Australia has proven a valuable market for many franchisors, but preparation sets the true winners apart from the rest.
Australia has had a thriving and at times, challenging, franchise sector for many decades. Many categories and brands are represented from all over the world in the Australian market. It is a robust and stable economy and society in which to do business.
Like any new international market, if you’re planning to bring your franchise to Australia, then I would strongly recommend you consider some core do’s and don’ts of how to successfully enter this buoyant economy.
Let’s talk about the do’s first. To be clear, this article will assume your entry into the Australian market is one based on your strategic growth plans and is not being done on a whim or instigated because someone thinks it’s a good idea to open in Australia. It should be a part of your strategy with appropriate resources dedicated to the project.
1. Do: research
If you dig deep enough, you will find the stories of several franchise systems who made assumptions about their entry into Australia that were flawed. They did not do sufficient research into the nuances of the Australian marketplace. Some assumptions were based on simple observations about the business climate, language and culture being like their domestic business.
Australia may seem very similar to your home market, but there are clear differences in social practices, culinary tastes, ethnic diversity, and income that make Australia a unique country.
Australia is also a large island continent with a relatively small population spread out over a vast land. It is a Federation of States. Most of the population lives along the East coast of Australia. Sydney and Melbourne are their biggest markets. The largest markets are not necessarily the optimal markets to launch in. Figuring out which market is optimal to launch or test in is vitally important.
Investing in research that helps you understand these nuances can help you avoid expensive mistakes during the early stages of your expansion into Australia. Please invest in local, Australian resources to help you with research.
2. Do: get advice
You may have a bunch of experienced advisors and professionals in your home base and they will play an important role in international expansion, but nothing beats on the ground, in market knowledge.
There are many experienced franchise lawyers, accountants, consultants and other specialists in Australia that have many years of experience helping franchisors enter the market. There are also government agencies such as Austrade, which have offices in many countries around the world, that can provide useful resources and introductions.
But the best starting place is the people with all the franchise information and contacts you will need. That is the Franchise Council of Australia. They are a small but well connected and experienced team that can help you with your planning. Of course, becoming a member of the FCA is always a good first step.
3. Do: plan, plan, and plan
Franchisors are good at goal setting and planning. Well, they should be if they are expanding internationally. Nothing beats thorough planning and modelling. This includes deciding upon how to enter the Australian market. Should you master franchise, direct franchise or enter a joint venture? Modelling the different methods of franchising will be important.
Also, understand your legal responsibilities under the Franchising Code of Conduct. This is an important Federal Government law that all franchisors must comply with. You can find out about the Code from the Australian Competition & Consumer Commission website.
Being realistic about your goals and plans is also important. No matter how sophisticated your modelling and planning is, they are only forecasts. Nothing beats being on the ground and experiencing a market first-hand. So, plan carefully, but be realistic about the time and resources needed to be successful in Australia.
1. Don’t: assume
Don’t assume that Australia is the same market as your own. It certainly may look and act in similar ways. But it may not be the same. Take the time to study these nuances and how they will affect your launch in Australia and how you will manage the business and your partners and people in the long term. Retaining an open mind and flexibility about your business model will help avoid missteps in the local Australian market.
2. Don’t: underestimate people
Don’t underestimate the importance of partnering in the Australian marketplace with locals that know their way around and, even better, have some experience in the business sector that your franchise operates in.
“If you dig deep enough, you will find the stories of several franchise systems who made assumptions about their entry into Australia that were flawed”
Australians, as a rule, value their business relationships highly. They like to do business with people they like and can trust. Australians will want to see a substantial investment in the relationship now and into the long term.
Take the time to set expectations both ways so you can keep the relationship on track and make managing challenging moments in the future a little smoother.
3. Don’t: avoid structuring your launch
Don’t underestimate the importance of getting advice about structures and compliance issues. Entering Australia is just the same as launching a new business. Creating solid foundations help you avoid problems in the future. Getting appropriate Australian domestic tax, accounting, and legal structures right is just as important as getting international structures right. It can get complicated and expensive to change these down the track.
Australia has a vibrant franchising sector and economy and has people that can make great franchisees. There are also plenty of local resources available to help you with your market entry. The Franchise Council of Australia is the right place to start.
Take your time to plan well and get local advice. Being realistic about the time and resources it takes will also help you manage expectations and achieve long term success. It’s a good time to be in Australia right now!
THE AUTHOR
Michael O’Driscoll, CFE has been in the franchising sector for 30 years. He has been a CEO, COO and board director of several franchise systems. He is the former director of the Franchise Council of Australia and holds an MBA in International Franchise Strategy.
