Franchise Asia April 2017

International Focus
Australia has a strong banking system,
and banks are prepared to loan some
monies to prospective franchisees against
the goodwill of the business. FRANdata
has recently expanded in Australia to
assist in this process, by encouraging
the banks to evaluate systems and be
prepared to loan monies to well-run
franchise systems and their potential
franchisees. Please visit: http://www.
frandata.com.au
Professor Frazer, in her 2016 report states
the total start-up cost for a new retail
franchise unit was $287 500 compared
to $59 750 in a non-retail franchise. This
included an initial franchise fee of $31
500 in retailing compared to $28 000 in
non-retail franchises.
The shortage of franchisees has led many
companies to seek hardworking people
who wish to come to Australia to apply.
This has led to quite a deal of Business
Immigration, adding to the ethnic diversity
of our country.
Regulated markets
Franchising has become a mature
distribution method for many major
companies. The Federal Government
has stepped in to place some forms of
national regulation over it, by legislating a
Code of Conduct, which is administered by
the Australian Competition and Consumer
Commission (ACCC). The Code of Conduct
is aimed to be:
• Fair to both parties
• Ensure a proper Disclosure Statement
is provided to would be Franchisees
• Ensure the Franchise Agreement is
reasonable to both parties
• To minimise legal actions by bringing
an arbitration process in before Legal
actions are taken.
Any company wishing to Franchise in
Australia must comply with the Code of
Conduct or risk prosecution by the ACCC.
There has been some push from various
state governments over the last 10
years to introduce their own separate
regulations; however this has not come
to pass, meaning that we have one set
of regulations Australia wide. The huge
advantage of this is to minimise red tape,
unlike some other countries (such as
the USA), where some states have their
own franchise regulations, meaning to
individually comply in registration and
fees from one state to another.
Summary
Franchising is moving slowly forward in
Australia where we have a relatively mature
market, and a great variety of systems
working under the franchise format.
Australia is open to business for
international franchise systems to
enter the market with minimal foreign
ownership constraints. The main point
of difference to many other countries is
our relatively mature legislation which is
definitely aimed at ensuring the franchisor
acts responsibly, and encourages the
franchisees to be properly funded and act
in a responsible and legal manner.
If you are looking to enter Australia, we
recommend you liaise with the Franchise
Council of Australia, and look at using a
responsible consultant to assist you, and
a legal firm who specialise in Australia’s
Franchise Law.
We look forward to welcoming you and
your business into Australia.
Peter Buckingham
is the Managing
Director of
Spectrum Analysis
Australia Pty Ltd, a
Melbourne based
Geodemographic
and statistical
consultancy.
Spectrum
specializes in
assisting clients with decisions relating
to store and site location, strategic
network planning and territory planning
using various scientific and statistical
techniques. To contact Peter email
peterb@spectrumanalysis.com.au or call
on 61 398300077.
Franchise Asia • 2017 Vol 33
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