Franchisors are offering discounts, waiving fees and even giving away franchises as part of an effort to lure prospective franchisees as economic conditions worsen.
Jumping castle franchise Jumping J-Jays has given away a free franchise in Melbourne worth $50,000, and is preparing to give another away in Canberra this year.
Cameron Fancourt, chief executive of health and relaxation brand the Beauty Spa Group, is waiving the usual $50,000 initial franchise fee for established spas that join his chain.
Fancourt says this will help him expand the group during the downturn, as prospective franchisees are, “looking for more support and more security”.
Brendan Green, chief executive of personal services franchise Hire A Hubby, is now offering opportunities for franchisees to win discounts worth up to 50% over the next three months.
Steve Wright, chief executive of the Franchise Council of Australia, says these discounts are a response to rising unemployment figures.
“I think it’s a fair reflection to say that recent years have been very tight for franchise recruitment. We’ve had full employment and a resources-driven, well paid level of full employment. That has made it more difficult for franchisors to recruit, particularly for franchises that are closer to the micro-business level.”
“And I think that you saw, late last year, some response to that. Some systems are trying to be a little more creative with the offers they are making. That’s obviously flowing through into this year now with these discounts.”
Wright says franchisebusiness.com.au, the industry’s main advertising portal, has seen a rise in traffic for the last few months of 2008.
He claims that as more franchisors step up their advertising to tap into the growing pool of potential franchisees created by rising unemployment, franchisors will need to get more creative with their promotions.
“I think there’s going to be more creativity in small business this year because it’s simply going to need to be there in tough conditions. Those who show creativity and flexibility are more likely to be the ones who are rewarded “
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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