Is the franchise business model growing or in decline? And what role does franchising play in our economy? The 2016 Franchising Australia Report has all the answers…
While retail growth has been fairly flat in recent times, the biennial report found that sales revenue across the Australian franchise sector has grown by $2 billion since 2014, to an estimated $146 billion.
The franchise sector added 11,000 new jobs over the same period, now employing a total of 472,000 staff.
However, there has been a small drop in the total number of franchise brands operating in Australia, falling by 40 since 2014 to reach 1,120. Despite the number of brands dipping slightly, the volume of franchise units has continued to grow, now totalling around 79,000.
“Whilst the number of brands has declined, individual franchise systems have grown internally, with modest increases in the number of franchise units,” said Professor Lorelle Frazer, director of Griffith University’s Asia-Pacific Centre for Franchising Excellence, which conducted the study in partnership with the Franchise Council of Australia.
“Franchise brands have continued to merge and consolidate to remain sustainable and to grow,” she said.
Most common franchise industries
Non-food retail is the dominant franchise sector in the marketplace, accounting for just over a quarter (26 per cent) of all franchise brands.
Other major franchise players include:
• Accommodation and food services (19 per cent)
• Administration and support services (15 per cent)
• Other services – including personal services, automotive repairs and IT (10 per cent)
As well as the aforementioned figures, the biennial report on the franchise sector has revealed that:
• The majority of franchise brands are well-established in this business model, with 60 per cent having operated as a franchise for more than 10 years.
• The total start-up cost for a new retail franchise unit is $287,500, compared with $59,750 in a non-retail franchise.
• The proportion of franchisees involved in a formal dispute with their franchisor remained static at 1.8 per cent.
• Almost a third (32 per cent) of franchise chains are franchising internationally.
• Only one third of franchise brands engage in online sales, demonstrating the dominance of face-to-face services for franchise chains.