Franchise Sector Indicator
How is franchising driving business growth?
Welcome to the 2011 edition of the PwC Private Clients Franchise Sector Indicator.This year’s survey continues the trend of the past two years, telling the story of another year of excellent growth. The sector has achieved what some thought were ambitious targets set in 2010, and has performed particularly well when compared to the broader economy.
With three years’ worth of results under our belts, the Franchise Sector Indicator continues to demonstrate that franchising is a robust business model which can withstand the swings and roundabouts of a turbulent economy.
Reporting on performance and growth aswell as the challenges and opportunities facing the sector we welcome you to download the 2011 Franchise Sector Indicator [PDF 3.3 MB].
Greg Hodson, National Managing Partner Franchising, talks below about the key findings from this year’s research.
Highlights
Strong Growth has exceeded targets set for 2010
Overall, the sector has performed extremely well compared to the broader economy and has delivered on the double digit growth objectives it set last year.
This is a significant achievement in a difficult economic year, and further evidence of the robustness of the franchise business model.
This is a significant achievement in a difficult economic year, and further evidence of the robustness of the franchise business model.
Sector optimistic about short to medium-term prospects
Franchisors continue to forecast double digit revenue and profit increases over the next three years.
However, the sector is being more conservative in its growth plans, preferring to place more emphasis strategically on pursuing organic growth than overseas expansion and acquiring other businesses.
However, the sector is being more conservative in its growth plans, preferring to place more emphasis strategically on pursuing organic growth than overseas expansion and acquiring other businesses.
Consumer confidence predicted to have an impact
For the first time since the Franchise Sector Indicator commenced three years ago, franchisors have highlighted consumer confidence as a key factor that may affect their growth; reflecting concerns surrounding retail performance and the current uncertainty in global markets.
Key challenges remain recruitment and franchisee funding
Finding new talent and obtaining funding remain key challenges for franchises of all shapes and sizes.
Franchisors have begun addressing these challenges through a greater focus on initiatives to attract new franchisees; and are looking at innovative ways to assist prospective franchisees access finance.
Franchisors have begun addressing these challenges through a greater focus on initiatives to attract new franchisees; and are looking at innovative ways to assist prospective franchisees access finance.
New tactics adopted to attract a younger set
Despite identifying recruitment of franchisees as a key issue impeding growth, in 2010 over 50 per cent of franchisors had not changed the way they attracted franchisees.
However in 2011, 70 per cent had made changes.
These changes include specific initiatives aimed at the next generation of franchisees,
Gen Y.
However in 2011, 70 per cent had made changes.
These changes include specific initiatives aimed at the next generation of franchisees,
Gen Y.
Multi-site operators fundamental to sector’s growth plans
Multi-site operators represent a tremendous opportunity for franchisors to solve the difficulties of finding suitable franchisees and, potentially, issues associated with new franchisees obtaining funding.
Online retailing and use of social media on the increase
Franchisors are increasing their online presence to assist with brand building and coverage.
Use of social media is continuing to increase with franchisors finding it to be a powerful tool to improve and strengthen customer awareness and loyalty.
Use of social media is continuing to increase with franchisors finding it to be a powerful tool to improve and strengthen customer awareness and loyalty.
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