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(Last updated: 17 Aug 2009)
Overview
Although relatively mature, the Australian franchising sector experienced solid growth of 14.6 per cent from 2006 to 2008. Currently there are around 1,100 business format franchises in Australia. Of these, 91 per cent are of Australian origin.
There are an estimated 63,500 units operating in business format franchises, employing around 413,500 people. A total of 28 franchisor organisations appeared in the 2008 BRW List of Top 500 Private Companies in Australia.
The majority of franchising continues to take place in retail trade, which accounts for 28 per cent of franchisors. Accommodation and food service (including ‘fast food’) franchises represent 16 per cent of franchisors. Administration and support services (including travel agencies, office services, domestic and industrial cleaning, gardening services and lawn mowing) account for 15 per cent of franchisors.
International franchising opportunities also exist with an increasing number of markets opening up and franchising almost universally accepted as a way of doing business. More than one-quarter of Australian franchise systems have international operations, contributing millions of dollars in export income from royalties and franchise fees.
Two-thirds (68 per cent) of the international franchised and company-owned units were located within the English-speaking nations of New Zealand, UK, Canada and USA. Some 12 per cent of units were held in Europe and the remainder were mostly in South-East Asia.
The opportunities, however, do not apply in equal measure across all Australian systems or markets. Individual franchisors need to assess their own readiness and capability to export, as well as undertaking comprehensive market research, before going anywhere. Most franchisors entered international markets within the last eight years and held a median of 20 units in the domestic market prior to venturing overseas.
(Source: Franchising Australia Survey 2008)
Key opportunities
Social and economic trends such as an ageing population, increasing disposable incomes, single parent families, health and fitness and Internet usage are a good indicator of opportunity areas in franchising. These trends can translate into demand for products and services such as aged care and child care, retirement planning services, recreation services for the over-55s, security services, healthy takeaway food, domestic and personal services, home improvement services, specialised fitness gyms (such as women-only gyms), and technical services such as telecommunications and IT services.
Products/services that are currently selling well internationally are:
- Retail food such as coffee shops, cafes, juice/salad/noodle bars
- Retail non-food such as homewares/home storage
- Business services, such as financial planning, tax agents
- Personal services, such as fitness training, beauty treatments
- Home services, such as home maintenance/renovation
As franchising is a business model covering many different industry sectors, market opportunities depend on the products and services being offered.
New Zealand is always popular, especially as a first market, although its small market size can be a drawback. Other English-speaking markets, such as the UK, US and Canada have well developed franchise sectors and offer a level of familiarity that tends to outweigh their distance.
Closer to home, South-East Asian markets such as Singapore, Malaysia and Indonesia also offer opportunities however, the considerable cultural diversity must be understood and factored into business plans.
High-growth emerging economies such as India and China are generating strong interest, as well as Central Europe, the Middle East, and Latin America.
How can we help you?
With a worldwide network of highly experienced and qualified staff, Austrade provides a number of dedicated and tailored services to Australian exporters.
Services include:
- Coordinating trade missions around international events such as Franchising and Licensing Asia in Singapore, SIF in Spain and IFE in Washington DC
- Conducting seminars in Australia, often with Austrade staff from overseas offices
- Undertaking market research and business partner searches
- Individualised market visit programs
- Buyer visits
For further information please contact Austrade on 13 28 78 or email info@austrade.gov.au.
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