The editor of Franchising magazine, Sarah Stowe, is probably too polite to say it but she was part of a collective ovation at the recent International Franchising Association (IFA) annual conference.
Sarah was one of 50 Aussies directly involved in franchising who made the trek to the Nevada desert to see what they could learn at the world’s biggest franchising convention, held this year in Las Vegas.
The 50-odd Aussies (and let’s face it, some of us are considered a little odd to Americans) did not make the journey to get recognition – but that is exactly what they got.
It was acknowledgment not for individual achievement, but for what the Australian franchising sector has been achieving in economic times which are extremely difficult in many parts of the world, including the US.
Franchising is a relatively young, definitely dynamic, and rapidly growing part of the global business community. What the IFA audience acknowledged, in front of the opening plenary session attended by 2500 people, was that Australia has been at the forefront of this growth, even during the global financial crisis.
It is something to be proud of, and a factor which we can be optimistic about for the future. Australians are now taking their businesses to the world – and, because of our recent success compared with other countries; the world is taking a closer look at Australia.
This means it is a great time to get into franchising. Not only do we have successful Aussie brands looking to expand here and overseas, but we have overseas operators noticing how vibrant the Australian market is compared with their own, and as a result, they are taking a much keener interest in the prospects of rolling out their concepts here.
That simply means greater prospects and more choice for potential franchisees in Australia. At a time when global economic conditions can test the mettle of any potential business investor, it is good to know that successful franchise businesses are pressing forward with confidence – and with results to back that confidence.
In franchising, Aussies are undoubtedly at the cutting edge globally. We may not have the population of the Americans but we do have the know-how and the essential entrepreneurial spirit, backed up by a straight-forward approach to business and a genuine work ethic.
In the US, the franchise sector was static in 2010; for the first time in many, many years there had been no aggregate growth. And this followed the year before (2009), in which there was only 1.5 percent growth, though this was a very good result compared with most other industries in the US, which actually went backwards.
The story was similar in the UK and most other European nations. In Australia, franchising had a strong year in 2009, and then tapered off a little last year as we saw economic carnage in the northern hemisphere. Confidence is high that the historical average of seven to eight percent annual growth will again be achieved in 2011. This is excellent news for the Australian economy, which seems to have developed a two-speed character: fast for mining, slow for the rest.
Franchising has always been the turbo on the small business engine of the economy, consistently outperforming the national rate of economic growth. According to a PwC study undertaken late last year in conjunction with the Franchise Council of Australia, the top 200 franchise brands in Australia are expecting double-digit growth in 2011. If they are right (and they were in a similar survey in 2009), then the sector is in for a solid year.
Of course, it will not be a uniform result. Others may find the going more difficult, especially if there are industry structural issues, such as in book retailing, where Borders and Angus & Roberston have run into trouble with internet competition and import prohibitions.
If we can take any sort of lead from the US and UK, then there is further cause for optimism. Having been flat in 2010, the US franchising sector is anticipating growth of 2.5 percent this year while in the UK the depressed conditions of 2009/10 appear to be lifting and 2011 is slated for sector growth.
To give you an example of size of market, franchise owners in the US are expected to create 194,000 jobs in 2011. That is of a total of 7.8 million franchise business employees. With an Australian national population the size of Los Angeles and its surrounding counties, we can only dream of such numbers.
However, pound for pound, we are definitely punching above our weight. Australian and Kiwi franchising interests form a greater proportion of the overall domestic business market than in any other country in the world.
With our established leading brands continuing to do well, with an increasing appetite for growth and partnerships that will take them into new businesses and territories, and with a vibrant group of young fresh and dynamic brands emerging to join them on the higher platform, there is good reason for optimism for future growth.
And with plenty of choice on offer and keen competition to attract new franchise partners, it is a great time for an astute operator to get into this dynamic sector.