Franchising operational units in Australia

Franchising operational units in Australia

Analyses the incentives for franchising operational units by Australian franchisors. Draws from explanations used in the US empirical studies of the phenomena and identifies differences in the domestic economics and the extent of regulation of franchising in Australia and the US to suggest particular incentives are more likely to apply in the Australian setting. Given the greater ease of entry into franchising in Australia compared with the US, as a consequence of a smaller domestic economy and less regulation of franchising in Australia, Australia provides a setting which limits the impact of the capital constraint explanation of franchising. Using data obtained through a survey of business-format franchisors, finds that in Australia, contracting cost considerations associated with a greater level of repeat customers for operational units, contributes along with the lower start-up investment requirements for franchisees to the decision to franchise operations. Taken together with US findings, the study has implications for expanding franchising operations in Australia and similar economies, business expansion internationally and the impact of regulating franchising activities.

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