case that customers are unaware that franchising is the means of delivery of their holiday, property sale, business accountancy service, children’s after-school activity, mobile phone, gym experience, babies’ swimming lesson, domiciliary care or car rental to name a few. The impact franchising has had on certain sectors, in particular quick- service restaurants, is well documented. A number of leading food and coffee shop brands such as: McDonalds, Subway, KFC, Domino’s, Starbucks and Costa Coffee are among the very largest franchise brands in the market. The bfa/NatWest 2018 survey also pointed to a number of additional metrics which demonstrate the successful evolution of franchising, in particular: • There has been a significant increase in the estimated number of people working in franchising over the past ten years, with 710,000 now employed in the sector compared to only 467,000 in 2008. • There are an estimated 48,600 franchised units in the UK – the highest number on record – with the number of franchisees estimated to be around 20,000. • There are 935 franchise systems, a nearly four-fold increase since 1988. Turnover generated £17.2bn Franchised units in the UK 48,600 People employed in franchising 710,000 The market for franchising in the UK is significant. In 2018 it contributed in excess of £17bn to the UK economy according to the most recent bfa/NatWest survey. Franchising industry turnover (£bn) 0 2 4 6 8 10 12 14 16 18 2018 2015 2009 2004 1999 1994 1989 1984 * Rolling for past 3 data points used in 2016 and 2018 Franchising industry turnover (£bn) 4.7 0.9 5.3 8.9 9.1 11.8 15.1 12 17.2 OVERVIEW (2015: 44,200) (2015: 621,000) (2015: £15.1bn)