If franchising is a way to speed expansion, why aren’t there more franchises in the Fast50?

 

Franchising is “one of the most dynamic business methods of the past 50 years”, according to the NZ Franchise Association, enabling businesses to “expand faster”. But if that is the case, why were there only five franchises represented in last year’s Deloitte Fast50, an annual ranking of New Zealand’s fastest growing businesses?


In the first 50 companies in Australia’s 2014 BRW Fast100, there were just six franchises, representing less than 10% of Aussie’s fastest-growing businesses.


Here’s a breakdown of the industry types last year’s fast and furious companies in each country came from.


Not surprisingly, the No. 1 positions on both New Zealand and Australian Top 50s were held by Technology companies – Voyager Internet in New Zealand and Kloud Solutions in Australia.


What was surprising, however, was the higher proportion of fast Technology companies in New Zealand, but this may have been because of the higher proportion of fast Construction and Property companies in Australia.


Both New Zealand and Australian Top 50s had a similar proportion of fast Franchise Businesses, representing less than 10% of the total.


What does this say about the state of franchising in Australasia?


To find out, you need to compare apples with apples.


How does a Technology company generally achieve scale? Through the internet, of course.


The same goes for most of the Retail or Consumer companies on the Top 50s. New Zealand’s I Love Ugly (No. 5 on the Fast50) and the Aussie Commerce Group (No. 10 on the Fast100) are e-commerce businesses. Because they sell solely through the internet, they don’t need a network of local stores or branches.


Unlike the fast Franchise Businesses. In New Zealand, the Mad Group (No. 8 on the Fast50) already has a network of 15 franchised Habitual Fix stores.



“Because of its franchise model, Habitual Fix is effectively self-funding and so we’ll continue to open on average four new stores per year in New Zealand,” said Mad CEO James Tucker in Idealog magazine.



Left: The Habitual Fix franchise is on track to continue its healthy growth rate of four new stores per year.





“Because of its franchise model, Habitual Fix is effectively self-funding and so we’ll continue to open on average four new stores per year in New Zealand,” said Mad CEO James Tucker in Idealog magazine.


The franchising model has enabled the other fast Franchises (Just Cabins, Mike Pero Real Estate, Refresh Renovations and Pita Pit in New Zealand and Schnitz,  Coco Cubano, Supercheap Storage, Zambrero, MyNetFone and New Zealand-originated LINK Business in Australia) to grow a physical network at a faster rate than they may have using a company owned and financed model.



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Article by Robin La Pere, No Ordinary Business and Franchise Consultants

Contact me at robin@noordinary.co.nz.





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Robin La Pere of No Ordinary Consultants has been a franchise manager and franchise owner, and has now applied his accumulated experience and knowledge to franchise consultancy.


Robin's contribution to Signature Homes' growth propelled that franchise into the New Zealand Fast50 in 2003 and his own franchise business went from zero to $16 million in less than three years.