What is franchising?

What is franchising?

Franchising is the practice of using another business’s successful business model. By replicating a successful model, the new business owner or franchisee has a greater level of incentive than an employee, they directly benefit from the effort they put into their business.

The franchisee also has the advantage of starting up quickly, capitalising on a proven brand and its associated tools, software, business relationships and procedures as opposed to developing them on their own.

Franchising is also a system where interdependence is required to ensure success. The success of the division and the franchisor is based on the success of the franchisees so there is a common motivation and goal.

However you are ultimately your own boss and responsible for growing your business to suit your needs and income expectations, essentially, you get back what you put into it.

In Australia the Federal Government manages the Franchising Code of Conduct which is a mandatory industry code of conduct that has the force of law under the Competition and Consumer Act 2010.

The code aims to regulate the conduct of participants in franchising towards each other and to ensure they are sufficiently informed about a franchise before entering into it. The code is also a cost effective dispute resolution scheme for parties involved in franchising.

The Australian Competition and Consumer commission promotes compliance with the code and educates parties about their rights and obligations. The ACCC has useful information including guidelines, articles and fact sheets. They will also investigate complaints and undertake enforcement where necessary.

Find out more about the franchising industry by checking out the Franchise Council of Australia’s website.








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