The state of franchising in Australia

Written on the 22 October 2013

More Australians than ever are embracing the freedom offered by franchising to run their own businesses with minimal risk and access to a dedicated support network.

Conducted by the Asia-Pacific Centre for Excellence in conjunction with Griffith University and Franchise Council of Australia, the annual Franchising Australia report reveals that the franchising sector is enjoying steady growth.

Recovery and growth

Franchising was affected along with many industries during the GFC between 2008 and 2010, but it has experienced strong recovery and net growth since then. In 2012, franchising in Australia accounted for:

• 1180 business formats (up from 1025 in 2010)
• 73,000 franchise units (4 per cent increase)
• $131 billion sales turnover

Of the franchisors surveyed, half reported improved sales, profits and gross revenue margins compared to the previous year a trend that shows no signs of slowing. While 28 per cent of franchises provide international services, 92 per cent were developed here in Australia.

Most successful franchises

In 2012 the largest franchise industries were:

• Retail (27 per cent)
• Accommodation (18 per cent)
• Food (18 per cent)
• Administration/support (16 per cent)

The continuing growth of franchising has been credited in large part to non-retail industries, which expanded from an average of 15 franchised units in 2010 to 17 in 2011. Online services and eCommerce also achieved above-average growth, with nearly 40 per cent of franchise systems offering online sales to clients. However, eCommerce still accounts for less than 5 per cent of sales overall, though this figure is expected to increase every year as more businesses migrate online.

Employment opportunities

The employee dissatisfaction that characterised many industries during the GFC is continuing to motivate people to look to franchising as a desirable alternative, for the greater freedom and increased security it offers compared to starting a new business from the ground up. Franchising is also a growing source of employment, with over 400,000 Australians directly employed by franchises in permanent full-time, part-time and casual positions.

The future of franchising

The rise of eCommerce and the non-retail sector in particular is expected to continue driving the growth of franchising in the years ahead, which is an ideal fit for online services. The franchise sector contributes more to the Australian economy than other areas of small business, which will continue to attract investment from entrepreneurs, established businesses and government, and franchises with strong environmental credentials will be viewed more positively.

Contact Snap to find out more about achieving financial independence through franchising.