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Concept creates mixed feelings

FRANCHISING is one of those odd concepts in business which create mixed feelings for market watchers.

The franchise, by its very nature, limits creativity yet it still provides the flexibility to all grow faster than almost any business.

Typically, fast food is the image which is first conjured by talk of franchising but the idea has been adopted almost universally across the business spectrum.

Even private client banking works under such guidelines.

But there is a little bit of that pervasive Americana, with franching being almost synonomous with McDonalds hamburger chains, which initially made the concept a dirty word.

Franchising was the carrier of foreign concepts which, through the transfer of skills and technology, quickly beat the existing competition.

These days, the global village has a more level playing field and we can now see franchises from WA sprouting up around the world.

With a growing army of people leaving careers for self employment, a franchise is often a more efficient way of moving on, compared to study or learning from scratch.

New laws have helped get rid of the worst examples of franchising which led to a few headlines last decade.

Franchising has also proved that it is not the be all and end all, but just another business model which can be used to help operate profitably.

Beware the monopoly

THE insatiable appetite for growth that drives business constantly throws up reminders about why we must protect ourselves from monopolies.

It is healthy for business to crave growth.

Few would argue that anyone is well served by complacent companies in under-serviced markets.

Such companies inevitably become fat and lazy, unresponsive to change and often fail to meet standards once regarded as a minimum.

In the best case this leads to a takeover, in worse situations it leads to corporate collapses, often preceded by the disastrous consequences of poor maintenance and inadequate supervision.

In some industries this means lost money, in others lives can be put at risk.

Even in the best case scenario, the takeover, lives are likely to change as new management purges the old.

Against all this law of the jungle and survival of the fittest mentality is the danger that allowing industries to consolidate to the point where one or two big players dominate has its dangers.

Should anything resembling a monopoly or even a duopoly be allowed to exist, the above criteria start to show.

In other words the very thing competition sets out destroy, ineffeciency, can be created in a vastly more damaging form than previously.

The energy business, particularly the retail side, is fast resembling a market in which the players’ clout outweighs the ability of competition to do anything about it.

One of the problems with fuel, of course, is government taxes take such a big percentage. Unfortu-nately, big oil companies no longer prompt the sympathy required from the buying public to point to the real reason for high petrol prices – politicians addiction to raising money.

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