Australia has one of the highest rates of franchising per capita in the world. Put simply – franchising is so hot right now. And why wouldn’t it be? Reliance on a particular system and intellectual property for the common good just makes good business sense. As a self-confessed guru of all things ‘en vogue’ (or so I like to think), I’ve set out some of the current trends in franchising, as well as those that are, well, on their way out.
Health and Fitness Based Franchises
There are many new and emerging players in the health and fitness industry in Australia, and many of these are choosing to franchise as their preferred model to facilitate growth.
With startup costs only a fraction of their brick and mortar counterparts, food trucks are a great option for those who want to enter the food scene without the eye-watering large fit-out bill. And extra points for the cool factor, of course.
While these are not a new invention, some franchisors and franchisees are using tech to create on-line forums, blogs and webinars to promote communication between the franchise network. When you think of the wealth and knowledge that can be tapped into, this just makes good business sense.
Franchising got a bad rap last year with the well publicised 7-Eleven scandal, closely followed by a similar, albeit smaller, situation among Oporto franchisees. This appears to have prompted numerous franchisors to crack down on franchisee compliance, both with their obligations to the franchisor and under other applicable law (including the Fair Work Act). Franchisors are particularly using their audit powers and implementing prescribed systems and documents that franchisees can use across the network to ensure compliance.
Refusing to Negotiate
Once upon a time, it was near impossible to get a franchisor to change its standard term franchise agreements. Nowadays, particularly with the upcoming unfair contracts legislation, a lot of savvy franchisors have caught on to the fact a refusal to negotiate can have effects down the track when enforceability is questioned (not to mention its good practice to engage in negotiations and cooperation from the outset).
It seems a lot of prospective franchises are turning away from the burger and pizza giants of yesteryear, and looking for more niche products and offerings. Not only do these generally come with a much lower upfront franchise fee, they also, at least with some of our fabulous clients, have the all-important X-factor.
Old School Franchise Lawyers
Yes, this is a shameless plug. But it’s great to see so many new and emerging brands are embracing ‘new law’ firms, with their lower costs, a greater focus on technology, and quicker turnaround times.
Hard Copy Operations Manuals
And on the topic of technology, it seems many a franchisor is embracing the ability to provide, not to mention update, their Operations Manuals without the need to kill more trees. Having a manual that franchisees can access anywhere and that you can amend in real time may also assist in demonstrating the system that ought to apply.
What do you think? Tag us on Twitter @legalvision_au and let us know or get in touch with our franchise lawyers.
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