A guide to the franchise industry in Australia

The market

The franchise industry is an important sector for the Australian economy, as it is estimated to contribute Aus$128 billion to the country.

A recent survey, Franchising Australia 2010 conducted by Giffith University’s Asia-Pacific Centre for Franchising Excellence and sponsored by the Franchise Council of Australia (FCA), has found that despite a decrease in the number of franchise systems due to the economic downturn, the Australian franchise sector remains strong.

According to Professor Frazer the decrease in franchises has had a positive impact on the Australian franchise industry, as the stronger opportunities have remained while the small and unsustainable ones have declined. Professor Frazer said: “The number of franchisors declined by seven per cent over the last two years, from 1,100 in 2008 to 1,025 in 2010. Previously the number of franchisors had grown steadily since 1998.

“The overall decline in franchise systems means only the most robust systems survive and will bring the Australian sector more in line with other developed sectors, such as the United States, where the density of franchise systems is lower. The Franchising Australia 2010 research also provides evidence that surviving franchises are growing despite the economic slowdown, and the majority of closures were in retail, reflecting the broader Australian retail sales slump.”

The report has also revealed that there has been a decline of two per cent in the number of franchise units since the 2008 study, with nearly 70,000 franchise units still operating in Australia.

Regulation

Unlike many other countries, the Australian franchise industry has specific legislation imposed on it to help protect both franchise owners and franchisors. All franchise businesses within Australia are required by law to comply with the Franchising Code of Conduct, which aims to assist franchise owners and franchisors in making informed decisions before entering into legally binding agreements and to provide a framework for dispute resolutions.

The Franchising Code of Conduct also includes provisions relating to disclosure documents, cooling off periods, marketing fund audits and dispute resolutions.

Many organisations and individuals within the Australian franchise industry are members of the Franchise Council of Australia (FCA), a not-for-profit trade association that was formed in 1983 and represents the interests of the franchise industry.

Membership to the FCA is voluntary and is open to any organisation or individual involved in the franchise industry, including franchise owners, franchisors, lawyers, accountants, banks, consultants, academics, and publishers.

Expanding your brand into Australia

Australia has a good record of both importing and exporting franchise concepts. Some of the brands that Australian-based franchisors have expanded internationally include Pack & Send, Hire a Hubby, and Gloria Jean’s Coffee.

Within Australia you will not only find household names, such as McDonald’s, Domino’s Pizza and Subway, successfully franchising across the country, but also smaller brands. Some of these include EmbroidMe, Anytime Fitness and Expense Reduction Analysts.

The type of franchise that does well is not restricted to one specific sector. Instead successful franchises range from a number of industries from pizza takeaways to those that provide financial services.

Franchise expos and events

A great way to finding more about the Australian franchise industry is by attending a franchise exhibition in the country. There are many exhibitions and events held throughout the year. Some of the largest include Franchising Expo & Business Opportunities in Sydney, on 1-3 April 2011, Franchising Expo & Business Opportunities in Perth, on 21-22 May, Franchising Expo & Business Opportunities in Melbourne, on 19-21 August.

Written by Derin Clark