Franchising a global opportunity for diversity

06 September 2007

Franchising is a vital business strategy offering substantial diversity because of its adaptation to many kinds of different business concepts, according to experts speaking at a recent AGSM Lifelong Learning event.

Professor Andrew Terry, Head of UNSW’s School of Business Law and Taxation and Governor of the Franchise Academy, along with Mark Bouris, Wizard Home Loans founder and an adjunct Professor at UNSW, discussed methods of creating successful global franchises.

Franchising was increasing in popularity with organisations that wished to grow their business or enter a particular industry, said Professor Terry.

Citing Wizard Home Loans as an example, Professor Terry said big business was finally recognising the appeal of franchising, with participant diversity increasing.

Mr Bouris, non-executive chairman at Wizard, revealed his initial psychological resistance to adopting a franchise model, fearing being “held hostage” by franchisees.

In Wizard’s early stages, Mr Bouris said he preferred to accelerate the company’s growth through strategic business deals, such as the $25 million investment in Wizard by the Packer family in 1999, rather than adopt franchising.

In retrospect, Wizard should have adopted a franchising model earlier, Mr Bouris said. Fears over a lack of control in franchising were removed if franchisees were well trained and looked-after.

Mr Bouris said franchises returned higher growth because a greater sense of responsibility by the owner-operator ensured business effort was maintained. Regular employees of a business had a lesser incentive to do well because the onus of responsibility was not on them – they did not own the business.

The sale to GE Capital in 2004 made high future growth in Wizard possible, adding global appeal. Mr Bouris revealed Wizard’s imminent expansion into India.

The event, Achieving growth whilst navigating the Wall Street imperatives: Wizard takes the franchise model global, was part of the AGSM Lifelong Learning Series.

The series keeps AGSM alumni abreast of current business issues and provides them with networking opportunities.