tips to find a stable franchise sector in australia


Australia continues to be one of the best countries in the world for franchise opportunities. The franchise sector contributes significantly to the Australian economy and provides a proven business model for entrepreneurs.

When considering investing in a franchise, choosing a stable industry sector with ongoing demand is one of the most critical factors. This helps minimise risk and sets up your franchise for longevity and success. Here are some tips on finding a stable franchise sector in Australia.

Research Industry Growth Projections

Your first step should be researching official industry reports with growth projections and analysis. Resources like the Australian Bureau of Statistics and franchise advisory firms provide five-year forecasts across Australian sectors. Look for industries predicted to grow steadily between 5-10% annually.

Healthcare, home services, hospitality, retail food/beverages, business services, trade services, and education are sectors with positive outlooks. Avoid declines of 5% or more annually. Thorough research will give you data-driven insights on stability.

Look For Trends And Market Gaps

Analyse consumer trends across Australia to spot growing needs that stable industries serve. For example, aged care and disability services have grown steadily for years due to Australia’s aging population. The focus on health and wellbeing has driven growth in fitness franchises.

Environmental awareness and sustainability have increased the demand for recycling services and eco-friendly brands. Choose sectors meeting emerging needs for stability. A market gap is also an opportunity, such as a noodle bar franchise succeeding in areas lacking Asian cuisine variety.

Choose Established Franchisors

The success rate is higher when partnering with major franchisors with a proven business model, strong branding, high consumer awareness and a track record over 5-10+ years. Look for franchisors with 25+ franchisees, clear operations manuals, ongoing training support and advertised growth plans. This establishes long-term stability. Be wary of startups and first-time franchisors, which carry more risk. The franchisor should have weathered economic ups and downs successfully.

Perform Due Diligence Checks

Once you’ve identified promising sectors and franchisors, perform extensive due diligence. Analyse their legal documents, audited financials, franchisee attrition data, store locations, and evidence of average sales, profits, and growth. Visit stores and talk to franchisees about their experiences to assess satisfaction. Research the executive team’s background. Validate all claims through evidence and data as it verifies the franchise is proven, profitable, and positioned for stability.

Favour Service-Based Businesses

Service-based franchises are more stable and resilient to economic fluctuations than product-based concepts. People still spend on services in downturns. Critical needs like healthcare, home services, auto repair and B2B services remain in demand through business cycles. Brick-and-mortar retail can be challenging as people cut discretionary spending, so evaluate stability by sector type.

Consider Repeatable/Consumable Concepts

Franchises offering repeatable or consumable products and services build in consistent demand. Examples are maid services, tutoring, fitness centres, beauty salons, and food/beverages. Customers use these frequently and recurrently, driving stability. Avoid franchises dependent on big luxury purchases that drop in downturns. Necessity-based offerings are less affected by economic swings.

Research Local Area Demand

In addition to sector stability at the macro level, research local area demand for the franchise type you’re considering. Even a stable concept will only succeed with target consumers in your location. Study area demographics and psychographics. Drive the market to observe competitors meeting the exact needs. Talk to local business owners. For instance, Luncheonette franchises will fare better in a densely populated business district than a remote rural town. The location must align with the concept.

Diversify Your Portfolio

Industry experts recommend diversifying your franchise portfolio across 2-3 sectors to mitigate risk. Don’t invest your entire capital into one industry or concept, however stable it may seem. Economic shifts, new competition, and changing consumer preferences happen. Spread risk by owning diverse concepts with uncorrelated demand cycles. For example, add a gym and a tutoring service to your existing auto shop. Diversity strengthens your income streams.

By thoroughly researching growth projections, examining consumer trends, verifying franchisors’ stability records, favouring essential services, and diversifying locally, you can identify Australia’s most resilient, promising, and stable franchise sectors. This data-driven approach minimises risks and positions your investment for success over the long term.

For more details on various franchising sectors in Australia and how to invest in one, call The Franchise Institute at 1300 855 435. Alternatively, please write to us through this contact form. One of our specialists will contact you soon to answer all your questions.

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