What is all the hype about Franchising in Australia?

After over 100 years of success, Kodak couldn't survive employing the same business strategy. It tried to change and grow, but an organisation like Kodak still failed.

Let's be real! There are plenty of stories like Kodak that fill our history and provide education for our future. It is no different with franchise brands.

Do we have to be competitive? Absolutely. The market dictates this and accordingly the expectations continue to increase.

Everything has a life span, it's up to the business owners to be informed and be responsible for their own business decisions. Franchising provides an opportunity, a very high prospect of success opportunity, which should not be taken as granted. The franchisee must still consider the merits of the opportunity and continue to question the strength of the model, leadership and business over the life span of the product or service being offered to the market place. The franchisee cannot and should not assume that all will go according to plan forever, it rarely does. More astute franchisees have some foresight and observe the ongoing performance of the network and what the market is dictating.

Rumours are that there are a number of significant brands under scrutiny. We have had a few of late, 7 Eleven, Pie Face and VW but let's not be surprised if there are more. There will be. We are a growing economy and franchising continues to grow as a result. We will see some of the old brands being taken over by new brands. Why, you might ask? Because they are introducing perhaps the same or similar product or service but in a way that meets the consumer’s demand, the growing appetite for organic or healthy alternatives, rather than fast food, the causal option and speed of service.

It's called 'Evolution' and those that don't evolve will perish. This is not a new concept but funny how people seem to forget its importance.

No matter what is happening in franchising, the franchisor and the franchisee both have a role to play in its success. Those looking for the quick million, a visa or a means to keeping a job might not be doing the sector any favours. Politicians are forced to react at times based on who screams the loudest, but let's be honest without franchising in Australia we would not have McDonalds, famous hotel chains like the Hilton, Marriott or the Wyndham Resorts, Hertz, Audi, Porsche and many other well-known brands close to home. With an estimated 79,000 units operating in business format franchises and over 460,000 people employed directly in franchising, the sector’s contribution to Australia’s economy cannot be discounted.

There is no doubt, some franchisors need to be put under scrutiny and asked the tough questions, particularly if they are not working towards the ultimate outcome which is to ensure success is tasted by both franchisee and franchisor. However, those that are quick to scrutinise franchising as the culprit need to reset their thinking. Some franchisors will strive to achieve this outcome, however in some cases like Kodak, others will evolve or die. For some this is a very difficult challenge.

Marwan Kojok is the Managing Partner of premier franchise firm Baybridge Lawyers where he specialises in emerging and mature franchise systems and franchise litigation matters. Marwan has over 18 years’ experience assisting franchisors manage their legal affairs along with assisting in the development of their networks and maintaining their brand goodwill and compliance with the Franchising Code of Conduct. Marwan works alongside some of the fastest growing franchise networks including, Top Juice, Shingle Inn, Total Tools, Coco Cubano, Audi and many more.