Thursday 24th of February 2022
The franchising sector in Australia is one of the most prolific industries. Every commercial prec
...inct in the cities has one or the other franchise...
The franchising sector in Australia is one of the most prolific industries. Every commercial precinct in the cities has one or the other franchise brand getting thronged by a pool of customers. These brands have become a part of the lives of every Australian. Whether it is McDonald’s, KFC, Poolwerx or Hudson Coffee, franchises have grown enormously in popularity and size over the years. The franchise industry represents 10% of the national GDP, and its revenue took a leap of 2.4% in the past five years.
More than 94,000 franchise businesses are currently operating in the country, and 574,000 people are employed in the sector. Although the industry has stumbled upon some roadblocks due to the pandemic, it is quickly recovering to reach the same figures. With the economy stabilising and consumer confidence rising, the market size is expected to grow in the coming years. Let us look at the franchise market analysis for 2023 and the anticipated trends for 2024. These will help assess the changes occurring in the sector and its future.
Australia Franchise Market Analysis 2023
The market size of the Australian franchise industry reached $169.5 billion in 2023. The figure is lower than expected because the sector was soaring to new heights before the COVID-19 pandemic. However, after 2020, it started declining and continued to feel the heat of lockdowns, remote work, increased interest rates and rising inflation. The revenue generated by franchise businesses nosedived for two years, affecting the industry. Also, many employees were laid off, and businesses were shut.
However, 2023 brought improvement as consumers started returning to retail stores because of increased purchasing power. Last year’s annual market size growth stood at a negative 1.7%, showcasing a minor reduction. Thus, the industry is on the path to recovery and is expected to regain its position in the market by 2029. One of the problems that are still affecting the sector is the shortage of skilled labour. The restrictions on the inflow of migrant workers have resulted in this scarcity of casual and permanent employees.
Franchise Industry Report for 2023
Franchising has always been one of the most lucrative ways of business expansion. Every capital city has a large number of franchise outlets, and most of them are small businesses with less than 20 workers. They operate in every business category and offer stable career opportunities to driven individuals. Many budding entrepreneurs who purchase a business for sale Adelaide opt for a franchise to grow with the support and training provided by the head office.
Most franchisees stay with the brand for the entire franchise term, usually lasting five to ten years. The highest-grossing segments 2023 include fitness, freight and logistics, courier and maintenance services. The rise in courier and freight businesses is the high growth of e-commerce post-pandemic. The franchise industry contributes $35.1 billion in wages, which contributes significantly to the economy.
The maximum number of franchise businesses operates in the retail industry, followed by quick service restaurants, mobile services, real estate, fitness, automotive and aged care services. Some challenges that are hampering the growth of these small businesses include inflation, labour shortage and data security. However, entrepreneurs are moving past these obstacles to reach new milestones. Thus, if you are looking for businesses for sale in Adelaide, you must consider a franchise that promises growth.
Anticipated Franchise Trends for 2024
Although the franchise industry is struggling with minor challenges, franchisors are looking at a brighter future and adopting the latest trends to stay ahead in 2024. These include:
Artificial intelligence (AI) is changing how businesses operate by bringing in the advantage of automation. It has reduced the burden of completing repetitive activities and increased data accuracy. AI has also enabled entrepreneurs to use automation and predictive analysis to understand customer behaviour and offer services that exceed their expectations, such as product recommendations that match their preferences.
In addition, AI-powered chatbots allow them to solve customer issues and promptly respond to their questions. Aspiring entrepreneurs who wish to acquire a business for sale Adelaide must adopt technology to create a high-performing franchise outlet.
Sustainability is not just a trend. It is the need of the hour. Every business must become eco-conscious and reduce carbon emissions, and franchises are no different. In 2024, they must focus on reducing waste, recycling old materials and repurposing outdated things. They must get the product sourced and packaged eco-friendly and stop using single-use plastic and disposables in the workplace.
Budding entrepreneurs who are looking for a franchise business for sale in Adelaide must invest in service-based entities. These are always in demand, and if they fall in the essential services category, they can generate significant revenue quickly. These include healthcare, automotive repair, childcare, beauty salons, advertising and marketing, tuition, fitness studios, accounting, real estate agency, maintenance services, etc.
Marketing a franchise business is the responsibility of the franchisor. They need to understand that consumers are spending most of their time online. Therefore, it is necessary to send out the marketing messages through every touchpoint, such as emails, text messages, social media channels, mobile apps, business websites, etc. It is vital to maintain consistency in brand voice and tone across online and traditional channels. Also, individual outlets must customise the marketing messages to suit the demographics of their audience while promoting the products locally.
Most franchise businesses follow the retail store format and face competition from the convenience e-commerce platforms offer. Thus, they are evolving and creating retail spaces that offer an exceptional customer experience and make the buyers return. For example, franchises are using virtual reality to create an endless aisle for showcasing all products in the inventory. The sales executives are using hyper-personalisation to cater to the needs of the customers in a better way and keep them satisfied.
Wrapping Up
Franchise businesses may have suffered during the pandemic, but they have recovered in the last year. They are still facing certain challenges but will be able to move past them in 2024 by adopting technology, sustainability and comprehensive digital marketing.
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