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Franchisees’ safety is not in numbers

THE number of business offering franchises has dropped markedly in recent times, but that fall has coincided with better quality in what is on offer.

Retail Traders Association manager Brian Reynolds said a franchising code of practice was drawn up by the Department of Employment, Workplace Relations and Small Business in 1998.

“I don’t think we’ve seen franchises increase to the extent of other years but that’s recognition that not all business formats lend themselves to franchising,” Mr Reynolds said.

“We went through a period where there was an explosion of franchises about three years ago.

A number of dubious franchise opportunities in the past have tarnished the reputation of franchising for the entire industry, however the code of practice has strict regulatory controls that have eliminated many of the questionable operators, Mr Reynolds said.

Franchise Council of Australia state president John Brown said the franchising industry took about 12 months to settle down after the introduction of the code of practice, however activity in the sector increased in latter half of 1999 and 2000.

Historically, the growth rate of franchises is higher in tough times because they offer employment stability for the franshisee.

“Particularly after the housing boom, people have big mortgages and a franchise is one option in terms of being self employed,” Mr Brown said.

“You can’t take all the risk out of business but you significantly reduce the risk of going into business with a franchise.”

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