In another sign US companies are viewing the Australian franchising sector as a haven compared to domestic economic turmoil, frozen yoghurt franchise TCBY is set to enter the local market.
It comes after four announcements were made last week from US chains Carl’s Jr, The Melting Pot, Golf Etc and Right At Home, all looking to enter Australia to take advantage of strong franchising and economic growth.
TCBY, which stands for The Country’s Best Yoghurt, is owned by Mrs. Fields Famous Brands and has over 800 locations within 60 countries including the US, Canada, South America and the Middle East. The company is currently looking for interested candidates to open new franchised locations.
The confectionary retailer was founded by entrepreneur Frank Hickingbotham in 1981, and merged with Capricorn Investors in 2000 – the principal shareholder of Mrs Fields Holdings, which has previously held other well-known US brands including Pretzel Time and Great American Cookies.
Both of these brands were acquired by NexCen during the past few years, and are also set to enter the Australian market within the foreseeable future with the company currently looking for individuals to hold the master franchise rights.
The move comes after Mrs Fields Holdings applied for bankruptcy in the US in late 2008 as part of an overall restructuring of the business. It emerged in October 2008, and has continued to operate normally since.
But despite its success in escaping collapse, the business could be looking to the Australian market in order to avoid economic turmoil at home. It wouldn’t be the first – Carl’s Jr has recorded a 7.6% drop in same-store sales during March, while Gap has also seen a drop in sales.
Franchise Council of Australia chief executive Steve Wright says there is a perception that Australia’s growth has been strong during the global financial crisis, offering an alternative to doing business at home.
“The activity here has really opened up people’s eyes to Australia in such a way that hadn’t been done in the past. Others hadn’t really bothered to do business here because it was such a small market, and really looked on as too far away.”
“But when you are struggling and you see there is some strong growth being experienced, you take closer notice. It also helps that we have a good, robust franchising system that is working will. If you want to expand overseas you want a stable environment, and you want to see conditions that are conducive to recruiting new franchisees into your system.”
But while TCBY has a solid foundation in the US, it is just one of a number of American companies moving to Australia without much brand recognition for assistance. While larger retailers such as Costco, Gap and even Apple have some clout, others have no brand recall at all.
But Wright says these businesses, which are often smaller, aren’t necessarily at a disadvantage.
“I don’t think there are bigger obstacles for smaller players, whereas they are there for some of the larger companies. The bigger you are, the more space you have to find, the more burdens you have to go through, and so on.”
“If you’re smaller you also have a much lower price of entry, generally speaking, and you’re probably going to be looking for niches where there isn’t established institutionalised competition.”
Wright also says smaller, lesser known businesses will face just as many problems as larger companies, and that having some marketing power won’t necessarily determine success.
“You’re going to be in a more competitive situation anyway here. Franchising has a territory kind of aspect to it, and if you’re small you look to areas where the territory isn’t really developed. So you have more room to move and more areas in which to infiltrate.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
