The franchising industry is tipped to undergo a surge in enquiries as job losses ripple through the economy, but a small business lobbyist has issued a warning to prospective franchisees.
Earlier this week, it was revealed at least 1,400 Australians are now facing unemployment after Qantas and OneSteel confirmed significant job cuts.
Westpac has also flagged cuts on the back of slower credit growth, leaving employees nervous about their jobs.
Meanwhile, data from the Australian Bureau of Statistics shows unemployment has edged up to 5.1%. It is an early sign that job opportunities generated over the last decade are now starting to wane.
As job losses begin to hit various industries, namely those affected by the Australian dollar, franchises are ramping up their recruitment efforts.
This weekend, Melbourne plays host to the Franchising and Business Opportunities Expo – an event expected to attract a record number of attendants.
Steve Wright, executive director of the Franchise Council of Australia, says the expo should be “a cracker”.
“We had very strong attendances in the Sydney and Perth expos, and the signs are positive that the Melbourne show will pick up where Sydney and Perth left off,” Wright says.
“The FCA will be there to answer any questions and to run the educational sessions, which give prospective franchisees the chance to talk to real life, current franchisors and franchisees in a dedicated area away from the exhibition stands.”
“Banking and legal advisers will be there as well, offering free tips and basic get-you-started advice.”
Among the exhibitors participating in the expo are Domino’s Pizza, Fastway Couriers, Hudsons Coffee, RP Vending and industry newcomer Tasti D-Lite.
Peter Strong, executive director of the Council of Small Business of Australia, believes job losses could lead to a surge in franchise enquiries, particularly among people who receive a redundancy payment as part of their layoff.
However, he says prospective franchisees should tread with caution.
“Be very, very careful. Don’t sign anything until you have sought legal advice,” he says.
“I would say to anybody that the ACCC has a training package for people considering going into a franchise. It’s not about [business] management skills – it’s about managing your emotions and identifying problems,” he says.
“Also, keep in mind that retail has changed forever. If the franchise package does not include a major component on the net, do not touch it.”
“Even with hospitality, I’d be looking at asking franchisors about the connection between the franchise and the internet.”
