Five reasons why franchising works

By Sarah Stowe | 12 Apr 2017 View comments

What is it about the franchise model that makes it a success?

1. It’s a proven model

Way back in the 1920s and 1930s Singer sewing machines and KFC were discovering new ways to expand their businesses. And when go-getting Ray Kroc (the subject of recent film The Founder) shook up the McDonald’s brothers’ burger store there was no holding back this model of business expansion.

Some of the fast food brands are multi-generational franchise successes. But it isn’t just the food retailers that have stood the test of time.

The specialist tools mobile retailer Snap-On is a global phenomenon that began life in the US back in the 1920s – and provides top class equipment not just for the neighbourhood mechanic but for space agency NASA.

2. It’s got the numbers

In Australia the sector is valued at $146 billion, with 472,000 people employed through the 79,000 franchised outlets. There are 1120 brands operating in this field

In the US, according to the International Franchise Association, 733,000 franchise businesses support 8 million jobs and 3.5 percent of the country’s gross domestic product.

A report in January 2016 in the UK measured the contribution of the sector to the country’s economy as about £15.1 billion, an increase of 46 per cent over the past 10 years.

There were 621,000 employees, and the number of franchisee-owned businesses had increased by 14 per cent in two years, to 44,200 [British Franchise Association/NatWest survey].

3. It’s empowering

Millions of individuals over the decades have been inspired to take the leap into business ownership through franchising. And why not? The chance to invest in an existing brand with an operating structure in place has obvious advantages.

The combination of a tried and tested method backed up by grassroots experience, together with the commitment, drive and investment of keen franchisees has proved perennial. What better way to launch into a business than with the support of a franchisor behind you?

4. It’s regulated

Australian franchising is heavily regulated. That doesn’t prevent dud systems and poor operators from trading but there is legal redress if franchisors act unconscionably. The presence of the Franchising Code of Conduct also provides a framework for both franchisors and franchisees to work to for the benefit of both.

5. It’s all embracing

There’s really no limit of age, gender, experience – even budget – when it comes to investing in a franchise.

Whether you are ready to avoid retirement and take on a new challenge, you have corporate experience to bring to the field, you are looking for a fresh start after redundancy in manufacturing, you want to fulfil your ambition of being a business owner before you hit 40, you want to secure a future for your family, or you’re young, inexperienced but hungry to make your mark, franchising has something to offer.