The franchising sector has been analysed by economists since its inception; while there are a multitude of statistics surrounding how much franchising contributes to the economy, ownership rates and the strength of the sector as a whole, there are limited accredited statistics pertaining to franchising success rates vs. independent business.

 

Franchising does have a number of distinct advantages over independent business ownership across many varied industry sectors from retail to financial services, food to fitness to name just a few. As the economy and society continually change, the one constant is new entrants and business models emerge.   

 

The franchise sector within Australia accounts for in excess of $131 billion in revenue generated across 1,180 franchise systems. It’s no accident that a number of the most successful franchise systems in Australia go on to succeed in other international territories.  

 

Franchising systems enable the Franchisor to rapidly expand a business network that is aided by the capital investment from a franchise business unit operator. What’s more with a vested interest in the business, a franchisee is likely to provide a franchisor with 100% commitment to the operation and performance of their business. Similarly for franchisees, there are significant advantages to investing in a franchise business to access the experience and expertise built up over many years of operation as well as a proven business model that operates under a well recognised brand that attracts a significant customer base to the franchise business. 

 

Operating within a niche sector of the homewares retail category, Howards Storage World is Australia’s leading national specialty retail brand in storage and organisation. As CEO Dirk Spence can attest, a prime reason people enter a well-established national franchise network is to access a proven business model with a high profile brand and reputation amongst customers and the wider industry as a whole. Furthermore, owning a franchise entitles a franchisee to be their own boss. “Instead of somebody inventing something and throwing a lot of money away because it didn’t work the way they thought it would, people are following a system, a methodology that is known to work and they gain support from people that know the business in order to help them in different areas.”

 

More than just an association with a well-established brand, reputation and product or service, other attributes should be sought after when assessing prospective franchise businesses. These include robust support across the entire operation of the business; assistance with site selection, lease negotiation, project management for store construction, assistance with store designs, equipment procurement, launch marketing program, management training and experienced field support; marketing support, advertising and merchandising assistance, buying power and access to a proven business model and a network of franchisee peers to draw support from.

 

While the opportunities are apparent, starting a business can be daunting without the right planning and support in place. One of the most common mistakes franchise prospects overlook is the alignment of individual needs compared to what the franchise business model delivers and underestimating the investment required in setting up a business and the working capital required to operate the business on a day to day basis, particularly in the first 12-18 months of establishing a new franchise business. A successful franchise prospect will be open to working within the framework of an established business model. This can bring less autonomy in some business decisions, and a set of guidelines that a franchisor puts in place for the franchisee to follow.

 

With the pros and cons of franchising outlined what do we know about the franchising sector and where is sits comparably to the wider business sector? According to the Franchising Australia 2014 report (1), although Australia performed well during the global financial crisis (GFC), the national economy has been characterised by temperate retail spending and uncertain consumer confidence. On the contrary, the franchise sector has performed very well, given the constraints experienced in the wider business sector.

 

Offering a number of advantages to franchisor and franchisee, between 2012 and 2014, the Australian franchise sector has grown by an estimated 6000 franchise units; compared to the 2.9 percent decrease in Australian businesses reported by the ABS in 2013 financial year.

 

Howards Storage World franchises are now available.