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Log In / Register | Dec 21, 2014

Franchising Sustainability Answer

The Asia-Pacific Centre for Franchising Excellence at Australia’s Griffith University has won research funding following some reputation damage for an industry reporting some high profile collapses.

‘Survival of the Fittest: The performance of franchised versus independent small business during economic uncertainty and recovery’. Franchising

Whatever this report produces, given the Franchise Council of Australia is one sponsor selective reporting can be expected yet again.  Here we have a slight of hand FCA opinion as an example of what lies ahead.  This is how you offer an opinion with an opening statement that there is no supporting data and then end up suggesting there is a factual basis for that opinion;

Over the last two or three years, it's become apparent that there's a lack of empirical data about the factors in success and the reasons for failure among franchisees.

We know that as a general observation, in the non-franchise sector, small businesses fail at an average of more than 40 per cent in the first two years. Franchises, on the other hand, have an average tenure of seven years and an average contract of length of five years.

So that means that as a starting point, we can speculate that franchising does appear to give people a much better chance of getting started and staying in business.      Steve Wright FCA

This study focuses on a performance question where the franchise business model is compared to independent business in ‘periods of economic uncertainty and recovery’. 

Given the healthy outlook for Australia’s economy at the moment and already available US research suggesting Mr Wright manipulates the sustainability truth, I would have thought perhaps this funding would have been better utilized to investigate decades of franchisee turnover.

However; this will be an interesting report where either the findings will contradict US research or contradict the wishes of the FCA.  There are questions and there will be answers but the sustainability question will be lost in the politics.

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