Franchising offers ambitious and cautious investors alike the chance to change their lives and enjoy the benefits of being their own boss. It’s a tried-and-tested formula.

So is now the best time to commit to buying a franchise? The truth is there is no time when buying a business is a guarantee of success and that’s just as applicable in franchising as it is in the open market. 

However, when we look back at the last pandemic-hit three years we see that franchised brands have by and large survived, and sometimes thrived, in the really tough times.

What makes franchising work?

There’s some luck in that, but also a magic combination of business experience, centralised resources and a commitment to sustaining a franchise network.

One of the key benefits of being part of a good franchise is the quality of support available. Mary Aldred, CEO of the Franchise Council of Australia says the pandemic clearly demonstrated the advantages of the franchise business model extend beyond leveraging brand benefits.

Buy a franchise in 2023 and get support from the franchisor

“As a new franchise business owner, a franchisee is not starting alone. Their franchisor can offer support for recruitment and retention, marketing and the adoption of new technology platforms. Better still, the costs of these services is manageable, as they are shared by franchisees across the group,” Mary says.

Darryn McAuliffe, CEO of business intelligence firm FranData Australia, agrees that while disruption has been a constant for small businesses across Australia over the last two years franchising has proved its worth.

“The last couple of years have provided many proof points for those quality franchises, particularly around dealing with landlords, accessing government programs and responding to the changing needs of consumers,” he says.

Franchisors have worked to negotiate better leases for franchisees, leveraged buying power to source better-priced products, sped up the rate of innovation and digital implementation, and developed mental health programs for staff and franchisees.

It’s a formula that will serve franchisees well over the next year and beyond as they face both micro and macro challenges.

What about the challenges ahead ?

Franchised small businesses are contending with inflationary pressures, supply-chain risks, increasing interest rates as well as staff shortages.

However, good franchisors will pivot and adapt to challenges. Other franchisees are able to share best practice business methods. So help is at hand, from cost-cutting measures, staff roster tips, revenue-boosting ideas to a supply chain solution.

The franchise sector also has an association lobbying government on its behalf. Mary Aldred explains it is responding to the business challenges franchisees and franchisors face.

“The FCA has escalated its engagement with small businesses to provide practical support and advocate on their behalf to government and regulators,” she says.

She is confident that despite the challenges, 2023 looks to be “another strong year for franchising in Australia”.

A recent survey showed 67 per cent of franchise respondents are optimistic about business conditions for the next six months. Quick-service restaurants, retail and health were the most optimistic industries.

What about getting finance if I buy a franchise in 2023?

“Access to finance will continue to be a challenge for small businesses,” says Darryn.

“Fortunately, most major banks, and a number of other lenders, not only have specialist teams in place to support the franchise sector but are currently expanding their offerings. “

He says that strong franchise systems work hard to make sure their brand is ‘lender friendly’. They provide the right information to help unlock finance for their franchisees.

Franchising is a regulated industry

Franchise buyers can access plenty of information about how the sector operates, and details of individual brands.

Franchise brands and franchisees operating their small businesses are all subject to government regulation. The Franchising Code of Conduct guides the behaviours between parties, and prescribes certain rules and regulations, including specific documentation.

The Australian government recently introduced a Franchise Disclosure Register for which all franchisors must submit certain information.

Franchisees have easy access to this register and to information on the Australian Competition and Consumer Commission website.

FranData also runs a franchise register of brands and independently awards star ratings to franchises that demonstrate transparency and high levels of performance.