The Franchise Council of Australia, the FCA, is currently out promoting the health of the franchising sector based on a survey, Franchising Australia 2008.

"The latest report on the health and size of Australia's franchising industry paints a glowing picture of the sector, reporting 14.6% growth in the last two years and sales turnover of $130 billion last year."

But this survey, whilst conducted by the Griffith University, is sponsored by the FCA, and was conducted well before the onset of the current global financial crisis.

In spite of the current high inflation, and spending downturn, FCA Executive Director, Steve Wright, continues to point to sales figures that are out of date to explain his confidence. This is fooling no one, and franchisors are preparing their businesses for a downturn.

"Mr Wright says at the FCA's National Franchise Convention in Sydney last week, 7-Eleven senior executives discussed 'compressing' costs, mainly by cutting back on back-of-house systems.

Poolworks have opted to hold off tooling up its mobile fleet until it assesses the summer demand.

Snap on Tools recently announced it would allow franchisees to consign its inventory through a payment system instead of insisting on an upfront purchase.

Clark Rubber, which undertook a management rescue plan in June to help stores struggling with water restrictions and market conditions, has said it will curtail future expansion plans but hopes to get through without any further impact on their retail network."

The way the franchisor manages this economic slow-down will directly affect their franchisees, which should be of concern, as they have no control in these decisions.

So why are the franchisors so optimistic? Perhaps this question explains it.

"But can rising unemployment, especially among those leaving the executive ranks with a largish redundancy payment, actually help franchising?"

Could it be that these are the future franchisees that the FCA sees as the saviour of the franchisor?

See the article at Small Business, Australia

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