When a nation draws continuously on your home state as an example ofbooming business, does the reality match the hype?Western Australia has for some time been the jewel in the country's crown, and in this feature we take a look at how some franchisors view the situation.
If you're a local, the
Chicken Treat brand is a household name. For the rest of us, its highly visible sibling
Red Rooster restaurant and cafe franchise, is a popular fast food choice. They both hatched in Western Australia. Red Rooster's early footsteps were taken back in the 1970s when the Kailis family opened the Kelmscott restaurant. Coles Myer recognised the brand's potential and purchased the business a decade later. It added and rebranded the Queensland -based Big Rooster chain, which had franchised since 1979, and the alignment marked Red Rooster's first foray into franchising.
Six years ago the brand was acquired by Perth-based Australian Fast Foods, itself a subsidiary of the Quick Service Restaurants group.
While Red Rooster became a nationally recognised food outlet, Chicken Treat has been focused on becoming a WA success. Frank Romano started Chicken Treat in 1974 in Perth, introducing a Mediterranean seasoning and cooking method to Aussie chicken. Frank and his brother Joe built the business from a single shop to 39 outlets by 1988 when it was the leading fast food business in the state. By the end of the decade the brothers had joined forces with the Big Rooster founders Nick and Phil Tana, under the umbrella Australian Fast Foods Pty Ltd.
Now it has come full circle, with Frank Romano managing director of Australian Fast Foods overseeing what can only be described as a chicken empire. Chicken Treat has more than 60 stores, serves more than six million customers a year and has an annual turnover in excess of $60 million.
Frank Romano explains: "Chicken Treat is 'the Chicken Lover's Chicken'. This slogan summarises and conveys the key brand values of taste and value for money. The Chicken Treat brand operates throughout Western Australia, from as far north as Kununurra right the way down to Albany in the south. The team works hard to build and maintain strong relationships with key suppliers, ensuring a consistently high level of quality and consequently, customer satisfaction."
Romano believes the local brand will gain from the synergies and the economies of scale while belonging to a larger group and will continue to focus on growth opportunities throughout the state.
"The WA environment has always rewarded those who are prepared to work hard in business, with consumers being loyal supporters of locally grown business," he adds.
There is no doubt that the economic gains of the state have created a stimulating business environment, Romano says.
"Western Australia with its mining boom is an extremely dynamic and exciting state to live and work in. Running a business here is both challenging and rewarding. The mining boom has generated enormous wealth within the economy and this has help to propel retail sales. It has also brought challenges such as labour shortages, which impacts the efficiency of business. However this creates opportunity for those people who are looking to operate their own business. "Buying a Chicken Treat franchise opens the opportunity to be part of a significant national group, with experienced operators and well-established systems supported by a large marketing budget. In a highly competitive market, these are important aspects to consider when investing in a system."
Not only has the mining boom increased wage levels, handing out bigger bucks to invest and spend, but most WA industries have benefited says Steve Hansen, heading up Chooks.
"Because
Chooks fresh & tasty seeks out franchisees with the capacity to invest approximately $350,000, we are currently attracting people with reasonable financial capacity and business knowledge and in some cases we have gained franchisees that have previously worked in the mining industry that wanted a change and have crossed over into franchising," he reveals.
Only 10 per cent of the business lies outside the WA home base, yet there are still opportunities this side of the country, he insists.
"The opportunities for new franchising in WA are huge. There are many different business categories that are not franchised, which can be broken into and many existing franchise systems need assistance with their franchising models and how they derive business, which leaves the door open for innovators.
"From a franchisor point of view, WA is particularly insular from the rest of Australia and the world. WA is considered remote by many as well as able to look after its own economy – and we do. Our state is quite competitive in comparison to the franchising industries in other states and it is an excellent area to establish a brand or business."
For David Shimell, national franchising manager at print company Worldwide, there is no question that a WA home base has been good for business growth.
"The strong economy in WA has been good for most businesses, Worldwide included and WA offers a fantastic lifework balance. Thirty per cent of Worldwide's overall sales come from WA; this is disproportionate relative to the number of franchises in WA (23 per cent). It's reflective of a strong economy, and also that Worldwide was founded in WA and we are a well-established brand here."
And the party is not over yet, says Shimell. "There are metropolitan greenfield opportunities, regional centres and the sale of existing franchises as longer-serving owners decide to move on to different things and a new generation of owners buy in to grow their business to the next level."
Other franchise systems are mining the boom time from interstate.
Wokinabox experienced 80 per cent of its growth in 2006 and 2007 in Western Australia.
The first WA store opened at Hillarys Boat Harbour in 2004, three years later the number of stores had grown to 15, with another seven planned in 2008.
South Australian -based managing director Adrian Morrissy says that WA sales now account for more than 50 per cent of the total group sales.
"Our franchisees in Western Australia have enjoyed great success with most experiencing strong opening profits. Nearly all our stores have positive cash flows from opening, avoiding the need to inject large capital reserves into the business."
Jim Penman of the
Jim's Group agrees there is still room for growth but sees a different side to success. "There is huge potential in WA because the market is so strong, more than any other state in Australia. The problem with this is that it has become increasingly difficult to find the right calibre of franchisees to cover the work, so we're currently looking overseas, especially South Africa.
"Based on the amount of work available, we could easily double our franchise numbers in WA over the next year or two. This is what I'm hoping to see happen. WA is also the HQ of one of our best new divisions,
Jim's Pool Care mobile franchise.
"The benefits of being in WA are mainly that it's very easy to make good money. It's difficult to see any downside to being a franchisee in WA right now. If you can't do well here, you can't do well anywhere."
One company banking on the boom continuing is Allied Brands, which is targeting the state for a major expansion of its three brands Baskin Robbins, Cookie Man and Kenny's Cardiology. Thanks to a capital funding exercise, which has given the company $10 million to build growth, Allied Brands is obtaining sites before franchisees.
Allied Brands managing director Peter Graham believes the continuing strong WA economy provides exceptional prospects. "Previously these brands have been focused far more on the eastern seaboard but the recent capital raising has provided the company with the capacity to take advantage of the opportunities in the West," he explains.
"For instance, specialist greeting card retailer
Kenny's Cardiology currently has two stores in WA. We expect to increase that to 18 over the next 18 months with negotiations for the first 8 additional stores now in the final stages.
"Our other brands –
Baskin Robbins fast food franchise and
Cookie Man – are earmarked for similar expansion from their current stores numbers of eleven and three respectively." Look out in shopping centres both in Perth and across the state for franchisee opportunities.
"The shopping centre market provides us with the opportunity to expand our store numbers in a relatively short time frame. Traditionally we have found quality operators and then set out to find a site.
"Obtaining sites first is a far more aggressive strategy and one which we believe will help achieve our target for store numbers," says Graham.
This article appears courtesy of Franchising Magazine.
The Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.24-Jun-2008