Business Franchise Australia


Back to Basics – What is a Franchise?

Back to Basics – What is a Franchise?

There is little doubt that franchising is on an exponential growth curve.

Over the past few years, the franchise industry has expanded from its once ‘fast food’ and ‘automotive services’ label to a multi-faceted industry where almost anything can now be franchised. If you check out any franchise portal you will see literally hundreds of franchise offerings.

Not only has franchising grown in terms of industry diversity, but the franchise model has also grown as new industries enter the franchise arena.

Typically, franchising was always related to a storefront operation in a high traffic location and ‘location, location, location’ was always the key phrase for success. In today’s franchise environment the storefront is quite often a secondary situation and home-based, and even cloud-based franchises are becoming extremely prominent. ‘Location, location, location’ has now in many instances been replaced by ‘support, support, support’ as the keywords for franchise success.

Many first-time franchisees are individuals transitioning from the corporate world into self-employment and entrepreneurship. The lure of a home-based office, after possibly many years of commuting, has an enormous appeal and franchising has adapted to accommodate that situation. Technology has also played a significant part in boosting the home-based model. Numerous franchise opportunities can now be run quite successfully with a computer and a telephone, and the need for more expensive equipment and premises, and sometimes staff have  been eliminated.

Notwithstanding all of these changes which, in the main, have worked for the benefit of the franchise industry, the basic underlying model has not changed over the years. A franchise is still only a system. However, it is a system that has certain noticeable characteristics. Those characteristics include the fact that the system of the underlying business can be written down and replicated in numerous different environments. Invariably a franchise also represents an in-demand product or service, albeit sometimes in the short term, and the franchising aspect accommodates a rapid distribution opportunity.

Regardless of whether a franchise is homebased, a storefront, a manufacturing operation, etc. the underlying element is still a very specific system. If all franchises are reduced to the common denominator of only being a system, what sets one franchise above another? In virtually all franchise sectors there are a large number of franchise opportunities to choose from. In the fast food sector for example, hundreds or even thousands of opportunities still exist, and the diversity and variety also continues to expand. A similar situation extends with automotive services, print shops, sign and graphic stores, and so on. Quite often one of the elements that a would-be franchisee should consider is that of history. A franchise that has some solid history will naturally have some extensive track record that as an organisation it can share with their franchisees, which in turn should assist a new franchisee in developing and promoting their business in a rapid manner.

Therefore, when seeking out a franchise opportunity, an individual should explore the background and longevity of the organisation. A franchise organisation that can demonstrate a good base of franchisees and many years of operation will certainly be able to bring a mature model to the marketplace. Because a franchisee is acquiring a system, they expect that system to be as mature and well-tuned as possible. It is only history that can develop that fine-tuning.

Regardless of the franchise model that an individual may explore, a solid due diligence approach is always of paramount importance. A franchise is not something that can be purchased ‘off of the shelf’, but is usually considered an award to an individual who, in turn, also brings suitable history and experience to the franchise organisation. Franchisors look at potential franchisees and expect them to have a suitable and appropriate background for the franchise in question.

What is a franchise – it is a system that has been tried and tested and proven. Would-be franchisees should therefore always look for the well-tried and tested aspect in any model that they are considering. When it comes to a mature business model, a franchise with solid positive history should always stand out from the crowd.

David Banfield
The Interface Financial Group

Age and experience are without doubt key elements for any successful franchise. David Banfield is the President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas.