OzSpy Security Solutions is the latest franchise to heavily discount its start-up fees, reducing the establishment costs by $50,000, as recruitment issues continue to plague the industry.
An electronic security retailer, OzSpy sells surveillance equipment, alarm systems and CCTV, and operates 11 shops throughout the country.
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The franchise recently announced a $50,000 reduction off the establishment costs for a new metropolitan franchise store. An initial investment in OzSpy normally starts at around $130,000.
“We initially identified that we could start by trimming the cost of our new store fit-out by creating a less labour-intensive in-store design,” OzSpy managing director Craig Mitchell says.
“From there, we focused on our core stock range and – through adding lower cost quality technology products to the range and creating new localised supplier arrangements – we could provide franchisees with the required stock range for less money.”
“It then became obvious that if we also sacrificed a portion of our upfront franchise fee, we could position the overall investment in a significantly lower price bracket, so we decided to bite the bullet and reduce our fee as well.”
OzSpy is the latest in an increasingly long line of franchises discounting their franchise fees.
Less than two months ago, fruit hamper franchise Flowers by Fruit said it would reduce its franchise fee for those willing to take part in its pilot program.
Flowers by Fruit has created two separate franchise models: the Edible Gift Guru, or EGG, and the creation centre franchisee.
The pilot program will see new franchisees enjoy up to 50% off the franchise fee, which is usually $10,000 for an EGG and $50,000 for a creation centre.
Earlier in the year, Baskin-Robbins announced it would offer a $10,000 discount off the start-up costs to new franchisees sourced through one of its showcase expos.
While heavily discounted fees could serve as an incentive to enter a franchise, it comes on the back of major recruitment issues within the industry.
According to Stan Gordon, managing director of the Franchised Food Company, the recruitment of suitable franchisees is currently the biggest issue facing Australian franchisors.
“Any outlet lives and dies on the strength of its operator and tier one franchisees are currently in short supply,” Gordon says.
“The last few years have been difficult for several operators in Australia… Recruitment should be the key concern, not a secondary thought.”
Small business lobbyist Peter Strong has warned prospective franchisees to tread carefully in the current economic climate, urging them to look beyond attractive offers and read the fine print.
“The ACCC has a training package for people considering going into a franchise. It’s not about [business] management skills – it’s about managing your emotions and identifying problems,” Strong told StartupSmart.