AUSTRALIAN SURVEY REVEALS FRANCHISING STILL GROWING
The latest franchise survey reveals that the sector is continuing to expand across the Tasman.
- There are approximately 1,100 business format franchisors in Australia in 2008, compared with 960 in 2006 and 850 in 2004.
- There are an estimated 71,400 units operating in business format franchises.
- The largest industry segment is retail trade, which accounts for 28% of franchisors.
- The growth rate in franchised units from 2006 to 2008 was 15.4%.
- More than 400,000 people are employed in business format franchise organisations.
- Sales turnover of the entire franchising sector was estimated at $130 billion in 2007. However, it should be emphasised that this figure includes estimated turnovers for motor vehicle sales ($37 billion) and fuel retail ($32 billion), which industries are not represented in the rest of the survey. The turnover figure for ‘mainstream' business format franchising is $61 billion.
- Some 91% of franchisors are Australian home-grown systems.
- Substantial disputes were experienced by 17% of franchisors in the previous 12 months but most disputes were only with two franchisees.
- The proportion of franchisees in disputes is estimated at 2%.
- Over half the franchisors reported that 98% of their franchisees had renewed their agreements upon expiration of the initial term.
- More than one quarter of Australian-based franchisors are currently operating internationally. New Zealand as a destination is favoured by 67% of franchisors.
- Part-time franchising appears to be a growing trend with individuals seeking a form of independent business ownership that accommodates existing employment and family commitments. Just under half of franchisors (43%) reported having franchisees that worked on a part-time basis (less than 40 hours per week) in their franchise.
The Franchising Australia 2008 survey was conducted prior to the onset of the global financial crisis. Many large economies around the world were already in or heading for recession. However, at the time of the survey, Australia's economy was still expanding and this situation is reflected in the survey findings.
The authors comment that the continued growth and maturation of Australian franchising is impressive, particularly considering the current economic outlook, a recent change of government, and a franchising sector that has faced close government scrutiny. Not surprisingly, franchisors view the next 12 months as challenging, but conservatively estimate that sales and profitability will remain constant whereas the employment market is expected to tighten.
There has been no comparable survey of the franchise sector in New Zealand since 2003. While there are some key differences between the Australian and New Zealand markets (see Buying Australian ), many of the trends could be expected to be reflected here.
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