Regional Trends and Developments in Australia

By Robert Toth

Posted: 8th July 2014 08:45

The current business environment in Australia is extremely positive with GDP growth in the Australian economy in the first quarter of 2014 in the region of 3.5 per cent.
 
Retail sales figures show an increase of 6.2 per cent over the past 12 months with increases in the retail sector particularly in the food and hospitality, household goods, clothing and footwear sectors.
Australians seem to be eating and drinking their way back to prosperity and the reserve banks monitory policy is having a positive effect.
 
Australia’s interest rates remain at an all-time low for borrowing and the Australian property market has seen positive and stable growth over the past 12 months.
 
The franchise sector has also seen positive trends with average annual revenue growth of 10 per cent.  The franchise sector in Australia contributes approximately AUS $131 billion in revenue annually according to the Franchise Council of Australia.
 
The Australian economy remains stable and is well placed against many of the European, US and South American economies.
 
There are six great reasons to invest in the Australian economy:

  1. 22 years of uninterrupted growth with Australia’s strong diverse and growing economy offering excellent opportunities underpinned by strong trade in Asia, Europe and the United States.
  2. Australia has a ”AAA” rating by the three major global rating agencies and the GDP is projected to out-perform every major advanced economy to 2018.
  3. More than 80 per cent of Australia’s economy is services based, despite the heavy focus on mining and resources.
  4. Australia has strong trade links and a highly educated multilingual workforce with eight out of Australia’s top ten export markets in Asia.
  5. Australia’s westernised consumer culture makes it an excellent test market for products intended for launch in North America and Europe.
  6. Australia has a sophisticated corporate governance regime and franchising code which regulates businesses Australia wide rather than state by state.  This uniform legislation provides efficiency to companies looking to enter the market, whether in Melbourne, Sydney or WA.
Wisewould Mahony act for a number of overseas companies from USA, Europe, Asia and India.  We have assisted them to establish their business operations in Australia by incorporating a new subsidiary entity or registering as a foreign company.
 
Wisewould Mahony also has a network of reputable consultants and accountants that can assist overseas companies, conduct feasibility and due diligence enquiries and provide taxation and corporate compliance advice.
 
Developing Markets
 
Key developing markets in Australia are Tourism, Science, Technology, New Energy and Digital Technologies.
 
Australia has approximately 73,000 franchise businesses that employ approximately 400,000 people.  Franchising has grown at a faster rate than any other small business. 
 
Franchising is experiencing growth in aged care and personal services, courier services, health and fitness, beauty, retail and hospitality and business services.
 
In Australia, franchising operates under a mandatory Code of Conduct, under the Trade Practices (Industry Codes — Franchising) Regulations 1998.  Franchisors must comply with the Code, and provide a disclosure document with a draft of the proposed franchise agreement to franchisees.
 
As funding by banks and institutions remains tight, a key issue for international franchisors is finding master franchisees with sufficient capital.  There are now greater expectation in franchisors and a greater sharing of risk between franchisors and franchisees than the previous franchise models. 
 
There has been a great trend to decrease the upfront franchise fee and entry costs to encourage and bring on franchisees, recognising that revenue is made from sales and on a sharing of profit margin which have been squeezed. 
 
International franchisors need to ensure that their business model is viable in the local market.  The market and demographics vary considerably from State to State in Australia.  A system successfully established in Queensland may not extend as successfully to New South Wales or Victoria. 
 
Wisewould Mahony acts for a number of international franchisors and companies, and can assist overseas companies to establish their business operations. While there is great opportunity for international franchisors in Australia, it requires on the ground local knowledge and market and feasibility research.
 
As a leading Specialist Franchise Law firm, Wisewould Mahony has a network of consultants to assist overseas companies to establish their franchise systems and company operations in Australia.  The firm is a member of the International Franchise Lawyers Association (IFLA), Franchise Council of Australia (FCA), Franchise Association of New Zealand (FANZ) and the US Commercial Service and Themislink Forum.
 

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