FRANCHISING
Australia
Overview
The Australian franchise sector is both large and mature. As part of the service sector, it benefited from the 2005 ratified Free Trade Agreement with the United States. It is considered a sophisticated industry, contributing some 14 percent of the nation’s GDP. The total turnover of the franchising sector, including the motor vehicle and automotive fuel retail industries, is close to US$96 billion.
In 1988, there were 184 business-format franchised companies in Australia, whereas today there are around 960. Of these systems, 93 percent are Australian-based as opposed to overseas imports. The remaining 7 percent are predominantly a mixture of systems from New Zealand, the U.S., UK and South Africa.
Franchised businesses in Australia are 2.5 times more likely to be successful than non-franchised business. The average total start-up cost for an individual franchise across all industries was US$58,500. The average cost for a retail franchise unit has increased to US$197,000 to include the fit-out costs. On the other hand, non-retail franchise systems’ start-up costs have decreased to US $38,000.
Best Prospects/Services
Franchising is continuing to experience growth in Australia and has spread into virtually every area of commercial activity. Sectors as diverse as home building, carpet cleaning, repair systems, waste management, and financial planning are enjoying high growth. The best opportunities for franchising in Australia are within the retail non-food industry (29 percent of franchisors and 36 percent of franchise units) followed by the property and business services sector accounting for 21 percent of franchisors and 7 percent of franchise units.
Australian Franchise Industries:
| Industry | Percent |
|---|---|
| Retail trade non-food (includes automotive services) | 35.5 |
| Property and business services | 7.3 |
| Retail trade food (includes fast food) | 16.5 |
| Personal and other services (includes video hire and gardening services) | 12.2 |
| Finance & Insurance | 9.1 |
| Education | 2.4 |
| Construction & trade services | 3.2 |
| Accommodation, cafes & restaurants | 1.3 |
| Cultural and recreation services | 0.9 |
| Wholesaling | 0.4 |
| Communication services (includes postal, courier & telecommunications) | 3.1 |
| Manufacturing & printing | 1.0 |
| Transport & Storage | 6 |
| Health & community services | 0.5 |
| Unclassified | 0.7 |
(Franchising Australia 2006 Survey – Griffith University)
Opportunities
Most growth in the franchise sector has been within the services segment, predominantly in the ‘personal and other services’ arena such as video hire and gardening services. Services catering to the time-deprived as well as financial service concepts are also very popular. Australia has a growing elderly population with many baby boomers moving into retirement. This presents many opportunities for concepts in home services, health/care, and mobile sectors.
The retail trade food sector (including fast food) also presents a number of opportunities for U.S. firms, accounting for 16.5 percent of franchisors with a particular upsurge in the number of healthy food concepts. Like the U.S., Australia is experiencing a problem with increasing overweight/obesity rates. A recent health study showed that 68 percent of males and 53 percent of females were overweight or obese. The problem is just as prevalent for children. Therefore franchise systems related to health foods and fitness could also find a receptive market.
Resources
Trade Events:
FRANCHISING AND BUSINESS OPPORTUNITIES EXPO
Frequency: Annual
Web site: www.franchisingexpo.com.au
Franchise Council of Australia: www.franchise.org.au
International Franchise Association: www.franchise.org
The Office of the Mediation Advisor: http://www.mediationadviser.com.au
The Australian Industrial Relations Commission: http://www.airc.gov.au
U.S. companies seeking information on the Australian franchise market are encouraged to contact Kate Wilkie at the U.S. Commercial Service in Melbourne (email: kate.wilkie@mail.doc.gov )