If you are weighing up a franchise investment, the story of XP Factory plc, the AIM-listed owner of Escape Hunt and Boom Battle Bar, is worth a close read. It offers a rare, publicly documented example of a franchisor gradually pulling away from its franchise network in favour of running sites itself, and it raises important questions for anyone considering signing up to a brand's franchise agreement today.
A network in retreat
XP Factory's interim results for the 2025-26 financial year confirm a trend that has been building for some time. Escape Hunt's franchised estate contracted by one site to a total of twenty, while revenue from that franchised network remained broadly flat at £0.3m. Meanwhile, the company's owner-operated estate kept growing, reaching 27 Escape Hunt sites by 8 December 2025, including locations in Paris, Brussels and Dubai.
This is not a one-off blip. Previous full-year results had already shown a similar pattern, with owner-operated sites rising to 25 while franchised network revenue slipped to £0.5m from £0.6m the year before. Taken together, these figures paint a picture of a company that is consistently steering resources and growth towards directly managed locations rather than franchised ones.
The buyback that tells the real story
Perhaps the clearest signal came in June 2023, when XP Factory disclosed that it had bought back two franchise sites in Chelmsford and Ealing, funding the acquisition through vendor loans. In the same period, the owner-operated side of the Escape Hunt business generated £6.1m in revenue, a 41% increase on the prior year. When a franchisor starts repurchasing existing franchised units and funnelling growth capital into company-owned stores, it is a strong indication of where its strategic priorities lie.
It is worth noting that Escape Hunt has historically operated a hybrid model, combining owner-operated sites in the UK with an international network of franchised outlets across five continents. Boom Battle Bar follows a similar mixed approach in the UK. So the shift is not a wholesale abandonment of franchising, but a rebalancing that appears to be moving steadily in one direction.
What this means for perceived franchise profitability
For prospective franchisees browsing the wider list of available franchises, the XP Factory case is a useful lens through which to assess any opportunity. When a franchisor's own owner-operated arm is outperforming its franchised network, in like-for-like revenue in this instance, it can suggest that direct control, whether through operational efficiencies, marketing investment or site selection, is delivering better returns than the franchise model at that particular brand. That does not automatically mean franchising is a poor choice across the board, but it does mean franchisees should ask pointed questions about why the parent company is investing more heavily in stores it owns outright.
Signals to watch for as an aspiring franchisee
Due diligence should extend well beyond the glossy prospectus. Anyone evaluating a franchise opportunity, whether in leisure and entertainment or in more established sectors, should look out for:
- Buybacks of existing franchised units, particularly if funded through unusual arrangements such as vendor loans, which can indicate the franchisor sees more value in direct ownership.
- Flat or declining franchise network revenue alongside strong growth in owner-operated turnover, a pattern that may point to reduced marketing or operational support for franchisees.
- Territory reviews or consolidation, which can signal that a franchisor is reassessing which locations it wants to control directly versus which it is happy to leave franchised.
- Public statements or annual reports that emphasise owner-operated expansion plans while saying little about franchise recruitment or franchisee support investment.
None of these signs are necessarily dealbreakers on their own, but together they should prompt a franchisee to ask the franchisor directly about its long-term intentions for the franchised estate, including whether buybacks are planned in specific territories and what ongoing support commitments look like.
What this means in practice for aspiring franchisees
Before signing any agreement, request recent financial disclosures covering both the franchised and owner-operated segments of the business, not just headline group figures. Compare year-on-year trends in franchised unit count and franchised revenue against the owner-operated equivalents. If a franchisor is quietly shrinking its franchised footprint while expanding directly, ask why, and get clarity in writing on territory protections and buyback policies. Franchisees considering hospitality, leisure or experiential brands in particular should study models with a clearer, more stable franchise commitment; browsing brands such as Heavenly Desserts, Papa Johns UK or German Doner Kebab can offer useful points of comparison when assessing how committed a franchisor is to its network. Staying informed through the latest franchise news is also a sensible habit, since strategic shifts like XP Factory's rarely happen overnight and are often visible in financial reporting well before they affect individual franchisees.