Franchise Brands plc Annual Report and Accounts 2018 05 Financial Statements Strategic Report Governance One of the factors underpinning the success of franchising is that the failure rate for a franchise business remains very low. According to the 2018 bfa/NatWest survey, fewer than 1% per year of all franchise businesses closed due to commercial failure in the first five years. The high success rate for franchises across the industry is a result of the number of well-established brands, proven business models and the wide range of support provided by the franchisors. In addition, the 2018 survey pointed to record levels of profitability with 93% of franchisees claiming they were profitable. The 2018 bfa/NatWest survey also showed an increasing proportion of franchisees are now managing sizeable businesses. 40% of franchisees surveyed had sales of more than £500,000 and 61% of franchisees surveyed had sales in excess of £250,000. Three quarters of all franchisees employ staff and 30% employ six or more staff. While around 70% of franchisees are male, the indications are that around 65% of those employed within franchise units are female. Furthermore, more females are becoming franchisees, with a 20% increase since the 2015 bfa/NatWest survey. In addition, more people under the age 30 are also getting into franchising with 18% of all franchisees now under 30. Finally, the survey also showed that multi-unit franchising is on the increase, with 36% of franchisees now owning more than one unit. This compared to only 25% in 2013 and 29% in 2015. New franchisees who are female 37% Franchisees under 30 years old 18% Turnover of six out of ten franchised units £250,000+ Women employed in franchise businesses 65% Franchisees claiming profitability in 2018 93% DEMOGRAPHIC PROFITABILITY (2015: 17%) The proportion of female franchisees in 2018 is the highest since the bfa/ NatWest survey began, with 30% of all franchisees being female. Franchisees with multiple units 36% SCALE (2015: 29%)