Franchising trends – what’s hot in 2007?

There are over 960 franchise systems in Australia these provide jobs for over 426,500 people in Australia. Slightly more than one quarter of Australian franchise systems are being expanded overseas, according to a recent study conducted by Griffith University, for the Franchise Council of Australia.

So, with hundreds of possible businesses to choose from, how do you pick one? How do you know if the business you choose will be a good investment? How do you know if the concept is the right fit for you and your market? Essentially, where do you start?

Kevin Bugeja, Managing Director of Franchise Selection, works with would-be entrepreneurs to help them find the franchise that meets their needs, goals and personality. In fact, Franchise Selection is the only franchise consultancy where all staff including including the MD have previously owned businesses either as a franchisee, Master Franchisee and or Franchisor. The recruitment managers meet face-to-face with their clients to provide no-cost guidance in helping people find the right franchise fit. Kevin has identified some of the hot franchising trends and concepts for 2007 in Australia to help local entrepreneurs in their search for the perfect business.

Top 7 Hot Concepts & Trends

1. Burgers:
Over the past few years there has been a growth in the Casual Dining category and the rise in a Healthy/Gourmet burger business in Australia. It seems that this trend isnÕt about to go away. Brands like GrillÕd which started 3 years ago in Melbourne are now expanding across Australia offering their customers a unique experience involving sounds, smells, ambience and providing their customers only the finest quality ingredients. These include freshly baked buns low in sugar, 100% lean beef and lamb patties with no preservatives, trim bacon, veggie patties, free range eggs, avocado, herbed mayonnaise, roasted peppers, brie cheese and cranberry sauce. Not your average burger fare. We expect this segment to grow substantially over the next few years. The fast food days of the golden arches and the colonel are fading. More importantly, people are also willing to pay more for these quality options and it will probably attract a lot of attention and the imagination of many as this category grows.

2. Coffee:
The cafe segment of the specialty coffee continues to grow. And, even in a country where Gloria Jeans is king of coffee, franchises are reaching for their share of the (coffee) pot. If you think thereÕs no room left for you to be a part of the specialty coffee market, think again.

• “It is expected to continue to grow, especially in the mobile coffee sector” sayÕs Kevin
• “Saturation must exist theoretically; we just donÕt know what it looks like.”

3. Education and Tutoring:
Another concept which grows exponentially as schools become more competitive is the area of education and tutoring. Whether itÕs online tutoring, subject specific, or even for the youngest bunch of pre-schoolers, parents are willing to throw down big bucks to ensure their child has the extra edge. Many of these tutoring franchises are even being hired by schools to provide tutoring services if their programs donÕt meet performance standards or even as after school programs. The growth in this category extends outside of the schoolÕs curriculum in many cases such as music, drama, sport, maths, English and even computer science. Some of these franchise systems require the applicant to have certain unique skill sets as a pre-requisite, which may limit their expansion unless this can be provided as a part of the franchiseeÕs initial and ongoing training.

4. Healthy Fast food:
This is probably one of the fastest growing categories in Australia, even major chains like McDonalds & Hungry Jacks have started to change their menu to cater for this change in consumer demand. Baby boomers that grew up on fast food are now getting older and realizing that a healthy diet can make a huge impact on their health. The biggest trends involve salads, soups, sandwiches and other healthy options that make people feel good about their meal and snack choices. In Australia childhood obesity levels have hit an all time high over the past few years and we are seeing more emerging food brands like Healthy Habits that have recognized this area of growth and have focused on consumer demand, even offering “Mini Habits” their version of the Happy Meal for children but with a healthy sandwich, fruit juice and toy. These changes are significant and I suspect we will see a lot more of them in the near future as parents and adolescents become better educated about eating habits and their link to serious illnesses like diabetes and some cancers.

5. Home services:
We all seem to be working harder and longer than our parentÕs generation and this seems to have accelerated the need for the home services sector. These days you can get just about anything from lawn moving to bookkeeping and even someone to clean your wheelie bin. The interesting part about these franchises is that they usually have quite low entry cost and many have quite reasonable returns for the outlay. This can be a great start for someone who is not confident to go it alone and wants the assistance and support of a franchise to help grow a service business.

6. eBay Consignment Stores:
The eBay phenomenon continues as one personÕs junk is another personÕs treasure. With close to 170 million eBay users worldwide and growing, an eBay auction company could be your bid for financial success. Almost every household has “stuff” they would love to sell but donÕt know how. With your eBay business, you take the pain out of listing on-line and collecting payment in return for 30%-50% of the sale. What a great deal for the franchisee, since you donÕt buy or own any inventory. And what about the potential buying and selling opportunities for anything from cars to designer handbags to vintage comic books? To ensure success, franchisees are given extensive training on how to value items, “selling strategies” to optimize bids and ways to market the business.

7. Technology & Franchising:
Another fast moving trend in franchising is the use of technology. There are several trends related to the use of technology in franchising today. Companies like Websitegurus have revolutionised how organisations and businesses use the internet. They specialise in ensuring that their clients achieve the maximum benefit from their website by integrating their business objectives with their online presence and capability. This Franchise opportunity is designed for anyone who is looking for immediate payback on their franchise investment and wants to be associated with a Franchise model that not only does not charge royalties but also creates an annuity income stream for the franchisee.

Many franchisors use the internet to communicate with franchise owners and suppliers through secure extranets in order to share critical information, facilitate discussion among the franchise network, post operations manuals and updates, disseminate news about ad campaigns, engage in supply chain management, and gather sales reports automatically and without the need for more labor-intensive data entry. Second, franchisors use the internet to advertise their network to customers. Third, some franchisors use the internet to engage in business-to-consumer (B2C) e-commerce, often with the involvement of franchisees. Fourth, many prospective franchisees glean information and make contact with franchisors using the internet. Some franchisors now report that they get more sales leads from the internet than from any other source. Fifth, some franchisors have started providing disclosure documents to prospective franchisees by electronic means. Sixth, and final, franchisors make extensive use of technology in offering their services directly to consumers – such as networks of businesses that offer website design and web hosting. The prospects of involving technology in franchising make this a very exciting time to own a franchised business.

So it sounds like there has never been a better time to buy a franchise. Buying into a franchise gives the franchise owner a proven profit model and a process by which profits can come quickly if they follow the system and work the business. If being self-employed, minimizing risk, using a sound business model with good training and support, and running a profitable business sounds good to you then franchising is the ticket. Ultimately it is you who makes the business successful. It is you who must feel good and bring passion to your work. But, you donÕt have to go it alone if you buy a franchise. Many day-job converts soon realize that you can either work hard for someone else or you can work hard for yourself.