Franchising industry sales in Australia are set to increase by 3.1% to $200 billion.
Melbourne, Australia (PRWEB) October 30, 2011
Service-based franchises are set to fuel growth in the Australian franchising industry over the five years through 2016-17, according to IBISWorld, Australia’s largest publisher of industry research. While retail franchises will continue to dominate the industry, growth in the range of services demanded by consumers will mean that service-based franchises will attain a more prominent place within the industry. Rising by 3.3% per annum, revenue growth will also be driven by trends in real household disposable income, consumer sentiment, labour force participation and the availability of leisure time. The rising number of time-poor, cash-rich consumers willing to pay extra for services that would traditionally reduce their leisure or free time will also affect the franchise market.
Franchising first began in Australia in the 1970s with the introduction of franchised fast-food outlets from the United States. Since then, the Franchising industry has continued to evolve and gain prominence across the business world. Prospective entrants have been drawn to the industry due to the large range of businesses to choose from, the ability to become part of an established brand and the associated benefits of belonging to a franchising model. While industry revenue has increased by 3.4% over the past five years due to trends in real household disposable income and consumer sentiment, various segments of the industry have responded to other factors such as the increased demand for healthy eating options (fast-food and takeaway franchises), leisure time availability (personal and other service franchises) and the age distribution of the population (education service franchises). Despite the steady rise in sales, franchising has continued to face strong competition from other industries that offer the same range of products and services as those supplied by franchised operators.
According to IBISWorld analyst, Claudia Burgio-Ficca, during 2011-12, Franchising industry sales in Australia are set to increase by 3.1% to $200 billion. “Consumer confidence, a slower than expected recovery following the global financial crisis, and unstable global markets are expected to create a more conservative trading environment for franchisors during the year,” says Burgio-Ficca. “However, sales growth will be supported by a rise in disposable income levels and continued unemployment and redundancies within the labour force, which will provide growth opportunities for new players.” Akin to trends in previous years, service-based franchises will continue to take much of the limelight over 2011-12.
Franchising operators are expected to post solid growth over the next five years, with sales rising from $206.6 billion in 2012-013 to $235.3 billion by 2016-17, representing growth of 3.3% per annum. Sales will be driven by continued consumer demand for service-based franchises due to an expansion in the range of services on offer. Key examples include franchises that teach or entertain children, beauty services and party planners. Growth will also be driven by the industry's capacity for change and innovation; the existence of a proven and replicable business model; and extensive operational and marketing support, and branding, marketing and buying power.
For more information, download the full report from IBISWorld on the Franchising Industry in Australia
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