Australian first for franchising
For the first time in Australia, independent business reports on the best franchise opportunities in the country have been made available to the public. Adrian McFedries of DC Strategy talks about why he and his team have spent the last 18 months compiling them.
The region’s leading franchise specialist is about to roll out a new initiative that will provide the opportunity for prospective franchisees to purchase independent franchise business reports containing independent information on individual franchise systems.
After two years of research, analysis, focus groups and interviews, the reports by DC Strategy will provide the most wide-reaching research and factual analysis of franchising ever completed in Australia.
Backed by leading bank
A proud supporter of the initiative, Commonwealth Bank has been working closely with DC Strategy on the project. Rod Nuttall, national executive manager (franchising) for the bank, says: “A key risk for any franchisee when entering into a franchise agreement is the depth of understanding they have of the business they are considering investing their capital into. We’re dedicated to supporting best practice in the franchising sector and support the practices that further educate franchisees in the business investment they are about to make.
“Commonwealth suggests that a significant due diligence is performed by the franchisee on the business they are considering investing into. We consider that the franchisee should not only seek information from the prospective franchisor, but also from reliable independent sources for both advice and information. DC Strategy is constructing well-researched, independent business reports on individual franchise systems. We have agreed to partner them in this initiative due to the growing need for better educated franchisees on their capital investment.”
He adds: “Importantly, DC Strategy is a leading firm with vast experience in the franchising sector as well as being an arm’s length independent party. This type of independent report will assist the franchising sector move closer to best practice.”
Why do the research?
DC Strategy MD Adrian McFedries, says: “There were two key catalysts for this business decision. First, as a specialist consulting and legal firm, DC Strategy has a detailed understanding of what aspects make a quality franchisor successful and how a business needs to evolve over many years to remain relevant to the consumer and franchisees. We’ve developed the bank accreditation frameworks over several years for ANZ, CBA, Westpac and BankWest which has also ensured a detailed understanding of franchise finance practices in Australia.
“As a result, we receive a significant amount of calls every week from prospective franchisees who are seeking to gain commercial advice as to which franchise to purchase which we have never commented on.” He adds the preparation of factually based reports provides a constructive channel to communicate independent, detailed and factual information to franchisees that are interested in making an informed decision.
Too many bad franchisors
“Secondly, our detailed analysis of the 1,000-plus franchisors in Australia has reinforced our professional perspective as a specialist that there are too many businesses and franchisors that should not be in franchising,” he says. “As a consequence, there is a genuine concern over the next few years that there may be unnecessary future regulation that seeks to curtail the poor practices of a very, very small sample of ill-equipped franchisors or franchisees that would have an unhealthy impact on the highest quality franchisors that account for the majority of franchisees in Australia.”
The success of franchising is built on the back of sustainable, profitable growth as a quality business which has been achieved on a wide scale in Australia. The success of franchising in Australia is not built on a measure of the number of franchisors but the depth and quality of the business and success of the franchisees. Franchising operates in the most regulated environment globally with the introduction of the Code in 1998, which has had a profound and positive impact in shaping many of the best practice standards in franchising and banking anywhere in the world.
Independent information
“The objective of the reports is to more easily identify the highest quality franchise systems in Australia and make quality information more accessible to the highest quality franchisees,” says McFedries. “As a result, those prospective franchisees that are serious about an opportunity now have a trusted and independent source of information to contribute towards making a fully informed decision about which franchise to purchase and make a commitment of five-plus years.”
He adds: “These reports have been prepared by DC Strategy drawing on experience that has actually built networks and brands around the world and as a result we have a detailed and specialist understanding of what to look for in a high quality franchise system.”
The response from franchisors towards the business has been extremely positive and viewed as a great opportunity to ensure franchisees make as fully informed a decision as possible.
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