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Remove barriers to franchise sector to boost Asian growth

15 Mar 2013

The University of Sydney Business School has launched a two year research project to identify the structural, regulatory, commercial and legal barriers to franchising in South East Asia and develop a strategy to stimulate the growth of the sector across the region.

Franchising, which began in the United States and now delivers goods and services from hamburgers to office printing to almost every corner of the globe, is yet to make major inroads into less developed nations including Cambodia, Laos, Vietnam and Indonesia.

The Business School project, funded by the Australian development assistance agency, AusAID, will audit conditions affecting the franchise sector in individual nations and across the region.

A research team, led by the Business School's Professor of Business Regulation, Professor Andrew Terry, will also make recommendations on ways of improving the local and regional environment for franchised businesses.  

"The franchise business model can make a significant contribution to economic development through the small to medium sized enterprise (SME) sector, said Professor Terry.

"Franchising gives small business access to the world's biggest brands, it introduces new business systems, takes customer service to a new level, provides much needed training and leads to a new way of thinking about the best way to do business," Professor Terry said.

"Franchise networks can also take advantage of their buying power to put downward pressure on the price of stock which flows through to the consumer."

"While McDonalds, 7 Eleven and Kentucky Fried Chicken are very well known franchisors, there is hardly a product or a service that isn't franchised these days," added Associate Professor Nigel Finch, another member of the Business School team. "Accounting, post, gardening, real estate and many other services are now available from franchise operators."

"Worldwide, franchise businesses generate thousands of billions of dollars each year and we believe that business in our region ought to be sharing in that wealth," Associate Professor Finch said. "But, unfortunately, the sector in South East Asia faces structural, cultural, regulatory, commercial and legal barriers."

For example, Professor Terry says that contract law and intellectual property protection are major challenges in a number of South East Asian nations. "Franchisors and franchisees want to know that contracts between them are enforceable and that their IP is safe," he said.

In addition to working with governments and businesses in individual nations, the researchers will consult with the Secretariat of the Association of South East Asian Nations (ASEAN) on a strategy to deliver uniform conditions for the franchise sector across the region.

"Franchising cannot turn a bad business into a good business," Professor Terry concluded, "But, it can turn a good business into an even better business through branding, training and ongoing support."