Australian report under fire

The FranData report published yesterday questioned the number of franchise brands in Australia, suggesting that it has only been able to validate 900 brands there rather than the 1160 stated by the regular Franchising Australia study carried out by Griffith University’s Asia-Pacific Centre for Franchising Excellence.

However, FranData’s questioning of the University’s findings, along with its comments about the need for franchises to join its privately-owned Australian Franchise Registry to avoid attracting the interest of regulators, has drawn a robust response from Australian franchise educator and Franchise Advisory Centre director Jason Gehrke.

He says, ‘FranData has an obvious commercial interest in making claims about its voluntary registry of franchisors. However, FranData notes on the Franchise Registry website that it does not actually check that the documents received comply with the Franchising Code of Conduct, yet seems intent on attacking the integrity of academic research in the biennial Franchising Australia surveys, which are recognised by the Australian government.’

‘The reality is that franchising in Australia is highly regulated, and anyone offering a franchise must comply with the Franchising Code of Conduct or face financial and other penalties running to tens or even hundreds of thousands of dollars. The regulator of the sector, the Australian Competition and Consumer Commission, has the power to randomly audit any franchisor’s agreement, disclosure document and other documentation relating to the franchise at any time.’

‘So simply by offering a franchise, a franchisor must operate in compliance with the Code or suffer major consequences. The Code – and the penalties for breaching the Code – provide infinitely greater protection to potential and existing franchisees than any self-proclaimed register.’

‘Even businesses that purport to be “licences” or “distributorships” but which are actually franchises are also caught under the Code, whereas these would never be featured in any self-proclaimed registry.’

Darryn McAuliffe responds:

'The work FranData has undertaken to validate the numbers of franchise systems is purely factual. We stand by our comment that we have been unable to validate by extensive searches in all media the Griffith Uni number. 

We support the work Griffith Uni has done. However we also believe it is time that more rigorous and comprehensive data is provided to the franchise sector. That is what Frandata does in the US, to great effect, and what we are beginning to do in Australia. Our recent report contains further detailed information, and has been welcomed by the Government, regulators and those to whom it has been provided.

Frandata's work is objective, and we do not buy in to political issues or personalities in the franchise sector. We respect the work done by Griffith Uni, and we look forward to making our separate contribution to the Australian franchise sector.'

Note: the Franchising New Zealand survey of 2012, conducted by Massey University using the same methodology as the Griffith University surveys, suggested there were 446 business format franchisors in New Zealand operating 485 franchise brands. Analysis of Franchise New Zealand’s own database suggests that this is an accurate figure, or possibly even a little low depending on the definition of ‘franchise’ used.