Franchising – the past five years

A PERIOD of rapid franchise growth began in WA in 1993. Statistically, until then WA had been lagging behind the other states in terms of the growth of franchised business units in the marketplace.

Annual growth rates of 15 per cent to 18 per cent were commonplace over east whilst Perth struggled with rates around 6 per cent to 10 per cent per annum.

Most prominent eastern states-based franchise systems ignored WA until recently, even though Perth offered them a relatively open opportunity to establish a viable business, with local competitors not really understanding the impact franchising would have.

A typical franchisor quote: “It is too far away and offers too little in terms of opportunity compared to the larger states”.

Because of the reluctance of the ‘big boys’ to come to Perth, local entrepreneurs chose the alternative pathway and set about creating their own systems. Research was mostly confined to the eastern states while some travelled as far away as the US to study trends and niche market developments.

The result is a strong collection of local franchise businesses that have prospered during the times when others chose to ignore WA.

A number of these groups have expanded across to the other states of Australia and internationally providing revenue streams back to the WA economy.

Today it is a different story. Most recognised groups are now well established in WA and local activity continues to grow. Annual growth rates are quoted at around 14 per cent to 16 per cent and WA is clearly abreast with the national trends.

The introduction of the regulated code of conduct in October last year caused a minor slip in growth rates as people became familiar with the new regime – but activity is again stronger and prosperous.

• John Brown is principal of Franchise Alliance (Perth)

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