Four new US franchises are set to enter Australia, including burger chain Carl’s Jr and restaurant group The Melting Pot, lured by the strength of the local franchising sector.
It comes just days after clothing chain Gap announced it would be opening an Australian store following years of speculation, with its first Melbourne location set to open its doors before June.
Burger chain Carl’s Jr, restaurant The Melting Pot, the sports store Golf Etc and elderly assistance group Right At Home are set to enter the market, and are currently looking for investors and individuals to handle the master franchise rights.
The four companies are searching for interested parties with funds between $410,000 and $1.1 million, and will be holding private meetings between April 12-15.
These chains join the list of US franchises aiming at Australia, including four brands from NexCen Group: Marble Slab Creamery, Maggie Moos, Great American Cookies and Shoebox New York.
Melanie Heskin, who works at the US consulate’s office in Melbourne and works directly with a number of franchises coming into Australia, says the companies in question will be meeting with potential investors over the next few months.
She says the businesses have travel plans for mid-year, “with the intent of learning more about and experiencing the Australian market first hand in addition to meeting potential partners”.
Retail Doctor chief executive Brian Walker believes the number of US companies entering the market is growing based on the similar wealth profile of the country and the strength of the franchising sector.
Last week Gap announced its Australian stores would be franchised-based, differing from its usual model of company owned stores.
“There is no doubt in my mind that US retailers are coming into this country and will continue to do so, with Gap a clear case in point. And that also rings true to the franchising model in this country, it has billions in turnover each year and these businesses are starting to tap in to that.”
“We have a reasonably healthy franchising market, subject to regulatory influence. We are, and will remain, a reasonably healthy economy with confidence improving. Although interest rate increases are coming, rates are still comparatively low, and we are a nation that loves to shop. We are a solid deployment model for international businesses.”
Heskin says US businesses are entering the market for a number of reasons, “including the fact that Australia has a relatively stable economy with the franchising sector outperforming may other small business models, transparent regulations… and the strong presence and support of the Franchise Council of Australia.”
Heskin also says Australia is three times more franchised per capita than the US, with high general acceptance of franchising as a business model, along with “sophisticated and affluent consumers whose general lifestyle and taste are probably closer to the US than any other country”.
But Walker says the push into Australia could also be due to problems at home. While the US economy is starting to recover, the overall picture is pretty bleak and businesses are looking overseas to shore up their bottom lines.
This is almost certainly the case for Gap, which has recorded a sizable drop in sales over the past year. Carl’s Jr has also run into hard times, recording a 7.6% drop in same-store sales during March, with revenue for company-operated stores dropped 6.7% to $US45.9 million.
The company said in a statement it has been “negatively impacted by the poor economic conditions and high unemployment rates in our core California market”.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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