The top two motivating factors for Australians planning to
buy a franchise before 2010 are the potential to earn and the enhanced lifestyle offered by the change of career path, a recent survey found.
In the national independent online survey commissioned by Mortgage Choice, of people in the 25 to 55 year age group earning $60,000+ per annum, the top reason for running their own franchise was ‘
income potential’. However, running a very close second was ‘improved lifestyle’.
Interestingly, the top two choices for 25-30 year olds were ‘improved lifestyle’ and ‘flexibility with the ability to control your own time/movements/etc’ – ‘income potential’ was third - while the top two for the 51-55 years group was ‘income potential’ and ‘channeling your experience into your own business’. For them, ‘improved lifestyle’ was fifth on the list of priorities.
Mortgage Choice National Manager Corporate Affairs, Warren O’Rourke said this stark contrast in responses for the older and younger generations was not so surprising.
“Australian society is realising more and more that Generation Y and the younger Generation X want to work to live not live to work,” he said. “In fact, it is a sentiment that appears to be catching on throughout most age groups. People are still working hard but are placing less importance on working long hours and striving for the best pay possible because they know that means sacrificing lifestyle.”
The objective of the survey was to determine drivers of behaviour when it comes to Australians looking to purchase a franchise.
“We wanted to take a good look at the current temperature of the market for potential franchisees,” Mr O’Rourke said.
Overall, the top three reasons for respondents planning to run their own franchise business were: ‘income potential’, chosen by 47.3% of respondents, ‘improved lifestyle’ (45.3%) and ‘flexibility with the ability to control your own time/movements/etc’ (44.5%). The next few were: ‘looking for stimulation, challenge and personal achievement’ (45.0%), ‘security of being your own boss’ (40.03%), ‘channel your experience into your own business’ (26.7%) and ‘more time for family’ (25.0%). Respondents chose between six personalities to describe their current career position and almost a third described themselves as ‘Aspirants’, the biggest ’go-getters’ on the personality list. The results were:
- 30.2% - Aspirant – Striving to make a big change in their working career, from employee to employer or across industries in order to make a bigger splash and earn more money. They really want to make their mark;
- 29.1% - Lifestyle Seeker – Already a high income earner, they want to continue earning big dollars but are searching for the right kind of lifestyle that comes with running their own show, whether that is from a ‘home office by the ocean’ or a multi franchise operation with outlets in each state. For them, it is all about work life balance;
- 22.9% - Flexible – Looking for the flexibility that working from a home (or relatively small) office provides. They typically have a young family, a partner in full employment or other interests they want to pursue alongside a running a business that allows their to work their chosen hours;
- 8.7% - Money Bags – ‘Cashed up’ from previous ventures and want to hit the ground running, already having the knowledge and skills to buy or start a business that will grow quickly. They aim to have their operation running under management a short time after commencing and are considering owning more than one outlet; 7.6% - Rising Star – Existing business owners who plan to seize the opportunity to operate multiple businesses/franchises of the same type. They are aiming for high revenue streams from multiple outlets and will reach for the stars in order to get there.
- 1.4% - Other
So which industries’ franchise numbers will we see grow as a result of these franchisee-to-be? Australians who love their food will be very pleased.
The most popular response to the question regarding franchise system industries being looked at to buy within was ‘retail – food, restaurants and cafès’. This was the most popular option for every age group apart from the 51-55 year group, whose top option was ‘business and professional services’ (chosen by 47.81%).
Overall, 27.2% said ‘business and professional services’, 21.2% said ‘health, beauty and personal services’, 19.2% chose ‘domestic services’, 19.0% said education and training services’ and 18.6% said ‘financial services’.
It is worth noticing how the interest in ‘white collar’ franchising continues to grow with a healthy percentage of respondents considering business and professional services and financial services as viable options.
These potential franchise owners take their franchise system research seriously, with over a third of the respondents (34.2%) planning to have researched six or more systems before deciding in which to purchase. 10.8% will have researched 11 or more.
This research process is done relatively quickly, with just over half (50.2%) making up their mind within 12 months. 26.4% will take 12-18 months, 14.9% 18 months to two years, 5.2% two to three years and a very small 3.3% taking over three years.
A brave 28.3% will have had no experience in the industry they are most interested in purchasing a franchise within, 19.3% will have less than one year 17.25% one to two years, 17.6% two to five years, 10.6% five to 10 years and 7.0% will be well-practised with 10+ years of experience.
When asked to rank what factors being part of a franchise system are most appealing, the results were as follows:
- Established franchisor brand recognition
- Established business model for franchisee to follow
- Level of support provided by the franchisor
Tied fourth were: ‘working within a collaborative franchise network’, ‘level of media coverage that can be achieved’ and ‘level of advertising that can be achieved’. Tied seventh were ‘supplier relationships already established’ and ‘higher likelihood of success in comparison to a small business’.
Other survey quick bites include:
- 56.3% will buy a new franchise vs. 43.7% an existing franchise
- 54.8% will buy with a spouse/partner vs. 24.5% buying alone
- 21.2% will spend up to $100k on buying and setting up vs. 7.6% spending $400k+
- The biggest barrier to entering a franchise system is cost to purchase at 58.4%
- Top three advice sources are: internet, professional advisors and franchise expos
About Mortgage Choice
Mortgage Choice is Australia’s leading mortgage broker. It provides professional home loan advice on, and choice of, products offered by a panel of 29 of Australia’s leading lending institutions and its accredited loan consultants do not charge customers for their services. Mortgage Choice does not have its own products, and consultants are paid the same commission regardless of the lender or product chosen by the borrower*.
Through its national network of over 436 franchises and over 628 loan consultants supported by Group and State Offices, Mortgage Choice writes almost 1 in every 20 Australian residential loans.
The company was listed on the Australian Stock Exchange in August 2004 (ASX sign: MOC).
Recent awards/recognition: 2007 Australian Banking & Finance Magazine Awards Best Mortgage Broker, 2006 BRW Magazine Top 500 Public Companies list, 2006 MIAA Awards Retail Mortgage Broker of the Year, 2005 Australian Mortgage Awards Best Branding and Most Effective Internet Presence, 2005 Australian Banking & Finance Magazine Awards Best Mortgage Broker and 2005 MIAA Awards Originator of the Year [30+].
More information is available at the Mortgage choice website.
17-Mar-2008