I am pleased to be here today, in this twentieth anniversary year of the arrival in Ireland of the world-renowned Marks & Spencer. I am happy to note that after some difficult years for all of us, Marks & Spencer Ireland is sharing in the hard-earned success of our economy which we are experiencing, with a total of four branches, including one in Cork, and a workforce which has grown from 80 to 1,250. I congratulate the company on its excellent employment record. Marks & Spencer is a fine example of best practice within the retail sector.

Your theme for the seminar is "franchising for the future". It is a timely topic for discussion. The franchise sector in Ireland is rapidly becoming a significant contributor to employment growth. In 1989 there were 1945 full-time jobs in the franchise sector in Ireland. By 1997 that figure had increased to 7,500. If present trends continue, it is estimated that 16,000 plus people will be employed in the sector by 2003.

Franchising is sometimes equated with fast food in the public perception. The hugely successful branding of franchises like McDonalds and Burger King is partly responsible for this. However, the reality is that, in the United States for example, there are 3,500 franchise systems operating across all the sectors. Many services and products are amenable to franchising, from healthcare to broadly based services such as hotels, business support and computer training and, of course, general retailing.

The increasing convergence of European markets, now gaining considerable momentum as monetary union becomes a day-to-day reality, will provide potential for Irish companies to adopt franchising as a means of growing their businesses. A small Irish company serving a local market is increasingly likely to encounter competition from a European or American franchise setting up in the same town. Indeed, with 3,500 different franchise systems in North America alone, no single business sector is free from exposure to the competitive influence of foreign franchise development in Ireland.

Opportunities for Irish entrepreneurs to negotiate pan-European master licences are almost non-existent. Exports and employment in the franchise sector must therefore be generated through the proactive development of a strong indigenous sector capable of exporting tried and tested business concepts to the European market. Such an approach will not provide instant results but, as the body of management expertise and experience in the field develops, employment growth and wealth creation will flow from it.

Success in franchising can be attributed to two factors that are relevant to sustained growth in any business. These factors are branding and a world class operating system which successful franchises place at the centre of their growth philosophy.

Their branding policy makes them instantly recognisable and their operating systems have been refined and manualised to such an extent that they can be replicated precisely in any country in the world regardless of cultural and social influences. These two strategies could equally be deployed by any company contemplating expansion, even on a more modest scale, whether it grows through franchising or by other means.

While franchising as a sector in Ireland has grown considerably in the past ten years with a turnover in 1997 of £313m and almost 7,500 jobs, the number of Irish companies who have franchised (15) is still relatively modest. Among the most successful and well-established of the Irish franchises are O'Brien's Irish Sandwich Bars (their MD Mr Sweeney will address you after dinner tonight), Abrakebabra, Supermacs and Eddie Rockets who have expanded throughout the country and in some cases internationally.

Franchising is not an area which has received much attention in policy formulation within Ireland. It was seen until relatively recently as being primarily involved in displacement of existing retail outlets rather than in the expansion of the sector. Like all simple categorisation, this narrow view is erroneous. Franchising, as you well know, can be used as a business development method which has wide applicability in a variety of service type businesses.

Looking at the occupation of franchisees in Ireland prior to establishing their business it is interesting to note that only 24% were classified as self-employed, while 17% were unemployed. As such, franchising has helped in the expansion of the 'enterprise culture' which is at the heart of the development of the Irish economy in recent years.

Many of these franchises are conduits by which manufacturers can sell their products while controlling the level and quality of service provided to the ultimate customer. As such, franchising can be viewed as a business development method and Irish manufacturers and service providers need to be knowledgeable about the method and the process and understand its implications for their businesses.

Existing Irish service businesses need to be aware of the changes taking place through the exploitation of franchising as a business model. Irish service businesses can and indeed must take advantage of the opportunities of using franchise systems to build scale and grow their businesses internationally.

Many of the trends which are driving the growth of franchising internationally are also relevant in an Irish and European context such as:

• The shift in the economy from production to service;
• The rise in the number of women in the workforce;
• The so-called 'greying' of populations in the western economies;
• The downsizing and the displacement of middle managers from established businesses;
• Newer foods and healthy eating;
• Environmental concern; and
• Increased leisure time.

These trends have given rise to a demand for services in the home, home offices, healthcare, entertainment, restaurants, retail food, and in retail services. The franchise industry has been active in addressing these needs and while many of these services are currently available in local markets, the appearance of franchise units with associated branding, advertising and standardised service can be competitive for established businesses.

A report commissioned by the Government and published in June last year, "The Franchise Option", outlines the trends which are occurring in the international marketplace and suggests a number of initiatives to stimulate the indigenous franchise sector and to overcome the barriers which Irish companies face in developing a franchise format. Many of these barriers revolve around information and advice in the areas of law and accounting and also professional assistance in re-structuring and re-focusing a normal trading enterprise into a franchise business.

While the State has a role to play in assisting the adaptation of business structures into franchiseable formats, the Irish Franchise Association has a lead role in promoting the sector, providing support and disseminating information to new franchisers. They should also ensure that professional standards and ethics are established and maintained by their members.

Under Measure 3 of the European Commission's Operational Programme for Small Business, the State development agencies will assist some pilot franchise initiatives to assess overseas markets and in managerial expertise to develop the concept. These pilot projects will be closely monitored to determine how best our development agencies can help the sector to evolve.

In conclusion, may I say how important it is for us to host such a distinguished gathering of international visitors as yourselves here in Ireland. With high employment, a healthy trade balance and an economy growing at unprecedented rates over the past several years, we take a certain pride in our economic well being. I said at the beginning Marks & Spencer has played its part in consolidating that success. The services sector as a whole, of which the retail trade is such a significant segment, is one of the principal drivers of growth in the Irish economy in the past decade. I very much hope and expect that it will continue to perform that role as we enter the third millennium.