Australian first for franchising
Why not a ranking system?
A straightforward ranking system however would be totally inappropriate and not capable of being done in a manner that is actually meaningful to a franchisee decision-making process. “Any ranking is subjective, no matter whether it be franchisee, franchisor or independent,” says McFedries. “More importantly, a ranking system by its nature infers people are better the higher up the ranking they are and this could not be further from the truth in franchising in Australia.”
A ranking system is inappropriate not least because franchisees have predetermined levels of capital they can afford to invest and franchisors are all at different stages of their growth cycle. “When you have a detailed understanding of what makes a franchisor successful in start-up, growth, maturity and reinvigoration or decline, any ranking system can simply not encapsulate the variety of issues and the differing levels of capital investment that automatically categorises the groups a franchisee may consider even without a ranking system,” he says.
DC Strategy will only be preparing franchise business reports on around 120-to-150 franchisors based on pre-established criteria. This is because the objective is to make detailed information available for sale to franchisees for the highest quality franchisors. There is no intention to become a directory or facilitate enquiries direct to the franchisor as there are already well established and respected directories, broker channels and direct franchisor access that achieve this.
The reports
The business will operate under the brand DC Strategy Research and the reports will be available for sale online and range in price from $350 to $700 plus GST, depending on the size of the investment and consequent detail in the report.
The report contents will cover key detail and information on the organisation, key management, franchise system structure, performance, industry commentary, resale activity, disputes and current franchisee feedback.
Over the past two years, DC Strategy has researched and analysed each franchise system in significant detail and run a series of discussion forums with past, current and prospective franchisees. It has combined a commercial, legal, and financial understanding of franchising from both a franchisor and franchisee perspective to detail information and build the website in a manner that provides high quality information to those who are prepared to purchase a report. The team has personally sat down with each and every franchisor that has had a report prepared to ensure there is a clear understanding of what is being achieved and that information is accurate. This has been done on a completely independent basis.
They’re available online at www.dcsreport.com
Franchising in Australia
McFedries says franchising in Australia is in a very healthy state.
“The vast majority of Greenfield and secondary resale activity of franchises in Australia is accounted for by 150-to-200 of the highest quality franchisors. There are around 600-to-700 franchise systems that have not scaled sufficiently to warrant adopting a franchise strategy that can still have one, two or three successful franchisees, but overall they are not driving a proactive, well-structured growth strategy.”
There is a significant amount of misunderstanding about franchising in this country. McFedries says that while around 600-to-700 franchise systems have insufficient scale, that is not to say they have extensive amounts of disputes or should not be in business. “The issue is there is a profound difference between a franchisor that has built a quality infrastructure, business and franchise system and continues to scale, and those which are an independent business but have usually sourced a legal agreement as the basis of franchising and not developed the necessary infrastructure for quality growth.”
The expected impact
Based on DC’s detailed research and analysis there are some clear expected impacts:
§ Franchisees will now have a choice to purchase independently prepared information in a consistent format as part of their final decision-making process in acquiring an existing or Greenfield franchise
§ Franchisors now have an independent source they can point to and ensure franchisees are aware there is a high quality and trusted independent source of information
§ There is now a factual and accurate resource of information relating to the highest quality franchisors in Australia in a trusted and respected forum
§ The material and independent reports will play an important role in making franchising more accessible to people as franchising continues to grow in Australia.