Closing out the year always presents an opportunity for reflection on how we might factor any learnings into achieving the most from the upcoming 12 months.
This year certainly reinforced some key themes we work with in Australian franchising.
Recurring challenges and themes in franchising remain largely unchanged
Frandata Australia has just completed its sixth year of surveying franchise systems quarterly for the Franchise Council of Australia. As I write, the biggest five challenges included:
- Sourcing enough suitable staff to operate franchised units
- The recruitment of quality franchisees
- The financial performance of franchisees
- Access to finance for prospective and existing franchisees
- Franchisee satisfaction
These challenges will surprise few people. Frustratingly, most of these challenges are recurring themes and continue to compromise the growth and performance of so many franchise systems.
AI growth and implementation
The pace of growth in the availability of AI related tools and services has been frenetic.
This has created great opportunities for efficiency and systemisation but has also caused significant anxiety around implementation and broader data security issues. The opportunities and potential risks continue to compete for the attention and resources of franchise systems in Australia.
Beware of the explosion in the number of opportunistic consultants positioning themselves as experts in the field!
Regulatory environment impost
Australia has maintained its reputation as the most regulated franchise community in the world. Franchise systems (many of them small businesses themselves) have reported significant increases in legal and compliance costs as they cope with the latest round of changes to the Franchising Code of Conduct.
The latest changes, particularly around the return on investment components, are not well understood and widespread cynicism remains in relation to the actual benefits they will bring.
Small business trading environment pressure
Whilst housing prices and many non-discretionary costs continue to soar, the easing of interest rates remains slow and cost of living pressures high. The impact on all small business, including franchising, is significant with cashflows coming under renewed stress and pressures high from reduced consumer spending and rising input costs.
Improved compliance
The capacity and willingness of many franchised systems to demonstrate a culture of compliance is the strongest we have seen in our 12 years operating in Australia. A growing number of franchise systems are now happily executing Certificates of Compliance providing the Australian Franchise Rating Scale and active franchise lenders with increased comfort around the additional measures they have taken to safeguard their brand from the actions of others.
In Part 2 we will consider what is on the horizon for the Australian Franchise Sector in 2026
