OK, I’m not excusing those franchises which were panned and damned by the recent Parliamentary Enquiry into Franchising. They should have known better and there is no excuse.
But news.com.au has taken it upon itself not just to report this news but to produce a little video that claims that the “franchise model seems to collapse over and over” and “many” of the 79,000 franchised businesses “end up bankrupt or caught in legal battles with their franchisor”.
This is patently untrue otherwise there wouldn't be 79,000 franchised businesses in Australia, making it one of the most franchised countries in the world.
Other news media have also jumped on the franchise shaming bandwagon.
Is this fair and balanced reporting? Should we judge the many by the actions of a few? T
he Australian media seems to have made itself judge, jury and executioner when it comes to franchising.
These so-called news stories seem to indicate that the whole of the franchise industry is rotten to the core.
Yet the facts are that:
- the franchise sector accounts for about 9% of the entire Australian economy or around $170 billion dollars
- 580,000 Australians depend on franchising for their jobs
- out of 79,000 franchised businesses in Australia, only a reported 330 submissions to the Parliamentary Enquiry were made by franchisees (that number represents less than half a percent of all the franchised businesses out there)
Now I’m not saying that that number represented all the unhappy franchisees in Australia. It could be just the tip of the iceberg and many franchisees may have been too afraid to voice their concerns lest they face possible retribution from their franchisors, although the Enquiry did offer franchisees the opportunity to make confidential submissions.
Neither have I taken into account that about 24 percent of franchisees operate multiple franchised units, which means there aren't anywhere near 79,000 franchisees in Australia. You have to wonder, though, if someone would buy multiple units if they weren’t happy with the franchise.
Anyway, as I said before, I’m not making excuses or saying there aren't any issues in the franchise industry.
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Yes, I feel for the franchisees who have been affected by unscrupulous franchisors and unsustainable franchise models. But I also feel for the franchisees who enjoy strong and profitable relationships with their franchisors – yet are finding that their livelihoods and assets are now at risk.
All because the whole franchise industry is being punished because of the actions of a few.
The Parliamentary Enquiry itself acknowledged that the overwhelming majority of franchises were doing nothing wrong – yet most of the news media seems to have overlooked this. The exception was Inside Story which commented:
So while the actions of a few franchisors may be “ruining the lives” of some franchisees, the actions of the news media may ruin many more.
Is that fair?
I'm Robin La Pere, no ordinary business expansion and franchise consultant. I've been involved in franchising for more than 20 years, and I am one of the few franchise consultants I know who have a combination of franchise management, franchise ownership and franchise consulting experience. I understand the industry at every level and across a wide range of business types. I have worked with many franchise systems to improve, develop and innovate.
As someone who believes that the franchising business model is an excellent way to scale while giving people a leg-up into their own businesses, I am appalled by the findings of yet another Australian Franchising Inquiry of misconduct in the industry - and even more appalled by the news media which seems intent on damning the whole sector for the actions of a few.
I have some thoughts which I will share with you in upcoming articles, but in the meantime, here are some of the ways I can help you to establish, develop, improve or grow your franchise.
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A new approach to manuals that works
If you have a team and systems in your organisation, you probably use manuals for training, guidance and compliance. But if they’re paper manuals, they probably spend most of the time sitting on a shelf, gathering dust.
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