Why Aren’t More Australian and New Zealand Franchises Going International?
That’s the question I asked myself when two of my New Zealand clients asked me for help in expanding their franchises into Australia.
New Zealand has been called the most franchised country in the world and 71% of the franchises here originated in New Zealand, but only around 20% of New Zealand homegrown franchises have entered international markets and the 2021 Franchising New Zealand Survey showed that intentions to expand internationally are significantly lower than in 2017.
Why is this?
Because New Zealand is a small market, you would think that mature franchises would have reached market saturation here and be keen to expand into larger offshore markets. But after being a big fish in a small pond, it’s a scary move to become a small fish in a big pond.
Having said that, the Australian franchise industry isn’t much different. Australia has more franchise outlets per capita than any other country except New Zealand, according to the International Trade Administration.
An impressive 90% of franchise brands originated in Australia, but only 32% are currently franchising internationally. That 71% of these expanded to New Zealand first is hardly surprising given how close the two countries are, not only geographically but in their heritage, language, cultures and legal systems. That they ranked the UK, US and Europe higher than South East Asia in their internationalisation plans demonstrates that geographical proximity is not always the most important factor.
Geographic proximity is not always the most important factor in franchise internationalisation strategy
For example, New Zealand-based companion driving service Driving Miss Daisy, the market leader in their home country, chose the UK as the next step in their global expansion strategy. Why not Australia, which is a simple ‘jump across the ditch’, as we say? The founders no doubt had family or contacts in the UK but other reasons would have included that the public health system there is similar to that of New Zealand, providing subsidies for mobility transport, and as in New Zealand, there are no specific franchise laws there, making it simpler to set up a franchise. In comparison, Australia has a different public health system and fairly rigorous franchise legislation.
Interestingly, the Driving Miss Daisy franchise has recently also entered the Australian market under a master franchise arrangement with the same Australian franchise consultants who helped them expand into the UK.
Has your franchise reached the limit of its growth in your home country? Is it time you spread your wings?
My next blog will explore the pros and cons of international expansion, feature some successful case studies and identify the critical success factors. To ensure you don’t miss it, subscribe to my email newsletter or follow me on Linkedin, Facebook or X.
“Nice work Robin. I read your blogs and find them thoughtful and useful.”
Greg Nathan, Franchise Relationships Institute
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