Franchise sector defies sluggish economy

While the number of franchisors trading in Australia has fallen since 2012, the country’s franchise sector is in better shape than it was two years ago, the 2014 Franchising Australia Report reveals.

The biennial survey, carried out by Griffith University’s Asia-Pacific Centre for Franchising Excellence in association with the Franchising Council of Australia, also examines the involvement of minority groups in franchising for the first time.

“The decline in the number of franchise systems can be viewed as a positive for the sector,” Professor Lorelle Frazer, Director of the Asia-Pacific Centre for Franchising Excellence, said.

“Some small non-viable franchise brands have now exited and the remaining brands have continued to grow and prosper.

“While economic growth in Australia has slowed over the past two years, the franchise sector has demonstrated strong growth.”

The ninth biennial Franchising Australia Report was launched today (Monday) at Sydney’s Olympic Park, as part of the National Franchise Convention.

Net Growth

It shows the Australian franchise sector has experienced net growth in franchise units and sales turnover, particularly in retail franchises, during the past two years.

“This trend reflects the power of franchise brands and their acceptance by consumers,” Professor Frazer said.

The franchise sector grew by an estimated 6000 units since 2012. While the number of full-time employees remained steady, a significant rise in the employment of casual labour was recorded.

For the first time in the report’s history, a considered focus on minority groups has found that approximately 16% of franchisors actively recruit migrants as franchisees, and a further 12% intend to recruit migrants as franchisees in the future.

Only 7% of franchisors indicated that they have recruited Aboriginal or Torres Strait Islander franchisees; however, over half the franchisor respondents indicated they were interested in a program that would transition Aboriginal or Torres Strait Islander employees into franchisee ownership.

As the only systematic data collected on the Australian franchise sector, the Franchising Australia 2014 report provides an in-depth profile of the sector, as well as a wealth of longitudinal data gathered over the past 16 years.

Download the full Franchising Australia Report here.

Key Findings

  • There are an estimated 79,000 units operating in business format franchises, an increase of 8.2 percent since 2012.
  • 1160 business format franchisors in Australia now, compared with 1180 in 2012
  • More than 460,000 people are employed directly in franchising.
  • The number of casual employees increased from 138,000 to 181,000 since 2012
  • Sales turnover of the entire franchising sector was estimated at $144 billion.
  • 86% of franchise systems originated in Australia.
  • 30% of franchisors have entered international markets
  • Only 1.5% of franchisees were involved in a substantial dispute with a franchisor over the past twelve months.
  • Fully 45 percent of franchise systems engage in online sales with customers. However, online sales account for only 5% of total sales in the sector.