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LATEST AUSTRALIAN RESEARCH REVEALS FRANCHISE SECTOR STRONG THROUGH DOWNTURN

by Media Release October 2010,
last updated 14/10/2010

in this article:

The latest franchise research from Griffith University shows the first decline in numbers of franchised systems and units in Australia since 1998, but other indicators provide evidence the surviving franchises are growing.

The Australian franchise sector is still strong despite a decrease in the number of franchise systems following the economic downturn, according to new research findings.

Lead researcher and Director of Griffith University’s Asia-Pacific Centre for Franchising Excellence Professor Lorelle Frazer released the findings of the Franchising Australia 2010 study this week at the National Franchise Convention, hosted by the FCA on the Gold Coast.

Professor Frazer said although a decline had occurred the consolidation of the sector was a positive outcome as many systems had been small and unsustainable.  

“The number of franchisors declined 7 percent over the last two years, from 1100 in 2008 to 1025 in 2010.  Previously the number of franchisors had grown steadily since 1998,” Professor Frazer said.

“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 the surviving franchises are growing despite the economic slowdown, and the majority of closures were in retail, reflecting the broader Australian retail sales slump.”

There has also been a slight decline (2%) in the number of franchise units since the 2008 study, with nearly 70,000 franchise units still operating in Australia.

The Franchising Australia 2010 report also reveals a shift in employment trends, Professor Frazer said.

“The proportion of people employed on a casual basis has increased”, Professor Frazer said.

“In the previous Franchising Australia study there had been a shift towards increasing part-time permanent employees, however that trend is now reversing back to casual employment.

“The findings suggest the sector has adapted to suit the current economic conditions, and the majority of franchisors are proactively investing more in staff training and marketing in order to build and protect their brands.”

Overall the Franchising Australia 2010 research shows the effect of the economic downturn has been reasonably mild to this point in time.

“The Franchising Australia 2010 findings show the overall size and contribution of the sector remained reasonably stable despite the impact of the global financial crisis,” Professor Frazer said.

“However a longer term analysis, to be provided in the Franchising Australia 2012 study, is necessary to draw meaningful conclusions.”

The Franchising Australia 2010 research team includes Professor Frazer, Asia-Pacific Centre for Franchising Excellence Deputy Director Dr Scott Weaven and Centre Researcher Dr Kelli Bodey.

Vist: www.franchise.edu.au/franchise-research--franchising-australia.html for a full copy of the Franchising Australia 2010 report.


Additional Franchising Australia 2010 fast facts:

·        The franchise sector is estimated to contribute $128 billion to the Australian economy.
·        The retail trade industry continues to dominate franchising with 26 percent of franchisors and 24 percent of franchise units involved in retailing.
·        91 percent of franchises operating in Australia are home grown.
·        A quarter of franchisors reported they had made operational changes in response to environmental concerns, including adoption of green products and services and environmentally-friendly packaging.
·        The proportion of franchisees in dispute with their franchisor is estimated to be 1 percent, which is a slight decline compared to the 2 percent in 2008.
·        28 percent of Australian franchisors are operating internationally, with New Zealand the most popular destination.

/ends

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