As 2010 gets well underway, there are ominous signs that not all is well with Australian franchising, with a number of key challenges and threats facing the sector. These include tight credit conditions; rising interest rates; greater competition for potential franchisees; increasingly saturated or “over franchised†sectors of the economy; and the threat of increased disputes.
As with 2009, franchise systems will continue to struggle as a result of the global financial crisis. The days of cheap finance to rapidly expand a franchise system are gone for the foreseeable future and those systems needing new finance or having to refinance existing debt will continue to be vulnerable. These franchise systems will struggle and some may even fail as banks look for greater security for loans and seek higher interest rates from SMEs. Continue reading this article.