Australian funded research shows that prospective franchisees who undertake pre-entry education are more likely to enter a franchise agreement.
The Australian Government funded Griffith University to compare the outcomes for prospective franchisees who undertake pre-entry education with those who don't.
Parliamentary Secretary for Small Business Bernie Ripoll said the research was important to inform Government policy relating to a major sector of the economy.
"The franchising sector is worth more than $130 billion and provides jobs for more than 400,000 Australians," Mr Ripoll said.
Pre-entry education provides prospective franchisees with skills that can assist them in their dealings with franchisors, and aid their understanding of the requirements arising from their agreements.
Mr Ripoll said the research builds on the Parliamentary inquiry, Opportunity Not Opportunism: improving conduct in Australian franchising which he chaired in 2008. The Australian Government's response to this inquiry undertook to work with the industry and academics to collect and publish more research on the sector.
The research considered the effectiveness of interactive online training modules for prospective franchisees developed by Griffith University. Since the modules were launched in July 2010 they have been completed by more than 4,600 people.
Mr Ripoll said "this pre-entry education program ensures that prospective franchisees go into the franchise term with their eyes wide open.
By completing this course, franchisees understand the nature of the business arrangement they're entering into, increasing their likelihood of success."
"This work complements the observations by Mr Alan Wein who was commissioned to undertake an independent review into franchising. Mr Wein found that there is a positive trend towards pre-entry education in the sector.
The Government accepted the key recommendations of Mr Wein's 2013 Review of the Franchising Code of Conduct on 24 July at the National COSBOA Small Business Summit in Brisbane and is working towards implementation of these amendments by Christmas 2013.
A copy of Preparation for Franchising: A study of prospective and current franchisees research report can be downloaded from the Asia-Pacific Centre for Franchising Excellence website.
More information about the government's response to the recent review of the Franchising Code of Conduct is available from the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education website.
1 August 2013