Recently the Franchise Council of Australia published The State of Franchise Report and we are sure everyone is talking about the results shown which are so encouraging.
It shows the franchise sector is composed of 94,000 franchise outlets (nearly 10% of the 1 million businesses employing staff in Australia today by my rough calculation), generates $174 Billion into Australia’s economy, and employs almost 600,000 people. This is significant.
The thing these stats hide though, is that the sector is not just represented by the big franchise brands everyone knows.
Examples from the big players.
Yes, the big players are very visible – Jim’s Group, 7-Eleven, and Subway take pride of place, each with thousands of outlets and people involved. But this big group includes some surprises too. Metcash, which owns IGA (every IGA store is a franchise) seems to top the list alongside Harvey Norman and then Maccas. But think about Jetstar Group which is owned by Qantas and has franchised its Singapore, Japan, and Vietnam operations to be managed in those countries. And IKEA which is owned by the Swedes with franchises in Australia and elsewhere. Not to mention Elders Rural Services with about 91 franchised outlets, and virtually all the fuel and car dealerships through Australia.
But the small players take up most of the field This is where most of the franchise brands lie, and some are very different. The IBIS World report notes the range is vast from cars to childcare. The FCA report shows that the sector is predominantly made up of small business with fewer that 20 employees. 95% of all franchisors and almost all franchisees sit hidden in this group. The IBIS World report remarks that the past few years have been tough, and we think especially on these smaller franchises. COVID had a big impact and despite a return to COVID normal trading conditions, IBIS World notes mounting cost of living pressures have made it difficult for businesses to regain lost ground. We are all feeling the pinch.
But it is this sector which is worth a look because it is where the variety and potential lies. The big thing is the diversity. There are a few reasons. The new growth areas Although still at the top of the list are retail outlets, restaurants, and quick service food outlets, it is the sections called ‘other’ or ‘personal services’ that we think are exciting. The reason – COVID again – we see the franchise market changing in response to the demand for personal growth, personal service, and escape. Our workshops and enquiries are more and more filled with those in the service industries – NDIS, beauty, creative arts, home renovation, recreation…
Here are some we have come across and note some of the examples have been around for years.
Paint and Sip Studios
We love this concept where friends can meet up over food and wine (well not for the kids!) and express their creativity with lots of fun. They opened in 2018 and today have studios and mobile units. The group is 44 franchisees, and 73 franchisor units. They operate everywhere in Australia except the Northern Territory and have plans to go there too. This growth in just 5 years is remarkable. The thing about these outlets also, is that they grew the enterprise through COVID and are still expanding. Paint and Sip are no orphans, there is a demand we see across all the creative arts to experience this kind of escapist, relaxing, fun activity that gives time away from all normal work and family life.
Happy to keep it small
There are many who choose to franchise, not because they have great ambitions to build an empire, but to help them better manage business at their own scale. Done properly, franchising does help with managing staff and the daily tasks of delivery and sometimes sales, but it comes with added responsibilities for looking after your franchisees. Keeping the group small reduces the problems that can come with that. These guys have successfully found their balance and we see a lot of groups happily not choosing to grow enormous.
Old Macdonald’s Travelling Farms
They bring the farm to you and no event is too small or large – we believe they attend the Easter Shows each year. Key here is the fact they love their animals as much as they love the kids they entertain. And it shows in the cute, cuddly unstressed creatures they take around each year. Established as a franchise in 1991, these guys have been around for years, but they have just 10 outlets. They can be found in the Eastern States and WA. What they show us is that you don’t have to be huge to be successful. It depends on your objectives, and it looks as though here it is the care of the animals that is the priority.
Sandwich Express Holdings
This is such a good example of a regional franchise where the franchisor obviously is using this model to run a great very specialised business in one town (Townsville) with three franchisees. They only serve sandwiches (well – croissants, muffins, wraps too but you get the drift) and are happy with how this is going. We come across many small family run regional franchises which fit this niche mould.
Little Boomer’s Basketball
New but with an eye to future expansion. These guys have only been around for two years in NSW and have 4 franchisees with 1 the franchisor is running, which is good going in that timeframe. Their website shows expansion is on the horizon for them and with a clear love of the game and the kids, they will be successful we believe.
To conclude
The mind-boggling scope and flexibility of the franchise model is clearly illustrated when comparing two 30-year-old examples: Old McDonald’s Travelling Farms with 10 outlets and Poolwerx who have expanded their model to 550 units and growing.
So, there you have it. Is there any other approach to business growth that offers such prospects together with the benefits that franchising affords?
It is exciting to see the wide range of businesses that explore franchising as another model to help manage their business and more exciting to see the range expand.
Just remember, there is one thing that keeps each of these groups successful – look after your franchisees and they will look after you.
Read full article – Business Franchise Australia – The Myriad of Franchise Brands in Australia Today
Brian Keen has been involved in the franchise industry for more than 30 years and Prue has been involved with systems and business for as long. Together they founded Franchise Simply, Systems2Grow and Microloan Foundation Australia. Brian’s on-the-ground business experience as a multi-unit franchisee, franchisor and consultant helping many of the big names create their own franchise systems and growth over the years combined with Prue’s structured approach has been fed into Franchise Simply, helping today’s SMEs and Franchisors grow their business by franchising
www.franchisesimply.com.au | www.systems2grow.com