The Business of Franchising

Franchising has been around for hundreds of years - since the time Kings allowed countries to be managed by other Kings or leaders for the return of royalties in the form of currency or riches.

The modern day franchise is known as “Business Format Franchising” and this was brought to fruition in the mid part of the 20th century by the fast food concepts started in the USA.

Over the years we have seen many controversial news items condemning franchising with unscrupulous franchisors doing the wrong thing.

Whilst this is not a myth, we need to put things into perspective. You only hear about people’s misfortunes in the media (it’s newsworthy) but in fact the success of franchising far outweighs the negatives.

The growth of franchising is enormous and varies from country to country, with the USA leading the way in the amount of dollars spent through franchised businesses.

Revenue from the franchise sector in Australia in 2008 was sitting around 14% of GDP and continuing to grow. This is a significant portion of the Australian economy.

Statistics show that it is far safer for someone to purchase a franchised business than going it alone. Whilst we do not have accurate figures on franchised outlet failures, we do know that some 70 to 80% of non franchised businesses fail in the first five years.

Through the statistics gained from the monitoring of many franchised companies, we have ascertained in general terms, at least 70% of reputable franchised concepts are viable. Please understand that these statistics were gained from reputable franchise systems.