Entry Strategy
Australia has nearly 1,200 franchise systems, with more franchising outlets per capita than the United States, and has been referred to as the “Franchising Capital of the World”. For many Australians, owning and operating their own business is a lifelong dream, and franchising is a relatively low-risk way to achieve this goal. This form of business is fast-growing, and more than 400,000 Australians are employed as a result of franchising (Vucic). Since 2010, franchising has grown by 15%, which can be attributed to the enactment of specific and compulsory legislation that governs franchise relationships (Baybridge).
There are different forms of foreign franchising in this Australia; however, we believe direct franchising is the best option because it provides ultimate control of the franchise network as the two parties involved will have a direct relationship. It also allows for the direct supply of products or allowances made to source own supply. Cultural barriers will have to be worked out to provide adequate training and a third party advisor can help with local customs and commercial practices (Baybridge).
Australia has many channels of support for this form of business as more and more companies emerge that aide in franchisee training, franchise system development, public relations and marketing (Vusic). The Franchise Council of Australia provides key aspects of franchise decision making, management, and practices from experts in their field (FCA).
The rules and regulations of franchising can be found in Australia’s Franchising Code of Conduct. The purpose of this Code is: “Regulating the conduct or participants in franchising to other participants in franchising” (Baybridge). Recent recommendations have been made to simplify regulation and lessen red tape. A risk statement should be made to the potential franchisee before they commit.