About 17 years ago I published an article headed “How many pizzas can one country eat ?” due to over saturation of pizza franchises in Australia at that time.
Since then, I could have written a similar article about our oversupply of ice cream and yoghurt, burgers, coffee and chocolate and more recently Bubble Tea franchises to name a few.
On the other hand, where would we be without food and franchising... hungry !
Many things have changed in the hospitality sector over the last 5 years with changes in our governments migration policies, free trade agreements ,tariff wars, wars and cost of living issues.
Despite all this we continue to see great activity in the franchise sector and greater interest from overseas franchise systems.
The QSR / fast food sector continues to be one of the most successful sectors in franchising. Even with some casualties when one door closes, another cafe opens and from adversity there is great opportunity !
QSR- what is it ?
We hear the phrase constantly, but what does it actually mean? Quick Service Restaurants (fast food outlets) focus on giving customers quick, convenient, and affordable meals focusing on speed of service, counter service or drive-thru options. They are the McDonald's, Boost Juice, Hungry Jack’s, Gong Cha and Guzman y Gomez style brands.
QSR’s differ to fast food casual restaurants where they are encouraged to dine in and wait for their meal.
The key challenges for QSR franchisees continue to be oversupply in certain sectors, occupancy costs (rents) and wage costs. Consumers are also more health conscious and want to see sustainability initiatives from franchise systems.
The key marker for success is still consistency in food delivery, speed, digital ordering and the ability to package up meals to be cost effective.
What’s happening in food and franchising in 2025 ?
Here are some interesting numbers (source IBIS World):
- The franchise market size is around $201 bn and only increased around 1.7% in 2025
- The Fast Food and takeaway sector contribute around $29.7 bn in that sector
- This sector has grown by 2.9% in 2025.
- The next 5 years projection is that there will be slow growth.
Franchised businesses pre covid were slow and steady, helped by rising disposable income and positive consumer sentiment. Since then, there have been cost of living pressures, wars, supply chain issues, and increased operational and supply costs have made it difficult for business and affected consumer confidence. The increased costs have also impacted on profit.
The bigger franchise systems such as Metcash, Harvey Norman, Subway, Dominos, and McDonalds have been able to absorb this negative impact and adapt to the changed conditions and consumer trends whereas many smaller franchise systems have not had the same resilience.
Australia is a multicultural society, embracing foods from many countries from noodles to pappadums, pasta to sushi, kebabs to gyros, burgers to pho and this diversity in offering has encouraged many overseas franchisors to enter the Australian market.
Recent Franchise war stories – Too many burgers not enough population ?
There will always be some franchise systems that fail in our market and usually you can identify why they failed due to inadequate research or oversupply, or their product and service offer just didn’t stack up with their competitors.
Carl Jr which had grand plans to enter the Australian market and compete with our established burger chains but failed to gain traction. There are a number of reasons why they found it hard to enter into the market here, despite their success overseas.
Now Wendy’s has sought to re-enter the market with new owners, and it will be interesting to see how they track going forward.
Key take out
For franchisees the key take out from the above is ”choose wisely” as even though it may be a new and exciting franchise opportunity taking up a new franchise brand carries greater risk than taking up an existing brand.
Taking up a franchise and then watching the brand exit the market is disheartening and will crystallise a loss so choose carefully and seek advice before you take up a new franchise opportunity.
The key issues for overseas system coming to Australia are understanding our consumer tastes which differ from say the US or the UK as well as our planning costs and delays and wages and occupancy costs all of which mean you have to carefully assess if the franchise will be viable in the Australian market even if highly successful overseas. This is more so as the new code requires that franchisors give the franchisees a reasonable opportunity to make a return on their investment.
Should I buy an existing franchise or go into a new ‘greenfield” site?
The benefit of buying an existing franchise business, is from day one you have revenue coming in which means you need less working capital for the first 12 months of operation.
In this case, as you are buying a going concern so generally the cost to get into an existing franchise will be higher than if you are set up a greenfield site.
If you are looking to buy an existing franchise business the key things to be aware of would be:
- The Lease – who holds the lease is it the Franchisor or will you be the head tenant? what term is left on the lease if any existing site and is there an option. Does the lease term align with the franchise term? – Are the annual rent increases fixed or to CPI? (Note- many leases provided for annual CPI increases which was good for the tenant when CPI was low, however over the past 2 years the CPI has increased substantially so rent reviews to CPI now favour the landlord not the tenant!).
- The Plant and Equipment – is the existing plant and equipment fit for purpose and functional as the cost to upgrade or replace them to comply with the Franchisors operational standards could be very costly.
- Refit or rebrand – check if the franchisor or the lease requires you to refit the premises or rebrand shortly after you buy the business as that can be a substantial extra capital cost.
The benefit of establishing a "new” greenfield” site is that you will have the latest fit out, new plant and equipment and you may be able to negotiate some concessions on fees from the franchisor and also rent concessions from the landlord.
The negative in establishing a new greenfield franchise is that you need to ensure you have sufficient working capital to build the business up over that first 6 to 12 month trading period. Therefore, franchisees should weigh up each option and seek appropriate financial and legal advice.
New players in the market
Over the past three years we have seen an array of prospective new franchises enter the market such as international chains like Wendy's, Chuck E. Cheese, and Firehouse Subs, as well as concepts like Mr. Charlie's ("vegan McDonald's").
Other notable newcomers include Graze Craze, a charcuterie franchise, and Jollibee, a large Filipino fast-food chain. We have also seen Guzman Y Gomez significantly expand.
How many Bubble Teas can one country drink ?
A lot it seems, also known as “Boba” a Taiwanese milk tea when you look at this sector.
The main players being Chatime (165 stores), Gong Cha (172 stores), Sharetea (130 locations) and Palgong Tea (380 stores worldwide) with more being established.
These franchises don’t just sell tea they sell a fun and immersive experience and contribute around $480 million to the franchise sector (source Ibis World ) annually with around 300 businesses.
We have also seen an influx of Asian franchise brands such as Tam Jai Mixian, Banana Blossom (14 restaurants ), Bing Boy ( around 30 stores) and brands from Singapore, S E Asia and Japan.
Uncle Tetsu’s Japanese Cheesecake stores sell those unique, delectable Japanese desserts and is a great example of how to successfully take products overseas and maintain consistency with hands-on training, customised ovens, and adapting recipes with locally sourced ingredients.
Burgers and Coffee
We continue to see increased competition and new players in the burger segment with an increase in plant based burger chains and also some new “boutique burger” brands.
Australians continue to have a love affair with their coffee despite increased prices whether it’s from a café, a van or a hole in the wall .. provided its good coffee!
There is a myriad of franchise offerings from low cost mobile franchises such as The Coffee Guy and Xpresso Mobile Café where the investment can be from $60,000 to Hudsons Coffee, Degani and Coffee Club which require an investment from around $350,000 plus.
Choosing your franchise
For new franchisees we recommend that you look at a franchise that suits your lifestyle and skill set, and one that you can see yourself doing long term as many franchises have a certain “life span” after which the franchisee will want to sell or exit.
So, ask yourself if you can see yourself for example selling BBQ chickens in 3 or 4 years.
Consider your exit plan at the same time as going into the franchise and if it has long term appeal and it is not just a passing fad as once you are in a franchise, there is no easy exit, there are only limited options to exit the system.
Despite the challenges confronting business, there are great opportunities in the franchise sector.
Before you jump in !
- Do your due diligence on the franchisor just as much as they do their due diligence on you.
- Is it a greenfield site which may be a higher risk than an existing business?
- Are you being offered an A, B or C grade site?
- Is the Franchisor big on technology, social media marketing and innovation? if not, how will they compete in the market sector they are in.
- Is the store fit out tired and due for an upgrade?
- Is the plant and equipment new or will it need replacement?
- Will you hold the lease or hold under an occupancy licence.
- What is your budget – what can you afford?
- Ensure you have adequate working capital to cover the first 6 to 12 months of operation (particularly if a new greenfield site).
- Factor in rent increases and fit out upgrades in your cash flow forecasts.
- Make sure the numbers work and you can take a salary for your effort along the way.
Above all to limit your risks and make an informed decision seek advice from a Specialist Franchise Lawyer who is a Member of the Franchise Council of Australia (FCA) and get independent financial advice before you jump in !
Sanicki Lawyers have over 35 years of experience in the sector and can help you establish a compliant franchise system , advise you on master franchise rights and also advise you on your proposed new franchise opportunity.
Robert Toth Special Counsel Accredited Commercial Law & Franchise Specialist
Email [email protected] Mobile 0412 673 757
Named by Global Law Experts as Franchise Law Expert of the Year 2025 in Australia
