TRANSCRIPT
Franchise Council of Australia Chairman Brendan Green has been the Chief Executive of Australia’s largest handyman business, Hire A Hubby, for over 22 years.
He says he noticed a demand for handyman services and took the opportunity to start his business, starting with one franchise in 1996.
"Home Services as they were right back in the mid 90s. When I got the Hire a Hubby thing underway it was largely most people were still doing a lot of the work around their own homes and I just started to see an evolution of, I used to have a little lawnmower business that became while you're here, can you clean the gardens? Can you cut the tree down? Can you take the rubbish to the tip? And that expansion of can you do it for me? became more and more apparent as the years were going through. So by the late 90s we pretty much moved away from the lawns and gardens but no one was dealing with the home maintenance, that sort of repairs maintenance renovation space."
Hire A Hubby now has 335 franchisees across Australia, but Mr Green says it wasn't always easy.
"I was 26 when I started the franchising journey, so you don't have a world of experience to call on. You certainly, often you'll find yourself undercapitalised based on what challenge might be ahead. So access to funds access to business mentors, unless you're able to do both of those and obviously be resilient. You know, it can certainly be a tough road. But, you know, I think at the end of the day, if you believe in your concept enough, and you get the right people around you, you continue to push through those things."
So what is franchising?
Mick Keogh is the Acting Chair of the Australian Competition and Consumer Commission.
He says it's a way of doing business.
"Franchising is a business system whereby the owner the franchisor, has developed a model of a business and sells the rights to use that model to others to expand the footprint of that business."
The International Trade Administration suggests Australia has more franchising outlets per capita than any other country except New Zealand.
The Franchise Council of Australia says there are over 1,200 franchisors and over 94,000 franchise outlets employing 565,000 people in the country.
There is a franchise operating almost every type of business category, with varying levels of complexity and market share.
But why do people choose to join a franchise, and what are the benefits?
Mr Keogh says it can be a good opportunity for entrepreneurs.
"From the franchisees perspective, the benefit is, in normal circumstances, they're picking up a tried business model. So in other words, they don't have to discover everything for themselves in terms of the successful operation of a business. The franchisor has presumably trialled it over a period of time refined it worked out what works and what doesn't, and is then in a sense, passing on that and allowing the franchisee to pick that up and therefore not have to go through a long process of trial and error to get the business successful."
A 2021 survey of franchisees conducted by the Franchise Council of Australia revealed the important role migrants play in the sector.
It found while 57 per cent of franchisees were born in Australia, more than 40 per cent were born overseas with India the second most common place of birth followed by China and the United Kingdom.
Mr Green says migrants are essential to the franchise industry.
"I think across franchising in general, we're all looking for talent at the moment. I mean, we've got a very low level of unemployment right now, which obviously takes away the opportunity for people who might be looking to invest in a self employment opportunity. There are a huge number of brands that are looking forward to immigration pipeline being opened up so we can bring skilled and unskilled labor into the business. So from a Hire a Hubby point of view, skilled labor coming in is a great opportunity for us to tap into people who are looking for an opportunity to use those skills and for us to target a very big hole. So I think it plays a very big and important role across the whole sector."
But franchising doesn't come without it's challenges.
Andrew Terry is a Professor of Business Regulation at the University of Sydney.
He says it can be a complicated industry to navigate.
"Underneath that superficial simplicity it's a fairly complex and intricate business relationship, possibly the most complex business relationship in the business world. I mean, you have a challenging relationship because there's obviously a disparity of power between the franchisor and the franchisee the disparity of knowledge between the franchisor and the franchisee and once the franchisee signs up, there's a loss of independence. The franchisee has to comply with a franchise or system and that obviously creates tensions throughout the relationship."
The Australian government has announced it will review the effectiveness of the regulatory framework which underpins this sector of the economy.
It will aim to investigate the fitness of the Franchising Code, enforcement and dispute resolution mechanisms.
Bruce Billson is the Australian Small Business and Family Enterprise Ombudsman.
He has welcomed the review.
"The franchising regulatory framework aims to support good entrepreneurship in a model of business that when it's done well is a fantastic way of owning your own business but not being on your own. There's been a number of changes to the franchising regulatory framework. It's timely that they be reviewed to see if they're working, the outcomes and consequences are what was intended. And also there's some new aspects such as the Franchise Disclosure register, some increases in penalties, they're all worth a look to see whether they're doing what they were intended to do."
The franchise industry in Australia is worth $174 billion, which Mr Billson says is crucial to the Australian economy.
"It's a vital contributor to economic and employment opportunities in Australia. It's also a good model for entrepreneurship when it's done well, because you can benefit from the experience of business people that have solved many of the problems that you might need to solve on your own. If you're operating a separate business, it does give you a chance to tap into know how, into technology into better practices, that are developed among you and your peers in a franchise system. They're all the good things about franchising, and that's why it's so important to our economy."
