Franchising Australia 2012 report - Thewebconsole.com

One quarter of franchisors reported that they had made changes to their operational practices inresponse to environmental concerns. For most, the adaptations were undertaken to remaincompetitive and because they felt the change of practice was appropriate.Social mediaFranchisors are rapid adopters of social media with more than 90 percent indicating theyuse social media such as Facebook, intranets, Twitter or Linked in to communicate withfranchisees and customers. This level of adoption is far above that of independent smallbusiness, reflecting a more sophisticated communication capacity amongst the franchisingcommunity.Online salesOnline sales are facilitated by almost 40 percent of franchise systems but fewer than5 percent of total sales occur online. It is clear that eCommerce activities are in a stage ofinfancy in most franchise systems.Franchising disputes and unit closuresSubstantial disputes (those referred to an external advisor for action) were reported by18 percent of franchisors, who were in dispute with an average of two franchisees. Hence,across the sector the proportion of franchisees in dispute with their franchisor wasestimated at 1.5 percent. These findings have remained relatively consistent over the pastdecade and are consistent with data provided by the Australian government 5 . Reporteddisputes reflected the diverse industry profile of the sector but were less likely to be foundin small franchise systems (1 to 20 units) or large systems (more than 50 units). The mostcommon causes of disputes were those related to system compliance, franchise fees,territorial issues, misrepresentation and profitability. Only 3 percent of franchisors weresubject to a formal audit for compliance with the Franchising Code of Conduct by theAustralian Competition and Consumer Commission (ACCC).International expansion by Australian franchise systemsThe degree of penetration into overseas markets has remained relatively stable over thepast few years. Some 28 percent of franchisors are currently operating internationally.ConclusionAustralian franchising has endured the recent years of economic instability quite positively.The net growth in the sector disguises differing degrees of resilience amongst industrygroups. The retail sector continues to struggle with weak consumer outlook, pricediscounting practices and the challenge of eCommerce. Conversely, the non-retail sector hasexperienced renewed growth as entrepreneurs continue to find gaps in the market that5 Department of Innovation, Industry, Science & Research (June 2010). Report by Orima Research: SmallBusiness Dispute Resolution.Franchising Australia 2012 Page 13