From its early days of being identified primarily with fast food outlets franchising has now expanded to include most product and service business in most industry sectors. It is hard to think of take-away food without thinking of a franchised format.
It is difficult to purchase petrol except through a franchised petrol station, and it’s impossible to imagine a shopping centre without franchised stores.
Business format franchising
A business format franchise such as the OzSpy franchise is a unique relationship between the franchisor (the owner of the system) and the franchisee (the owner of the individual outlet), which is commonly referred to as a commercial marriage. The term business format is used because it includes a complete turnkey system of business set-up, tools, services, knowhow and support. You are never on your own.
Franchising in Australia
Franchising has revolutionised retailing in Australia, and provided small business proprietors with the competitive resources to compete against the large corporations that dominate Australian retailing.
It is amongst the most dynamic and progressive business sectors in the Australian economy and its economic impact is substantial and growing. The franchising sector is estimated to generate total sales of approximately $130 billion and employ approximately 600,000 Australians.
The ongoing relationship
This ongoing business relationship includes the product, service and trademark, as well as the entire business concept itself from marketing strategy and plan, operational standards, systems and formats, to training, quality control and ongoing assistance, guidance and supervision.
The business relationship enables the franchisor to expand its market presence and the franchisee has access to established business systems at lower risk.
The Franchise Council of Australia
The Franchise Council of Australia Limited (FCA) is the peak body for the franchise sector in Australia, representing franchisees, franchisors and service providers to the sector. Amongst many other contributions to franchising in Australia the FCA has established standards of international best practice in business format franchising for Australian franchise systems;
It is also a major provider of information and education about franchising in Australia.
Here is a link to the Franchise Council of Australia website:
The Franchising Code of Conduct
The franchise sector has been regulated by the ACCC since 1998.
A cornerstone of the regulation is the Franchising Code of Conduct. The 'Code' has been created to assist the ongoing relationship between the franchisee and franchisor. Issues covered include:
Disclosure of the pertinent information regarding the Franchisor,
Conditions contained within the Franchise Agreement, and
Complaint handling and dispute resolution procedures.
Advantages and disadvantages of franchising
There are many advantages to owning a franchise business compared to setting up a new business on your own. However a franchise is not always suited to everyone. The following links will lead you to two articles that appear on the Franchise Council of Australia’s website. These list many of the advantages and disadvantages of purchasing a franchise. Be sure to read these.
In short, it provides small business (the franchisee) with the tools of big business (provided by the franchisor).