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Australian Franchising's Unhealthy Trend

I would like to believe that the results of the annual Griffith survey of franchisors was an indictment of the tainted franchising reputation in Australia indirectly referred to earlier this year by the Chairman of the Australian Competition and Consumer Commission however, the small business climate suggests there are far greater influences.

Oh I continue to get a steady flow of franchisee complaints including some from well known brands such as the always reliable Wendys, Bakers Delight, Cheescake Shop and Poolwerx and sure I would not be surprised if they have stepped up harsh business relationship practices as a symptom of franchisor revenue desperation but hey; this is franchising Australian style so why not?.

Griffith University's annual Franchising survey this year shows almost half the sector (49.2 per cent) see a lack of franchisee finance as a critical challenge, second only to finding franchisees (77 per cent).  Courier Mail

Small business investor confidence is in a hole ensuring new prospects for franchising are becoming a tad scarce. Franchisors in a position to finance new or multi unit franchisees are utilizing that ability in attempts to grow or maintain network size.

The reality is that the banks’ considerations of finance to small business have taken on a much tougher stance in light of poor Australian consumer confidence and spending while small business bankruptcies and voluntary administrations are well and truly on the rise.

As James Thomson, Editor at SmartCompany points out; it is getting ugly.

The more I look at the survey, the uglier it gets. The picture is of an SME sector hanging on for grim life as traditional conditions continue to worsen. And so far at least, no amount of rate cutting is having much of an impact at all.

 

Of course you can easily find articles and fuzzy data suggesting consumers are getting happier however, no matter how much hissing and fissing the feeble attempts to talk up the market, business is down and its taking a whole lot of people with it.

My comment at the bottom of the SmartCompany article sums up the small business outlook around the 2013 federal election. To take from Paul Keating, Prime Minister 1991-1996, Australia is in a 'recession mentality'.

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