Franchises Forever a Favourite in Australia

IBISWorld Report: The opening of the first franchised McDonald’s outlet in Australia in the early 1970s marked the formal beginning of the Franchising industry in Australia (report X0002). Forty years on, the industry has about 1,200 franchisors and nearly 90,000 franchisees. The number of franchise operators has grown by an average of 6.1% a year over the past five years and the number of franchisees has grown by a yearly average of 6.8%. Australia now has the greatest number of franchises per capita, with three times as many franchises per person as the United States.

Revenue for the industry is derived from the production of goods and services under a franchise licence and from franchise fees paid to the franchisor. IBISWorld estimates that franchise fees alone will account for about $12.3 billion in 2009-10. With the addition of revenue from the sales of goods and services, total industry revenue over the past five years is estimated to have increased from $138.09 billion in 2004-05 to $171.0 billion in 2009-10.

The total market share of the four largest players in the industry is less than 4%. McDonald’s Australia has approximately 85,000 staff members in 780 stores. About two-thirds of these stores are franchised, while the remaining are company owned. KFC and Pizza Hut are subsidiaries of Yum! Restaurants Australia Pty Ltd. The company operates about 600 KFC stores in Australia and New Zealand, of which over two-thirds are franchised. Pizza Hut operates about 325 stores in Australia, of which about 80.0% are franchised. Retail Food Group is regarded as one of the largest retail food franchisors in Australasia, operating the franchise systems to Donut King, BB’s Cafe, Brumby’s Bakeries and Michel’s Patisseries. The company operates about 1,000 franchised outlets across Australia. It also has five outlets in China.

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