Does franchising look more than ever to be the new black for small business? asks Tanya van der Wall and Carolyn Evans.<\/p>\n\n\n\n
Revisiting a paper developed originally for our client, the Australian Business Foundation, the team reviews signals that franchising is becoming a business model in itself, not just a vehicle for growth or a phase in the business life cycle.<\/p>\n\n\n\n
In July 2010, amendments to the Franchising Code of Conduct were welcomed by many in the industry as striking a reasonable balance between the obligation on franchisors to disclose all relevant information, and a franchisee\u2019s own obligation to undertake due diligence, not least to determine the appropriate fit with the franchise system.<\/p>\n\n\n\n
But, as with so many sectors in the Australian economy, even where these obligations are in harmony, access to skilled people remains one of the challenges to growth. Finding suitable franchisees remains a high priority for many franchisors – a better understanding of the personality traits and skills required would assist franchisors better inform their stringent selection processes.<\/p>\n\n\n\n
It is a problem of many parts though – not least the risk for franchisees if suitable successors cannot be found in appropriate locations, meaning the business cannot be on-sold as a result. Few franchisees realise that succession planning from the outset is crucial for the protection of their own investment.<\/p>\n\n\n\n
And, while the sector remains optimistic about the growth coming out of the (latest) GFC – reporting ongoing intentions to recruit new franchisees – where to find those star recruits will continue to challenge the sector.<\/p>\n\n\n\n