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The What, Why, and How of Franchising in Australia

Thinking about franchising? Here are some answers to your questions.

By Lucas H. ParkerPublished 5 years ago 5 min read
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Many people nowadays want to be entrepreneurs, and with good reason. You are your own boss, you have your freedom, and, let's be honest here, your earning potential skyrockets. Furthermore, with the advent of technology, the interconnectedness supplied to us by the internet, and just the benefits of the modern age, becoming your own business owner is easier than ever. However, easier is a relative term.

Namely, there is a lot of suffering and hard work involved in becoming an entrepreneur, lots of sacrifices. However, there is a way for you to have the same level of freedom and earnings while minimizing some of the sacrifices needed. This is accomplished with franchising.

What is franchising?

A franchise is an agreement that is concluded between two parties. The parties are made up of the franchisor, the party which provides the franchise, and the franchisee, the user of the franchise license. Now, the former gives the latter the right to market and sell a product, using the logistics and services of the entire franchise, and make a profit. What the franchisor gets in return is a participation fee, as well as royalties in some form or another.

To give you a clear example, its McDonalds allowing a person to open up and manage one of their restaurants in a specific location. You pay a fee to get the rights to operate their franchise, you get their recipes, workbooks, guides… Furthermore, you might need to pay out a percentage of your profits, but that does depend on the franchise you are contacting.

Why should you use a franchise

There are many benefits to a franchise, the main one being that a person who wants to run a business can do it quickly, having a huge head start. Namely, when you want to start your own business, you need to think of a product or a service you can provide people with. And while many people want to do just that, others enjoy the actual work, the actual management part of the job. In other words, some people want to run a business, without really caring about whether the product is their own creation or not.

Now, as far as why a franchise makes things easier, well, first of all, you actually start with a ready product. In fact, a product that is most likely very useful and sought after. Next, you have a brand already. Building a brand can be one of the most difficult and troublesome parts of building any business. However, with a franchise, you already have a reputation to fall back on.

Next, a franchise business has logistical work to back it up. Most franchisors worth their salt supply the franchise with strategies, logistics, backgrounds, research, reports… You will have back up, you will have people who will push you in the right direction, while still having some freedom. Instead of drafting an entire plan on how to push your products, and how to research the market, you will have all of that delivered to you.

Now, do note that franchises vary. So, some may give you more help than others, and more freedom than others. For this reason, you have to do your research and think long and hard on what you're going to do. Furthermore, while we understand that you might be more interested in running a business than you are actually caring about the product, still try something you are passionate about. If you're passionate about bicycles, become part of a biking franchise. If you like tea, you might be interested in finding a tea business franchise for sale. Cooking? Try a restaurant. Sports? Maybe a clothing or sports equipment store.

Why Australia?

But, what is the situation in Australia? Well, first of all, there aren’t any official statistics on franchising in Australia, at least for now. However, some calculations have shown that only around 2 to 4 percent of business is franchised here. This is rather low when you take into account that in the United States of America, this number is closer to around 35 to 40 per cent. So you might be asking—why?

One reason might be that small businesses in Australia are frightened of branching out, of becoming a franchise. Perhaps they don’t want to deal with the development costs, the time, and the commitment necessary to become larger. Another aspect might simply be that Australians don’t have the strong, borderline unhealthy, entrepreneurial spirits that people in the USA do. But, without analysing things too much, it's still pretty clear that there simply aren’t that many franchise offices on this island.

Here we come to what this all means to you. While businesses like KFC, McDonald's, and Starbucks are pretty much ubiquitous all around the world and can be found in Australia, there is still an untapped market for franchises. And know that it's growing. As the years pass by, more and more franchisees are developing; they are becoming stronger, and while levels are not as high as they could be, they are still significant enough for you to make this investment.

Because of the low number of franchises here, you might just get better deals, a more optimized work environments, and, in general, franchisors eager to get a franchise and tap into the Australian market. And of course, thanks to the strong and solid Australian economy, you can rest assured that you will make a buck or two at the end of the day.

Conclusion

Franchising is a direct and lucrative way of being your own boss, managing your own business, while still having a kind of safety net and backup. You still have to do the work, of course; but logistics, planning, marketing, branding, these are all done for you (or at least planned out for you). And Australia is fertile ground for work like this. If you can get the starting investment going, you can very well end up with a job that has all of the benefits of being an entrepreneur, but with fewer disadvantages.

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About the Creator

Lucas H. Parker

Lucas is a business consultant from Minneapolis, Minnesota. Besides that, he has a passion for writing. Doing his research, exploring, and writing are his favorite things to do.

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