Tasmania the new frontier
Tasmania the new frontier
1. How will trends in franchising Impact Tasmania?
As the world economy continues to grow the commodities that are becoming more valuable than gold or oil are a skilled, motivated and affordable employee and a franchised owner / operator. This is particularly the case in Tasmania because of the combination of a growing economy, low unemployment and the success of many franchised brands in other areas of regional Australia.
While the bulk of franchised networks in Australia will be based on the mainland because of the weight of business population there, Tasmanian businesses will adopt the franchised. Business model as a way of expanding across Tasmania, as well as into the mainland states.
The true worth of the franchised business model is evidenced through qualified operators who create greater value at the customer end of the business than a paid manager.
2. What types of businesses are franchising?
As the Tasmanian population and economy grows and wages and profits continue to climb, new dwellings are built by franchised builders, cars sold by franchised car dealers, beds are bought from franchised Forty Winks, and car accessories from AutoBarn. However retailing is not the only franchise frontier.
Australia Post is Australia's largest franchised network and many Tasmanians are doing business with franchised owner/operators in the licensed Post Office network. Licensing is a less prescriptive form of a full business format franchise but the trend is towards franchised arrangements. Australia Post is currently developing a full business format franchise model.
The latest franchise entry to the state is juice and smoothie operator Boost Juice Bars, while Banjo's is the largest and most successful Tasmanian franchisor. Banjo's dominates the local bakery/cafe market in Tasmania and now has almost 30% of its bakeries on the mainland.
As baby boomers and their parents get older, the development of franchised in-home carers, and other Hospital-in-the-Home concepts will create a raft of franchised healthcare services. And franchising will provide a personal link between the huge financial services organizations and the service expectations of well-heeled consumers. By 2012, franchised networks such as Mortgage Choice, Smartline, and others will write half of the mortgage business in Australia. More banks like Bank of Queensland and Bendigo Bank will have franchised branches and wealth managers to maintain and expand their networks and build better and deeper customer relationships.
3. Do consolidation, acquisition, private equity & globalization feature in franchising?
As competition intensifies in each market segment, the top mainland players will seek to establish market dominance in Tasmania. Many will adopt a strategy of acquisition and conversion of their Tasmanian-based competitors to push growth more quickly than that provided by a cold startup in this State.
Linked to the globalization of brands will be the entry strategy into Tasmania of the "buy rather than build" approach by foreign companies, both franchised and non-franchised, and the purchase of foreign master franchises by Tasmanians seeking a fast entry into new business segments.
The quest for acquisitions will not just come from competitors. Three other emerging groups are being attracted to franchised networks;
• downstream suppliers seeking to secure distribution
• private equity and venture capital groups who understand the value of branded networks
• overseas companies looking to establish in Australia
4. Is franchising adding value?
While Australia is a small market (currently 960 franchise systems operate in Australia from 62,000 franchised outlets) it punches well above its weight in terms of profit per unit and has proven attractive to US based McDonald's, Burger King. KFC, Subway and Jani King. International franchising will become a bigger part of the revenue stream of our more successful franchise systems with emerging markets like China and India creating new opportunities. Companies such as Cash Converters pioneered internationalization of their brand many years ago, but in more recent times, and more successfully, franchises such as Gloria Jean's, Cartridge World, Howard's Storage World, Boost Juice, Aussie Pooch Mobile and Action International have demonstrated that Australian developed franchise systems can make it on the world stage.
5. How do I become a franchisee?
First, decide that you really want to be in business for yourself and are prepared to take the risks involved in owning your own business. While franchised businesses have substantially higher success rates than independent businesses there are still franchise failures and no franchisor can guarantee success.
The vast majority of franchised owner operators had no previous business experience before buying their first franchise. Franchise companies select their franchisees on the basis of a reasonable financial foundation and a judgment about their drive and commitment to owning their own business and their ability to learn and how to run a business and take care of their customers. Many banks now have franchising divisions that will lend up to 70% of the total capital required to establish franchises accredited by those banks. As a result, a major barrier to entry into business format franchises has been significantly lowered over the years.
Visit the Franchise Council of Australia website to review the substantial number of franchise opportunities that are available in Australia. When you've chosen a franchise that is of interest, obtain a list of current franchisees from the franchisor and call a good cross-section to determine if they are satisfied with their franchised business and the franchisor: their strong endorsement is an excellent indication of success.
6. What is the future for franchising?
Based on the double-digit growth trend over the last five years, the Australian franchise sector will grow at an annualized rate of at least 10% per year. Within 5 years there will be around 100,000 franchised businesses representing 1200 franchise systems, and Tasmania will have a growing share of these franchises as it moves from currently being substantially under-represented on a population basis in comparison with mainland states.
The Franchising Code of Conduct and policing by the ACCC have lead to better conduct in the franchising sector. There are more accountants and lawyers in Tasmania who understand franchising and are better able to advise prospective franchisees.
Franchising is healthy and the prospects for Tasmanian development look good.
Tasmania the new frontier - To learn more about this author, visit Rod Young's Website.
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As franchising evolves, Enterprise asked Rod Young to comment on its future in Tasmania.
1. How will trends in franchising Impact Tasmania?
As the world economy continues to grow the commodities that are becoming more valuable than gold or oil are a skilled, motivated and affordable employee and a franchised owner / operator. This is particularly the case in Tasmania because of the combination of a growing economy, low unemployment and the success of many franchised brands in other areas of regional Australia.
While the bulk of franchised networks in Australia will be based on the mainland because of the weight of business population there, Tasmanian businesses will adopt the franchised. Business model as a way of expanding across Tasmania, as well as into the mainland states.
The true worth of the franchised business model is evidenced through qualified operators who create greater value at the customer end of the business than a paid manager.
2. What types of businesses are franchising?
As the Tasmanian population and economy grows and wages and profits continue to climb, new dwellings are built by franchised builders, cars sold by franchised car dealers, beds are bought from franchised Forty Winks, and car accessories from AutoBarn. However retailing is not the only franchise frontier.
Australia Post is Australia's largest franchised network and many Tasmanians are doing business with franchised owner/operators in the licensed Post Office network. Licensing is a less prescriptive form of a full business format franchise but the trend is towards franchised arrangements. Australia Post is currently developing a full business format franchise model.
The latest franchise entry to the state is juice and smoothie operator Boost Juice Bars, while Banjo's is the largest and most successful Tasmanian franchisor. Banjo's dominates the local bakery/cafe market in Tasmania and now has almost 30% of its bakeries on the mainland.
As baby boomers and their parents get older, the development of franchised in-home carers, and other Hospital-in-the-Home concepts will create a raft of franchised healthcare services. And franchising will provide a personal link between the huge financial services organizations and the service expectations of well-heeled consumers. By 2012, franchised networks such as Mortgage Choice, Smartline, and others will write half of the mortgage business in Australia. More banks like Bank of Queensland and Bendigo Bank will have franchised branches and wealth managers to maintain and expand their networks and build better and deeper customer relationships.
3. Do consolidation, acquisition, private equity & globalization feature in franchising?
As competition intensifies in each market segment, the top mainland players will seek to establish market dominance in Tasmania. Many will adopt a strategy of acquisition and conversion of their Tasmanian-based competitors to push growth more quickly than that provided by a cold startup in this State.
Linked to the globalization of brands will be the entry strategy into Tasmania of the "buy rather than build" approach by foreign companies, both franchised and non-franchised, and the purchase of foreign master franchises by Tasmanians seeking a fast entry into new business segments.
The quest for acquisitions will not just come from competitors. Three other emerging groups are being attracted to franchised networks;
• downstream suppliers seeking to secure distribution
• private equity and venture capital groups who understand the value of branded networks
• overseas companies looking to establish in Australia
4. Is franchising adding value?
While Australia is a small market (currently 960 franchise systems operate in Australia from 62,000 franchised outlets) it punches well above its weight in terms of profit per unit and has proven attractive to US based McDonald's, Burger King. KFC, Subway and Jani King. International franchising will become a bigger part of the revenue stream of our more successful franchise systems with emerging markets like China and India creating new opportunities. Companies such as Cash Converters pioneered internationalization of their brand many years ago, but in more recent times, and more successfully, franchises such as Gloria Jean's, Cartridge World, Howard's Storage World, Boost Juice, Aussie Pooch Mobile and Action International have demonstrated that Australian developed franchise systems can make it on the world stage.
5. How do I become a franchisee?
First, decide that you really want to be in business for yourself and are prepared to take the risks involved in owning your own business. While franchised businesses have substantially higher success rates than independent businesses there are still franchise failures and no franchisor can guarantee success.
The vast majority of franchised owner operators had no previous business experience before buying their first franchise. Franchise companies select their franchisees on the basis of a reasonable financial foundation and a judgment about their drive and commitment to owning their own business and their ability to learn and how to run a business and take care of their customers. Many banks now have franchising divisions that will lend up to 70% of the total capital required to establish franchises accredited by those banks. As a result, a major barrier to entry into business format franchises has been significantly lowered over the years.
Visit the Franchise Council of Australia website to review the substantial number of franchise opportunities that are available in Australia. When you've chosen a franchise that is of interest, obtain a list of current franchisees from the franchisor and call a good cross-section to determine if they are satisfied with their franchised business and the franchisor: their strong endorsement is an excellent indication of success.
6. What is the future for franchising?
Based on the double-digit growth trend over the last five years, the Australian franchise sector will grow at an annualized rate of at least 10% per year. Within 5 years there will be around 100,000 franchised businesses representing 1200 franchise systems, and Tasmania will have a growing share of these franchises as it moves from currently being substantially under-represented on a population basis in comparison with mainland states.
The Franchising Code of Conduct and policing by the ACCC have lead to better conduct in the franchising sector. There are more accountants and lawyers in Tasmania who understand franchising and are better able to advise prospective franchisees.
Franchising is healthy and the prospects for Tasmanian development look good.
Tasmania the new frontier - To learn more about this author, visit Rod Young's Website.
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