Franchising in Australia is one of the most dynamic and progressive business sectors in the economy. But with so many franchising models on the market, how do you know which is the best franchise business for you?
Here we look at some of the franchise systems available to potential franchisees:
Franchising is a business relationship between a franchisor (owner of the business providing the product/service) and a franchisee (an independent person who holds the right to market and distribute the franchisor's goods or services). Franchisees also have the right to use the business name for an agreed fixed period.
The retailer is the franchisee selling the franchisor's product directly to the public. e.g. New motor vehicle dealerships.
The retailer is the franchisee under license who manufacturers and distributes the franchisor's product. e.g. Soft drink bottle arrangements.
The retailer is the franchisee that purchases products for retail sale from a franchise wholesaler. e.g. Hardware product stores.
The franchisor markets a particular service or product under a common name and standardised system via a network of franchisees. e.g. McDonalds, Harvey Norman.
Essentially, the type of franchise system you choose is going to determine the type of work required to run the franchise business. In Australia, there are five key franchise categories: retail, management, single operator manual, single operator executive and investment.
The retail franchise owner occupies retail premises. They sell products or services during retail hours. This business is totally dependent on the premises, as turnover is achieved solely on walk-in customers. Therefore, the franchisee will generate the majority of turnover from walk-in customers. They also must work and manage the franchise business during retail hours. Staff must also be employed and managed.
The management franchise owner exercises their experience of the franchise business and manages staff. The franchisee needs to employ and manage skilled staff, do their own administration in providing products/services, and market their business personally. They are required to deal more with businesses, as opposed to the general public.
Single operator franchise manual
The franchisee will usually work at the franchise in the form of supplying, selling and delivering products or services. This can be home-based, mobile or from a small office premises. Therefore, the franchisee will need to learn or specialise in the trade, deal with both the general public/consumers and market the franchise locally to grow the business. As the business builds, staff can be employed.
Single operator franchise executive
The franchisee will usually supply a service that is either mobile, home-based or from a small office premises. This type of work is an executive ‘white collar’ service, so the franchisee must learn the business and work office hours, as they will be dealing with businesses as well as the general public. They initially work on their own and can employ additional staff as the business grows.
The franchisee invests a large sum of money into the franchise. e.g. A hotel or car rental business. This allows for the franchisee to work at arm's length, employing a management team to operate the business on their behalf. Therefore, the franchisee does not work at the franchise, but they do need to have experience managing a large professional team.
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