Economic uncertainty affected franchise purchasing decisions, with most wannabe franchisees now looking for lifestyle, rather than financial, benefits, new research has found.
An annual survey by Mortgage Choice found that 53% of respondents were influenced by the GFC. The study quizzed 500 people who planned to buy a franchise in the next three years.
Just under a third of those questioned said they saw potential in a franchise that’s been positively affected by the GFC, with 26% saying that the downturn caused them to delay the purchase.
The largest proportion, 35%, said that they believe they will now be better paid as a franchisee rather than as a regular employee.
Despite this, the top reason, cited by 50% of those polled, for wanting to own a franchise was the job satisfaction and personal achievement. A further 47% said the flexibility, while just 45% said the income potential, despite this being the top answer last year.
The top reasons for owning a franchise were franchisor brand recognition, an established business model and a higher likelihood of success than a start-up company.
The most common purchase and set-up cost was $50,000 to $100,000, at 22%. Only 7% cited over $400,000, although the total spend is higher than last year, suggesting a greater confidence in the market.
Similar to last year, food franchises appear to be popular with soon-to-be franchisees, with 53% of respondents saying that they wanted to work in the food, restaurant and café sector.
Asked about the greatest challenges in the first 12 months, the most popular answer was cashflow, followed by ability to make profit and hiring the right staff.
Mortgage Choice spokesperson, Kristy Sheppard says: “Potential for income as a key motivation for purchasing a franchise is less important now than in 2009, perhaps due to Australians rethinking their priorities during the recent economic uncertainty.”
“The proportion listing it as the chief reason to buy dropped by nine percentage points year-on-year. Has the ‘work to live’ mantra become stronger due to a wakeup call?”