Franchising Still Popular

Border Mail:

For many Australians the prospect of being their own boss holds immense appeal, which could go a long way to explaining the popularity of franchising.

In fact, according to the Franchise Council, Australia is the most franchised nation in the world, with a new franchise system created every five days.

There are a variety of franchise models, but one of the most popular is where the franchisor markets a service, or product, under a common name and standardised business system, through a network of franchisees.

In many ways, buying into a franchise improves the prospects of success for a fledgling business.

But the costs can be significantly greater than those involved in starting your own independent business.

While the upfront franchise fee for some service-based franchises (like home cleaning or bookkeeping) can be relatively low, the initial cost can be well over half a million dollars for retail franchises once you add in the cost of shop fit-outs, the nature of which are dictated by the franchisor.

In addition to the upfront investment, franchisees can expect to pay ongoing royalties and marketing fees to the franchisor, set as a percentage of turnover — and they can be hefty.

These costs haven’t diminished the appeal of franchising.

A report by Griffith University entitled Franchising Australia 2006 survey indicates just how popular franchising is, with around 960 franchise systems to choose from.

Choice is always a good thing but it is important for any would-be franchisees to select carefully.

There is no shortage of information either on the web or from various franchise organisations about the selection of franchises available.

However, a handy first port of call is the Franchise Council of Australia at franchise.org.au

Before you select a franchise, it pays to have a clear idea of what will be involved.

Baby boomers in particular who are keen to embrace the option of running their own business may be surprised at the sheer hard work involved.

And if you’re the creative type with plenty of independent ideas for your business, you may feel restricted by the strict trading conditions often imposed by franchisors.