Disenfranchised: Negative consumer sentiment has constrained spending at franchised stores

The Franchising industry has exhibited steady growth over the past five years. Industry performance declined in 2011-12 due to a slowdown across the domestic market and uncertainty regarding the economy's stability. However, a recovery in economic conditions over the remainder of the five years through 2016-17 returned the industry to growth and enabled operators to recover earlier losses. As a result, revenue for the Franchising industry is projected grow by an annualised 3.4% over the five years through 2016-17. Trends in real household disposable income, average weekly hours worked and the target cash rate have also affected the industry's performance. Industry revenue is expected to post steady growth over the current year, rising by 2.6% to reach $178.0 billion...read more.

Industry Statistics & Market Size
Revenue
$178bn
Annual Growth 12-17
3.4%
Forecast Growth 17-22
Profit
Employment
580,000
Businesses
1,200
Market Share of Companies

Industry Threats & Opportunities

  • The industry returned to growth, enabling operators to recover earlier revenue losses
  • Operating costs and competition have influenced profitability differences among players
  • Rising incomes will benefit service-based franchises serving time-poor high-income consumers
  • Industry Report - Industry Investment Chapter

    The industry has low capital intensity. For every dollar spent on capital, an estimated $11.67 is spent on wages. Aside from the initial start-up cost or capital investment, the industry remains largely labour-intensive. Furthermore, capital costs principally include fixtures and fittings, display shelving, cash registers and point-of-sale systems. The industry has increased its capital expenditure over the past decade by introducing and installing computer scanning equipment. Such technology has enabled operators to computerise inventory control, which has reduced stock build-up and provided cost efficiencies. This has largely influenced players that operate from a fixed location. The...purchase to read more.

    Additional Insights for the Franchising Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Franchising Industry are

  • Having a loyal customer base
  • Having a clear market position
  • Business expertise of operators
  • IBISWorld analysts also discuss how external factors such as Real household disposable income and Consumer sentiment index in the Franchising industry impact industry performance..

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    What's in this report

    What is the Franchising Industry?

    Franchising is a method of growing a business in which a franchise owner (franchisee) is granted, for a fee, the right to offer, sell or distribute goods or services under a business system determined by the business founder (franchisor). The franchisor supports the franchised business group by providing leadership, guidance, training and assistance in return for ongoing service fees.

    Industry Products
  • Retail trade
  • Accommodation and food services
  • Administration and support services
  • Personal services
  • Other franchised products and services
  • Industry Activities
  • Franchised non-food retailing
  • Franchised food retailing
  • Franchised administration and support services
  • Franchised rental and hire services
  • Franchised education and training services
  • Franchised finance and insurance services
  • Franchised construction and trade services
  • Franchised healthcare and social services
  • Franchised information media and telecommunication services
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Real household disposable income
  • Consumer sentiment index
  • Cash rate
  • Average weekly hours worked

  • Current Performance
  • Trading landscape
  • Profit and competition
  • Operating structure
  • Chart: Revenue Growth

  • Industry Outlook
  • Operating landscape
  • Profitability and growth areas
  • Enterprises and employment
  • Table: Franchising Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Franchising Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Consumers

  • Key Selling Industries
  • Book and Magazine Wholesaling
  • Clothing Wholesaling
  • General Line Grocery Wholesaling
  • Hardware Wholesaling
  • Toy and Sporting Goods Wholesaling

  • Products & Services
  • Other franchised products and services
  • Retail trade
  • Accommodation and food services
  • Administration and support services
  • Personal services
  • Chart: Franchising Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Households
  • Businesses
  • Chart: Major Market Segmentation for the Franchising Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Franchising

  • Basis of Competition
    Barriers to Entry
  • Table: Barrier to Entry Checklist for the Franchising Industry

  • Industry Globalization
    Metcash Limited,
  • Table: Metcash Limited - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Franchising Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Franchising Industry
    Includes:
  • Industry Revenue (2008-2022)
  • Industry Gross Product (2008-2022)
  • Establishments (2008-2022)
  • Businesses (2008-2022)
  • Employment (2008-2022)
  • Wages (2008-2022)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Franchise
  • Permission given to distribute goods or services under a trademark, service mark or trade name.
  • Franchisee
  • The holder of a franchise or a person who is granted a franchise.
  • Franchisor
  • A company or person that grants the use of a franchise.
  • What Our Customers Say

    Why buy this report?

    The Franchising market research report provides key industry analysis and industry statistics, measures market size, analyzes current and future industry trends and shows market share for the industry’s largest companies. IBISWorld publishes the largest collection of industry reports so you can see an industry’s supply chain, economic drivers and key buyers and markets.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Franchising:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Franchising market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Franchising, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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