There are approximately 1,175 business franchises in Australia turning over $172 billion in revenue and employing over 570,000 people.
The franchise industry provides a jumpstart to a business owner with proven systems and brands that customers already recognise. They also allow a group of like-minded small businesses to come together and help each other move their businesses forward, meet challenges and take opportunities. It is the team environment applied to business.
Interestingly, growth in franchisees has been driven by the entry of Generation Y, supported by their parents’ capital investment. Franchising offers Generation Y consumers who want to be their own bosses, the support and training structure they require to succeed.
Common franchised businesses sit across all sectors including:
Administrative & support
Accommodation & food
What we do for this industry
While we provide excellence in tax compliance assistance including BAS & Tax returns, we can also assist with:
Evaluating the viability of the franchise and how it can impact on your personal assets
Business stress assistance
Book keeping services.
Challenges & Opportunities
While there are many benefits from starting a local franchise, there is also the need to fully understand the payment structures and the effect they might have on cash flow. Often there are ‘hidden’ payments that you are obliged to undertake (e.g. brand promotion levies) that can eat into your profit.
In a good franchise, there is support provided from both the franchisor and the other franchisee business owners, but there are still many business decisions you need to be on top of for your specific operations.
Strong legal advice around contracts and an understanding of your obligations are critical.
Case study 1: Staff productivity
An established franchise business was having productivity issues with some key staff. There was a misalignment with key motivations of the staff and owners and this was impacting their profitability.
Analysis of the businesses financial data showed areas where improvements could be made. Working together to clarify goals and expectations, we then created a bonus structure to suit the needs of the owner and a point of motivation for the staff.
With both of the staff and the owner collaborating and moving in the same direction, the strategy increased turnover for the business by $650,000. It has also removed some of the pressure from the owner and resulted in better work/life balance.
Case study 2: Solving cash flow problems
A franchised business was growing rapidly because of strong brand exposure and this created cash flow issues for the business. On top of this, legislative changes were also creating difficulties with cash.
We worked with our client to help them prepare up-to-date budgets and cash flow forecasts. In times of high growth or high instability, they prepared and review their cash flow on a weekly basis.
By creating an annual and weekly cashflow, our client was able to make better business decisions with confidence. They knew their exact position and what expenses were coming up. When something was changing or different to expected, they were aware of it within a couple of days instead of months. This enabled them to negotiate with suppliers and customers in a timely manner.