I believe there will be a slowdown of growth in the overall food and beverage market in 2015 and therefore some challenges for the franchising niche as well. There is also a continuation of the current cost pressures caused by high wages and penalty rates in our labour awards and rising operational and compliance costs in Australia. These cost pressures will result in a number of smaller food and beverage franchised brands and independent businesses struggling for market share and profitability. The need to invest in infrastructure, innovation in product and design and marketing is greater than ever and some of the smaller franchise systems will struggle as a result.    

 

There’s still a degree of weakness in the economy and fixing the financial mess facing Australia is challenging for the government, particularly with a hostile senate. This uncertainty, together with talk of a possible slowdown in housing and share markets, and rise in unemployment, is creating nervousness in the economy and undermining consumer confidence and therefore spending.

 

Traffic numbers are declining in the majority of the shopping malls and online ecommerce continues to attract the consumer dollar as they search for the best value for money options.   

 

Whilst I do believe that the economy and the franchising  sector has a challenging year ahead. I’m also firm in the view that it will be the franchise systems with the financial strength and ability to respond to those challenges who will continue to prosper.      

In the last 12 months, we’ve seen some franchise systems go into administration. While there have been a number of reasons for this, I believe that in some cases at least, they undertook aggressive expansion plans without first putting in place a strong infrastructure. Some Australian brands also seem to want to grow very fast internationally, again, without all the requisite building blocks in place. 

 

I think this consolidation will continue and there will also be a number of acquisitions, as more major franchisors move towards a multi-brand system. This has been happening in America for some years and the trend is now well and truly taking off in Australia. 

 

The yoghurt trend is set to continue and Mexican food brands will continue to grow. In the service industry, I believe there will be growth in beauty and wellbeing. 

 

The caf_ culture will also continue and this is a particularly interesting space to watch, because coffee is no longer just something we consume as a pick-me-up or social drink.  Now more and more consumers are treating it as they do wine, wanting to try different blends and specialist brews. 

 

While growth through acquisitions will continue, many systems will work independently towards sustainable growth by looking at how to better assist their franchisees increase profits. 

It’s a good time to be part of a franchise; consumers the world over love and trust brands. As such, the benefits of being part of a branded franchise business are tremendous – benefits such as greater brand awareness, tried and tested support systems, large networks and so on. With that said, I expect the franchising sector to strengthen tenfold in the short to long term. 

I believe that we will continue to see solid growth across the franchising sector in 2015. I also believe that we will see an increase in Gen Y investors as they appear to be experiencing an increasingly higher disposable income; this is something we have already witnessed within our network. Based on a continuing increase in awareness of health, nutrition and wellbeing I would predict that franchisees in these spaces will perform strongly in 2015 and that we will also see a number of new franchise systems launched. I also believe that we will continue to see an increase in aged care services and recreation services for older people in 2015. 

We believe strong franchise systems that are committed to the ongoing development of their franchisees and their franchise model will see growth in 2015. The vast majority of good franchise systems should need to make little change to their franchise models following the changes to the Code, and it therefore should be “business as usual” for those franchisors currently operating best practice systems.  The introduction of more stringent disclosure requirements may see the demise of some less professional franchise systems which can only improve the quality and performance of the franchise sector over time.