ACCC: Franchising more successful than marriage

Franchising is the only Australian industry sector regulated by a Code of Conduct, administered by the Australian Competition and Consumer Commission (ACCC). Moreover, franchising provides substantial security. A disputation level of less than 1 per cent, and a failure rate of less than 20 per cent make franchising more successful than marriage! Franchise development tends to be driven by consumer demand and already we are seeing increasing trends towards home service providers.

Now, through franchising, we see home-based businesses growing rapidly with the establishment of niche franchise service providers. These franchises range from dog washing and walking to non-medical aged care. The deregulation of the workforce has seen another trend develop in the form of business-to-business (B2B) franchise systems. For example, bookkeeping has grown rapidly since the taxation system changed, and we are now seeing other services such as management training and technology services receiving a higher profile.

Australians generally aspire to two things: to own their own home, and to be their own boss. These dreams play an integral part in the Australian community, with housing a significant economic indicator, and small business providing opportunities for social capital and employment for many Australians.

Small business is risky, but entrepreneurs who wish to establish a new business should think about mitigating and reducing the risk by considering franchising. Statistics confirm a markedly reduced rate of small business failure for franchisees compared with independent business start-ups. But isn’t franchising just hamburgers and pizza? The answer to this question is a resounding no.

Franchising in Australia equates to $80 billion or 10 per cent of the nation’s GDP, representing some 64,000 workplaces with over 600,000 employees. This means franchising employs more than Australia’s agricultural and mining industries combined, and contributes more to the Australian economy than the combined Gross State Product of South Australia and Tasmania.

Franchising is also growing and developing in regional Australia, offering much-needed services and work opportunities that many major corporations consider too expensive to provide.

Australian franchising leads the world with many innovations. Our experts are called upon to advise countries all over the world on franchise law – most recently in Vietnam. Education is highly regarded in Australia, which boasts the only government accredited franchise training in the world.

Business can be precarious – even in well-structured franchise systems. This is why potential franchisees must conduct due diligence to determine the right franchise for them. The market for franchisees is very competitive and it is wise for a future small business operator to take the time to gauge the right opportunities.

A decision made in haste may be the wrong choice. Therefore, it is strongly recommended that franchisees seek the necessary information through the Franchise Council of Australia (FCA) and its members.

FCA members subscribe to higher standards than non-members by agreeing to meet the standards set by the FCA – exposing themselves to complaints should they not maintain those standards.

The ‘Don’t sign without this sign’ (FCA logo) should be an important consideration for anyone thinking about investing in a franchise. Reduce the risk by working with FCA members.

Franchising is a lot more than just hamburgers and pizza for the consumer, the small businessperson and the Australian economy. Business is risky, but franchising reduces the risk, and dealing with FCA members reduces the risk even further.

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