Whats Happening in Franchise Land?
The very word, "franchising" seems to be creeping into peoples minds more often these days as a growing number of businesses turn to this most effective marketing tool as a means of solving either employee problems such as keeping good people or in fact finding them or financial constraints on their growth. In many cases retailers in particular are offered more sites to expand into but cant afford the fit out costs
My specialist advisory firm The Franchise Centre has been recording and cataloging the comings and goings of many franchise systems over the last 23 years and each year we update our franchisor database and statistics and are always amazed at the diversity and ingenuity of new businesses who have discovered and embraced the franchise growth tool.
Unfortunately each year there are also many franchise system fatalities, which we believe are mostly caused by those franchisors that did not really understand the principles of professional franchising before they jumped in to sign up their first franchisees. Or worse were not told by their advisors or simply did not realize, why the selection process of new franchisees is so critical to the long-term commercial success of both the franchisor and each franchisee.
Our database at the beginning of the 2002-year tells us there are the following franchisor categories and how many franchise systems are in each category.
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Accommodation 5
Advertising Services 8
Amusements 31
Automotive Products and Services 94
Baby Services 5
Bookkeeping Services 12
Building products 83
Building services 43
Business Consulting 27
Business Services 18
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Financial Services 21
Food Services 40
Gardening Services 16
General Services 24
Glass Repair 8
Hairdressing Products & Services 11
Health Products & Services 18
Home Care 2
Industrial Services 11
Internet Providers Services 11
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Retail Books 6
Retail Clothing 30
Retail Fashion &Accessories 9
Retail Food 123
Retail General 126
Retail Sports 16
School Uniform Supplies 2
Security Products & Services 15
Service Stations 5
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Children'''''s Products & Services 16
Cleaning products 3
Cleaning Services 67
Computer products & Services 4
Convenience stores 8
Cosmetics 12
Courier Services 6
Education Services 29
Employment Agencies 10
Environmental Prod.& Serv. 4
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Office Products & Services 12
Pest Services 8
Pet Care & Products 17
Photography 8
Pools & Spas 8
Printing 11
Promotional Gift Services 6
Real estate Services 28
Rental businesses 16
Restaurants 28
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Sign Shops 10
Sporting Services 4
Supermarkets 2
Taxation Services 6
Telco Services 14
Trade Services 21
Travel Agencies 7
Vending machines 11
Video Shops 14
Water products 10
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TOTAL NUMBER OF FRANCHISORS: 1220
The fastest growing category would have to be, Food retailing, which are very well represented in all the food courts operating in just about every major shopping Centre across Australia.
The second fastest growing section would have to be the Building Products and Services area as more businesses move away from the traditional sub contractors or agencies distribution systems.
Another growth category is the Business Services and Consulting area, which includes coaching, training and advice to businesses.
But as you can see in scanning through the huge range of businesses represented the types of franchises we have listed are all growing and we fully expect when we do the same exercise next year the list and diversity of franchisors will have continued to grow.
However on closer examination, sadly many of these known franchise systems will not and have not achieved major growth in the actual number of franchisees in their respective systems as they have effectively "stalled" after the initial flush of their first franchisees, who may now by struggling to become commercially viable for a variety of reasons, not act as ' glowing testimonials' to other prospective franchisees contemplating joining that particular franchise system, if these early franchisees have not made the sort of profits they had either been told they would, or believed they could.
Franchising, is a numbers game and any franchisor must understand from the outset they have a leadership and teaching role to play and must look after the financial well being of each and every franchisee they sign on!
We believe the number of franchise systems we do know about, still only represents some 3% of all businesses operating in Australia and when you compare that number to the United States and its 40% market penetration you can see franchise opportunities abound for those astute businesses who can put together an attractive business package to convince a potential franchisee who is contemplating going into their own small business to accept the security of following a franchisors proven business system in the field they are interested in, rather than open up in that same type of business as an independent.
Our firm The Franchise Centre claims to new franchisor clients that you can franchise just about any type of business and it is a weekly fascination to us when we receive calls from potential franchisors as to how varied these businesses are.
We know each year more businesses will go down the franchise path or at least seriously investigate their options, but if they do, they must do so with the right cultural attitude from the outset.
Understanding the franchisees success is ultimately their
responsibility and making sure each and every franchisee is
a' walking testimonial' to others so the group buying power
advantages more than justify the ongoing management fees
each franchisee pays to belong to their franchise system.
Most of us crave a business mentor and if the franchisee has chosen a "professional franchise system", the franchisor will be more than happy to be that mentor and ensure each franchisee
maximizes their businesses sales and profit
By Bob Williamson of Which Franchise? Magazine
If you would like more quality articles about franchising then check out Which Franchise? Magazine
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