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History of Franchising



Issac Singer, the founder of the Singer Sewing Machine Company, is generally credited as the founder of franchising. In the 1850s the Singer company sought ‘regional agents’ who would pay a fee for regional territorial rights to sell, demonstrate and repair. Singer sewing machines. This new method of distribution allowed the Singer company to penetrate the US market quickly with limited capital.

Manufacturers and suppliers such as motor-vehicle manufacturers, soft-drink companies and oil companies have traditionally used franchising as their primary distribution method, and franchising still remains the dominant business method in those industries.

‘Business format’ franchising (the concept which is commonly associated with franchising today) was developed in the United States in the 1950s by some of the well-known US fast food chains. This method was introduced into the Australian market in the early 1970s when fast-food retailer McDonald’s opened its first stores. Since its introduction business format franchising has transformed this method of distribution into a highly competitive, innovative vehicle for expansion for virtually any industry or sector where goods or services are sold to consumers via a network.

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Franchising in Australia

Franchising is a well-established and credible business method in Australia. There are more franchise systems in Australia per capita than in any other country, and it accounts for some 15% of the nations GDP. The increase in franchising over the last few years indicates that entrepreneurs and business leaders are using the model as an efficient means of market penetration.

The Franchising Australia 2006 Survey illustrates how the franchise sector in Australia is continuing to mature and consolidate, and is fast becoming more professional operationally.

 Some of the key findings of the Franchising Australia 2006 Survey are:

  • There are approximately 1000 different business format franchise systems, over 93 per cent of which are home-grown Australian systems. 

  • There are approximately 57 000 franchised outlets. 

  • Approximately 600, 000 people are employed in business format franchise organisations. 

  • The majority of franchising takes place in the retail (non-food) industry (30 per cent), with property (24 per cent) and business services (7 per cent) the next largest sections. 

  • Franchising exists in all regions of Australia, with New South Wales containing 34 per cent of all franchises in Australia, Victoria 24 per cent and Queensland 20 per cent. 

  • The majority of franchisors expect their franchisees to be hands-on operators involved in all aspects of the business. 

  • Single-unit franchise ownership is the norm, although the number of multi-unit franchise owners is growing. 

  • 65 per cent of franchisors have adopted master franchising arrangements in their domestic operations. 

  • Most franchised outlets are operated by couples (50.7 percent), with male sole ownership representing 28.4 per cent and female sole ownership 10.5 per cent. 

  • A high proportion (72 percent) of franchisees is in the 31-50 age groups. 

  • 26 per cent of Australian based franchise systems have expanded internationally. 

  • Fewer than 2 percent of franchised units in 2005 ceased to operate, supporting the premise that franchising failure rates are low. 

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If you’d like to more information or advice on buying or establishing a Franchise, pleasecomplete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.