Food in Franchising

What are the key issues for the hospitality sector in franchising for 2026?

Rents have now increased with landlords less likely to offer rent free concessions.

Operational costs such as bank charges, electricity and staff costs have increased  This has put a further squeeze on profits ..

Staff shortages and training costs have increased.

Consumers habits have changed, and they are not spending as much nor going out as much as they used to due to with price hikes on alcohol and cafes.

Businesses need to be tech savvy and adopt contactless payments and ordering use and consider how best to implement AI to save costs.

Franchisors need to ensure they continue to support their franchisees with competitive supply arrangements and innovation to remain attractive and competitive in a highly competitive market.

The market size of the hospitality /restaurant sector in Australia is around $14.1 billion in 2023, with an expected growth rate of 1.2%.

Some real winners in the Franchise sector have been Guzman Y Gomez and El Jannah who have shown how from little things big things grow!

For Franchisees there are a myriad of opportunities in the hospitality QSR sector and getting independent legal and financial advice and doing your due diligence on the franchisor before committing is still vital.

Getting into a franchise is one thing but getting out of one can be difficult and often a franchisee who finds it’s not what they expected, they will crystalise a loss.

The cost of entering into a new food franchise can range from low-end $50,000 up to $700,000, so before committing, be clear about the following:

4. Is it a new greenfield location or an existing franchise:

Weigh up the option of taking up a new franchise system or buying into an established business which has revenue from day one.

An existing franchised business may involve paying for goodwill and a greater up-front cost, with additional costs for updating the equipment and refit of the premises, which you need to factor into your budget.

With a new greenfield location, you acquire new fit-outs and equipment and start afresh, but the new location may come with greater risk.

Despite the challenges confronting business franchising remains a very popular and accepted way to enter into business with the support of a brand, systems, marketing and ongoing support from the Franchisor.

Some brands have significant capital backing, which allows them the luxury to expand even during tough times. As my brother Ted of Ted’s Camera Stores fame always said – “when times are tough, market harder”!

This concept rings true, and we see it in many sectors where many businesses retract, reduce their stop marketing, and die a slow death, while those that are innovative, invest in technology and market harder to pick up market share in their sector, survive and succeed.

If you are considering entering into a franchise, make sure you seek advice from a Specialist Franchise Lawyer who is a Member of the Franchise Council of Australia (FCA) and seek independent financial advice before you commit so you can make an informed decision.  

If you would like further information on franchising, contact Robert Toth (robert@sanickilawyers.com.au) or call us on (03) 9510 9888.