5 REASONS FRANCHISING COULD SHAPE YOUR FUTURE

Franchising ticks all the boxes when it comes to setting up in business – it’s just a matter of following the formula to replicate a brand’s success at a personal level.

Why franchising could shape your future.

1. FRANCHISING IS TRIED AND TESTED

It takes courage, commitment and a hefty dose of luck to get a business up and running. So when you can piggyback on a concept that has already been developed, tried and tested, it is like taking a shortcut to success. However, as with any venture there are no guarantees.

The franchisor will have worked out efficient ways to run the business and how to market to customers; the best businesses are well structured and organised with processes and tools in place to help franchisees replicate the success.

2. FRANCHISING IS AN EFFECTIVE WAY TO EXPAND

The power of multiples comes into play with franchising, and franchisees benefit as the network grows. Retail franchisors with brand influence can negotiate leases on behalf of franchisees while increased buying power, greater brand awareness, stronger marketing campaigns and access to highly developed tools are all results of strong outlet growth.

Good franchisors will reinvest franchise fees into development, support and research to keep the business competitive.

3. FRANCHISING SUITS NOVICES

Perhaps you are highly skilled in your chosen sector, and there are certain advantages to tapping into an established brand to help further your career. However, it is common for franchisees to invest in a business without any similar experience.

Franchise systems are set up to train incoming franchisees who may lack business skills, and that makes franchising an appealing option if you want to try your hand at something new.

Good initial training and ongoing opportunities to learn best practice are a big advantage not readily available to an independent business owner.

4. FRANCHISING IS GOVERNED BY A CODE OF CONDUCT

Actively involved in keeping the sector honest, the Australian Competition and Consumer Commission is the governing body for the Franchising Code of Conduct. The code has been revised several times since being introduced in 1989 with a focus on setting up a fair balance of responsibilities and obligations between franchisee and franchisor.

Court actions and penalties result from franchisor misconduct and breaches of the code, but there is also an onus on the franchisee to act in good faith and comply with the franchise agreement.

5. FRANCHISING IS IS A SIGNIFICANT PLAYER IN THE ECONOMY

Involving about 1120 brands, Australia’s franchise sector was worth $146 billion in 2016, of which $66.5 billion was estimated to come from the sales revenue of business-format franchising (there are about 70,700 of these units across the nation). The remaining $79.4 billion was attributed to sales of fuel and motor vehicles.

Franchising is also a big employer. According to the Franchising Australia 2016 survey, 472,000 people earn their living from working in a franchised brand. About 4 per cent of Australian small businesses are franchise units.