Why franchise in Australia?
By Phil Bain, Franchise Alliance Being an English migrant to Australia back in 1974, I find this an amusing question to address. My immediate flippant reaction to such a question is to reply, “Well, apart from the climate, the beaches, the lay back attitude of the populous, the outdoor lifestyle, the high standard of living and a relatively stable economy compared with the rest of the Western World, why indeed would you bother”. Would any Franchisor in the UK not want an excuse to visit our shores on a regular basis? Most of you have relatives Down Under as well as business ambitions. But rather than dwell on the emotive issues perhaps we should look at some facts which may entice you South. According to research, Australia is the second highest franchised nation per capita in the World, and three times that of the Americans. It is our respected neighbours, the Kiwis, that lay claim to the number one position, but much to their chagrin they are frequently included as another Australian state in Australasia when foreign Franchisors view and grant rights to our shores. The benefit of this is obvious in that the general acceptance of franchising as a business model is very high indeed. Both within the business community at all levels, but also with potential small business owners (Franchisees) and indeed, the general public consumers who are used to seeking out the leading, safe, and usually franchised brands. Our shopping centres are now at the stage where there is very little point of difference from one to the next as the franchised brands dominate the retail market place. But franchising has invaded almost every aspect of business and a vibrant mobile sector also services the needs of every day Australians. Statistically, we rely upon research completed by Professor Lorelle Frazer of Griffith University in Queensland, who conducts a bi-annual survey on behalf of the Franchise Council of Australia. Some of the key pointers from her October 2008 findings are:-
So our franchise sector remains very buoyant and out performs the small business sector consistently.
Our general lifestyle, tastes and opinions are probably closer to Britain than any other country in the World and the Kiwis are probably closer again to you than ourselves, but our historical ties remain extremely strong. Our law is based upon yours but with regard to franchising is certainly stricter. We have an area of law specifically to cover franchising called the Franchising Code of Conduct which was brought into play in 1998 and as of March 2008, all foreign Franchisors must also abide by it. Thankfully, so far the law is Federal and covers the entire country, unlike our colleagues in the USA, still struggling with interstate variations.
I am firmly of the view that there is nothing in our Code that any decent, morally sound Franchisor would not wish to comply with anyway. But the legislation has certainly served to “clean up” the franchise sector in our country. If you are a cockney wide boy Franchisor – don’t bother coming – our law will get you eventually.
The Australian Competition and Consumer Commission (ACCC) is our sector watchdog, administering and enforcing the Code, and they have done so with vigour and success.
What this means in practical terms for a UK Franchisor is that you cannot use your home documentation and you must create Australian documents. So there is a cost involved, which I have seen, vary from A$15,000 upwards. Often this cost can be passed wholly or partially to an Australasian Master Franchisee.
The New Zealanders are yet to instil legislation and rely upon their Association Voluntary Code.
The Franchise Council of Australia (FCA) is well known to your British counterparts and our Chair was World Franchise Council Chair last year. Without wishing to offend, I believe the FCA is a far stronger organisation than the bfa being very active in Government negotiations and education on franchising as well as providing substantial benefits to Members and frequent activities. Their website www.franchise.org is well worth a visit and the accompanying Franchise Directory will take you to a well organised and categorised list of members and Advisors. Consequently, membership of the FCA is almost compulsory if success is sought in Australia as any advising lawyer or accountant will be very wary of non members.
But then if you consider coming to Australia, whilst we are arguably brothers, every country has its nuances and peculiarities and ours is no different. I implore you therefore to not just sell a Master right but to set up a pilot operation to prove that your business will work on our shores. I give the same advice to our Franchisors wishing to go to your country.
The correct process is to have a Company such as ours conduct a Feasibility and Entry Plan before you even set up the pilot. Far better to have a negative result from such research than to tarnish your brand with failure.
Don’t expect the World either, we are a sophisticated and affluent market despite our harsh nasal accent and knock about reputation, but are a small country in population, a little over 21 million and around a third of your size. Our concentration is along the East Coast and new entrants are well advised to focus on Brisbane, Sydney and Melbourne as the cost of servicing franchises in our vast country can be horrendous. Indeed it is best to establish a core in one of those towns alone before venturing to the others.. Those three centres alone are 2,000km’s apart and Perth is further again way over on the West Coast with Adelaide in between.
Australian’s are a fun loving nation and willing to embrace new ideas and concepts from abroad. We are predominantly Western but increasingly influenced by our other Asian neighbours in our tastes. We are a real mix of cultures and we just may prove to be a great new market for your franchise. Why don’t you give us a try, if only for a holiday to start with?
About the author - Phil Blain
Phil is a Director of Franchise Alliance Australia, is a past Board Member of the FCA and immediate past President of the Victorian Chapter. He holds numerous qualifications in franchising and can be contacted as follows.
www.franchisealliance.com.au
phil.blain@franchisealliance.com.au
Tel: 61 3 9501 2990
Fax: 61 3 9501 2991
