If you want to start your own business, buying a franchise from a successful operator means that you are buying into a business system that is already tried and tested. As a franchisee, you will also be provided with substantial sales and administration support and your company will be well branded in the market. All these factors reduce business risk and contribute to the popularity of franchising.
Franchising as a business concept has been particularly popular in Australia. Since its humble beginnings over 30 years ago with the big American fast food chains, franchising has grown and grown in popularity. Australia now has more franchises per head of population than anywhere else in the world. The franchise sector is currently an $80 billion industry and is providing jobs for more than 600,000 people. Nearly 1000 different franchise operations are in Australia at 64,000 workplaces.
The franchise industry is getting increasingly competitive however and there is evidence that some franchisees are even losing money. Consumer confidence has dropped recently and some retail franchises, in particular those in large shopping centres, have felt the pain of rising rents.
However, it is not all doom and gloom for potential franchisees. Franchising will always remain a popular choice for many wanting to own their own business. Figures recently released also reveal that only 5 per cent of Australian small businesses are currently franchised - meaning the room to grow in Australia remains substantial.
So what are the hot growth areas and which franchise businesses will likely prosper in the future?
Below are four ideas to consider when selecting your top franchise opportunity.
1. People are cash rich and time poor. People will rather pay for someone to clean, repair, deliver, maintain - rather than spend their free time to do it themselves.
2. Find a niche. Sometimes, the key to success could be targeting a specific group within a group. An example could be a healthy fast food franchise like SumoSalad.
3. Look past shopping centres. As rents continue to rise, more franchisees are looking at innovative and less expensive locations, such as home based franchises or retail vending machines.
4. Identify your target market and OVER deliver. "What makes any franchise successful is tapping into what consumers are looking for," says John Brown, Western Australian Principal of Franchise Alliance.
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