The top franchise trends in Australia for 2014

For people considering getting into business for themselves, especially in the New Year, franchising is one option many will likely investigate.

Franchise businesses make a sizeable contribution to Australia’s economy, turning over around $131 billion in revenue annually, according to the Franchise Council of Australia.

It says there are around 73,000 franchise businesses in Australia that employ around 400,000 people.

General manager Kym De Britt says franchising has grown at a better rate than other small businesses, citing a PricewaterhouseCoopers report that says franchises have seen average annual revenue growth of 10% recently.

“That generally comes because when things are tough, franchise systems have better support and marketing systems to help franchisees sustain the difficult times better,” he says.

De Britt tells StartupSmart that the main attraction for people getting into franchising is for the support.

“Rather than just taking that big step of going into business for themselves, they have a level of support behind them.”

Franchisees receive training in how to run the business and have someone to go to if there are problems, De Britt says.

“It’s working for yourself but taking on an established system and having support.”

But he warns that franchising is not for everyone and that it may not suit people who want to “do it for themselves”.

“For those kinds of people, franchising is not the right way to go because at the end of the day you have to follow the model because it’s been proven,” De Britt says.

He also recommends anyone considering a franchise to get legal and financial advice and to understand that it can’t be considered a means to semi-retirement.

So what types of franchises are most likely to see growth in 2014?

De Britt says people can get a sense for what business areas will be successful by looking at the media for trends, but here are his picks for areas to consider:

Aged care services

Aged care is growing because of Australia’s ageing population, De Britt says.

A recent Productivity Commission report says that the number of people aged 75 years and more is expected to rise by 4 million from 2012 to 2060, increasing from about 6.4% of the population to 14.4%.

“Demand is going up for services for aged people,” De Britt says.

Courier services

Growth in online retail spending has also seen growth in demand for services to deliver people’s purchases.

According to the National Australia Bank’s Online Retail Sales Index, Australians spent $14.4 billion online in the 12 months to October, equivalent to 6.4% of traditional retail spending.

“The boom area there is the courier business,” De Britt says.

“They’re all actually struggling to keep up with the demand at the moment.”

Health

With Australia ranked among the fattest in the world, health services that aim to address the issue will remain popular.

De Britt says the fitness industry, and particularly personal trainers, are likely to continue to thrive.

A report by market researcher IBISWorld says the personal trainer industry turns over $390 million a year and has seen annual growth of 11% between 2009 and 2014.

Work life balance/home services

De Britt says as workers seek to develop a better work/life balance, they’re outsourcing tasks such as home cleaning, gardening and pool cleaning.

Food retail

Food, and particularly fast food, is a mainstay of the franchise industry.

“They’re always going to be very popular,” De Britt says.

He says two trends that have swept through food franchising are Mexican food outlets and frozen yoghurt.

Mexican food is big in the US and Australia generally tends to follow the trends there while yoghurt is seen as a healthy alternative to other snacks, De Britt says.

He says he recently attended a conference in Dubai and the “two big kids on the block were yoghurt and Mexican food”.