Service franchises most popular in pre-entry education program

Written on the 15 November 2011 by FIona Taylor, Asia-Pacific Centre for Franchising Excellence Griffith Business School

Service franchises are the most popular type of franchise, followed by Retail (food) according to statistics from a free online pre-entry franchise education program, which has just registered its 2000th participant.

The pre-entry franchise education program, developed by Griffith University's Asia-Pacific Centre for Franchising Excellence and funded by Australian Competition and Consumer Commission, was launched July 1, 2010.

Seven months ago the Centre started asking what type of franchise participants were interested in, if they were looking to buy a franchise.

Nearly a third of participants indicated they were interested in a Service franchise, followed 27 percent interested in a Retail (food) franchise.

Centre Director Professor Lorelle Frazer said how the popularity of different franchise types wasn't a surprise.

"Service franchises are most popular at 31 percent and are less expensive to enter than retail so they often attract first-time franchisees," Professor Frazer said.

Based on Franchising Australia 2010 research findings, the average start-up cost of a new retail franchise is $275,000 compared with only $89,000 in non-retail franchises (which includes Service franchises).

"Retail (food) and the Service sector are also travelling a little better in the downturn with a slump in non-food retail, which may be why people are avoiding the retail non-food sector," Professor Frazer said.

Retail (non food) interested just a fifth of participants and Mobile franchises came in last, representing just 4 percent. 'Other' franchise models were listed by 5 percent of respondents.

"An interesting, yet positive finding, was 13 percent of participants were 'unsure' of which type of franchise they were looking to buy", Professor Frazer said.

"It's positive to see a reasonable number of people 'unsure' of the type of franchise they're looking to buy while undertaking the pre-entry franchise education program," she said.

"It demonstrates people are beginning to get a better grasp on franchising before deciding which franchise to buy and are more likely to make a business, rather than emotional, decision.

"The more due diligence prospective franchisees conduct and the better informed they are before they buy means they're more likely to invest in a franchise that suits their business and lifestyle goals."

The pre-entry franchise education program was developed after Centre research identified a major cause of franchise conflict was unrealistic expectations on the part of the franchisee when entering franchising.

For further information on the pre-entry franchise education program visit: