The state of franchising in Australia

A new report from the Franchise Council of Australia estimates the franchise sector across the Tasman to be worth A$174 billion, with 1,267 franchise systems and over 94,000 individual franchise units. The sector employs nearly 600,000 people.

The FCA’s State of Franchise report also finds that:

• 95 percent of franchisors, and almost all franchises, are small businesses with fewer than 20 employees;
• Almost 300 franchise systems in Australia have been in business for more than 20 years;
• 30 percent of franchisees have been in their franchise between 5 and 10 years;
• Nearly 40 percent of franchisees have been in their franchise for more than 10 years.

The new report is based upon a June 2023 survey of 65 franchise brands covering 19,628 outlets, meaning it is not directly comparable with the Franchising Surveys previously produced by Griffith University in Australia, or the Franchising New Zealand survey last conducted by the Massey University Business School in 2021.

The figures are broadly comparable with the 2021 findings in New Zealand, which showed 590 franchised brands, 32,357 franchise units and total turnover (including motor vehicle and fuel sales) of NZ$58.5 billion.

On business performance, the survey reflected that Australia has faced challenging conditions, too, with 36 percent of respondents reporting a reduction in their June 2023 franchisee revenue compared to the June 2022 quarter. The stronger-performing industries were seen as fitness, courier, freight & logistics, and maintenance.  

As in New Zealand, rising interest rates and the economic environment were the top concern, with continuing concerns about the availability of suitable employees for franchisees. Interestingly, over two-thirds of respondents said they were worried about data security and the risk of criminal conduct.

The next New Zealand Survey is due to take place in 2024.