At the same time, strong economic growth and boom times for Australian franchisors mean that business migrants are helping maintain the sector’s strong 14% annual growth rate (Source: 2006 Franchising Australia Survey) despite the fierce competition among systems for new franchisees.

State governments are also acknowledging that franchising is an attractive proposition for business migrants compared to the purchase of stand-alone businesses, and are keen to attract business migrants and their contribution to the state economy.

However the overall number of migrants coming to Australia on business visas is low according to Agnes Kemenes, director of No Borders Migration Advocates, accounting for less than 20% of visa applications. Of these, approximately half are buying franchises, but migrants entering the country under other categories of visa could also be buying franchises after their arrival.

Statistics about the uptake of franchises by business migrants are sketchy, but anecdotally the trend continues to rise in parallel with the overall growth of franchising in Australia.

The 7-Eleven experience

Warren Wilmot, chief executive officer of convenience store chain 7-Eleven which is acknowledged as Australia’s most multicultural franchise, says that business migrants account for as much as five percent of the system’s population of 360-plus franchisees even though the system is not actively targeting overseas prospects.

“We tend to advertise in ethnic newspapers here (in Australia)”, says Wilmot, adding that Chinese and Indian newspapers in particular have been effective.

While 7-Eleven has conducted franchise presentations previously in New Zealand and South Africa, it has no current plans to target potential franchisees offshore, citing the organic growth of the network and multiple-unit franchising by existing franchisees as sufficient to meet its requirements.

“Our overseas presentations came about through changes in the New Zealand market,” says Wilmot.

“We got a sudden influx of franchisees seven to eight years ago due to a change in the fuel market there.”

Wilmot explains that many of these candidates had already been operating retail convenience and fuel businesses in New Zealand, and with the changes to their industry locally, saw the opportunity to relocate to Australia and continue with a business they already understood with the support of a major brand. Similar to New Zealand, South Africa also has a highly developed convenience sector, and their South African franchisee who joined as a result of the 7-Eleven presentation, had prior experience in a similar business.

He has noticed waves of interest from other groups as well.

“Four years ago we had a wave of Egyptians coming through, who all knew each other and referred each other to the business,” says Wilmot.

“There was also a big exodus out of Asia prior to Hong Kong being handed over.”

Political, economic or social environments in foreign countries can stimulate migration to Australia.

“We joke about the coups in Fiji being good for us,” says Wilmot, as 7-Eleven has a significant number of ex-Fijian’s in the group.

Cultural considerations

The system is a real melting pot of cultures, with franchisees coming from a wide variety of ethnic groups including mainland and Hong Kong Chinese, Pakistanis, Fijian Indians, Egyptians, New Zealanders and English migrants.

The interest in 7-Eleven, particularly among Asian cultures, is partly due to the opportunity for an entire family to work together, according to business broker and National Business Sales managing director Patrick Lui.

“From an Asian point of view, the longer the hours the business is open, the more options for the extended family,” he says, adding that newsagencies have also become very popular with Indian migrants.

Lui is himself a business migrant from Hong Kong who settled in Australia in 1992, and is finely attuned to the business nuances of different Asian communities.

“Mainland Chinese are extremely aggressive at buying into restaurants and cafes, while Hong Kong Chinese are very conservative and are focused on the real estate attached to the business,” he says.

“Koreans are a unique group. Many come from professional backgrounds and have had dealings with multinationals in Korea. They are not scared of challenges and take bigger risks than the Chinese.”

“The advantage of Asians is that they work very hard, and like to work together as a family,” he says.

This characteristic is not limited only to Asian cultures, but according to 7-Eleven’s Warren Wilmot, is an important consideration in choosing a business.

“A lot of the people who buy our stores are where the families can work the business together and that appeals to a wide range of people who want to work in a family and wide social environment,” he says.

Case Study: Alan Parkinson, Clark Rubber Morayfield (Queensland)

New Clark Rubber franchisee Alan Parkinson, who arrived in Australia in December 2006 with his wife Jacqueline and two children Gemma, 14, and Ryan, 10, says his family plan to work in the business with him.

“My son wants to be acting managing director at 10 years old,” says the former British auto industry executive who will open his Clark Rubber franchise at Morayfield, Queensland, in May.

For Alan and his family, the prospect of adjusting to life in Australia – despite some good-natured ribbing over Australia’s supremacy over England on the cricket field - will not be the culture shock it might be for Asian business migrants. While Asia remains a large source of migration, England is the number one source of new Australians, and Australia is England’s preferred migration destination.

“For people aged between 25 and 55, it’s estimated that as much as 30% of the population in that age range are considering leaving England,” says Alan.

Regular migration expos, plus a generic migration magazine and a special newspaper for people interested in migrating to Australia highlight the apparent enthusiasm of the English to seek further opportunities in warmer climates.

“Most people leaving England are heading to Australia, Spain or France,” says Parkinson, who cites climate, crowding and ironically, migration, as the reasons for leaving England.

“We want to live in an English-speaking country with a better climate and liked the way of life here (in Australia),” he says.

“I worked in London for 10 years and went to work on the Tube every day. I woke up one day and realized it wasn’t a life, it was an existence.”

“The outdoor lifestyle in Australia is really great,” he adds.

“I run every day, the kids are sports mad and my wife’s health would be better here.”

The irony of Alan coming to Australia is that a huge influx of migrants into England from newly-admitted member states of the European Union has contributed to his decision to move.

“I wished that in the UK they go to the same lengths as here to ensure people are able to contribute to society,” he says.

“In England they just let anybody in, including those who intend to live on welfare and it’s the UK taxpayer paying for it.”

To underscore his point, Parkinson says that when Rumania and Lithuania joined the European Union, an estimated 13,000 skilled migrants from each country were expected to migrate to England. However that number swelled to nearly 600,000 he says.

Applying for a Business visa

Irrespective of where they come from, all business migrants to Australia must meet the same selection criteria. While the federal government’s Department of Immigration and Multicultural Affairs remains the final decision-maker and issuer of migration visas, state governments have recognized that migration can provide economic benefits to state economies and vie with one another to attract migrants.

Whereas business migrants are required to invest a minimum $500,000 or more in an Australian business under federal requirements, this threshold is effectively halved under sponsored visa programs offered by the state governments, with the proviso that the applicant must settle and operate a business in the sponsoring state.

The state sponsorship of business visas is ideally suited to prospective franchisees particularly of retail systems whose entry costs typically start at $250,000, and which provide the required investment level for the visa criteria.

But meeting the investment level is just one of many criteria required to satisfy state authorities to recommend to the Department of Immigration and Multicultural Affairs that an applicant should be accepted for a business visa.

For people considering a franchise, the prior approval of the franchisor is essential to gaining state sponsorship. For these applicants, they must first identify a franchise system of interest, go through the franchisor’s selection and approval process (which usually involves identifying a location and developing a business plan) before submitting their visa application to the state authorities.

For Clark Rubber’s Alan Parkinson, this involved extensive phone, email and postal contact with the franchisor in Australia, countless hours of research and preparation of a business plan, and two special-purpose trips to Australia. At the same time he was also preparing his wife and children for the possibility of selling their home and moving away from family and friends.

The business plan forms part of the state-sponsored visa application, and must include market research, a competitor analysis and financial projections (shown in Australian dollars), as well as the number of jobs to be created by the business and details of the applicant’s skills and business experience.

(Under the business migration visa, applicants are expected to have operated a business in their home country, or worked at senior manager level).

This business plan, plus a supporting letter from the franchisor and the formal application documents must then be submitted, and where possible, applicants are encouraged to sit an interview with state migration officials to support their application.

The approval of state-sponsored visas is handled through the Department of State Development (or equivalent) in each state. Applicants must verify that they intend to settle and operate their business in the sponsoring state, and although the location in the state must be specified, it is not a determining factor. However one government insider has not ruled out future emphasis being placed on applicants starting businesses in regional locations to partially offset the population drift to metropolitan centres.

The interview with state migration officials, while not obligatory, is highly recommended to demonstrate that the applicant is serious, according to No Borders’ Agnes Kemenes, and can help facilitate the approval process.

For example, Alan Parkinson’s state sponsorship was approved less than a week after meeting with the Queensland Department of State Development, meaning that he was quickly recommended to the Department of Immigration and Multicultural Affairs for a business visa.

In most cases, the recommendation is accepted, but can be declined in some instances. Active involvement in the business is essential and Kemenes cites the example of a Korean whose application was declined because he planned to invest in a business but not take an active role in its operation.

Business migrants are encouraged to use the services of a registered migration agent. Some government agencies have internal processes that can fast-track applications from migration agents over those lodged directly by applicants.

English literacy requirements

High levels of English language skills are not a strong requirement for state-sponsored visas, and in conjunction with the lower investment threshold, potentially allow entry to applicants who would not otherwise qualify for a visa from the federal government.

For many 7-Eleven franchisees, English is a second language but the nature and systems of the business provides opportunities for migrants with low English skills to still operate a successful business.

“We are definitely a “buy from” rather than “sell to”’ business,” says Wilmot, explaining that the language skills required for a convenience transaction are far less rigorous than for example, a sales or servicing business.

“We also provide full support, right up to doing the BAS, which is ideal for someone owning their first business in Australia.”

While not essential in convenience retailing, higher levels of fluency can have a strong positive impact on the business.

“Convenience stores are seen as expensive, but as soon as a service element is introduced, the customer’s perception of value for money goes up substantially,” says Wilmot.

“For example, we had a great nightshifter (nightshift operator) who could manage every transaction, but the minute someone asked him for directions, he was not able to interact.”

Anecdotally, Wilmot and Lui agree that many business migrants from non-English backgrounds will use their first business as an opportunity to familiarize themselves with the language, culture and business environment in Australia, and often go on to other businesses afterwards.

Lui says that in some instances, migrants choose businesses that are convenient for the purpose of obtaining the migration visa, and then after running them for two to three years, sell and buy another business.

Wilmot agrees that many 7-Eleven franchisees who sell their convenience stores have the confidence to progress on to buy larger businesses, or businesses that do not have the same high level of support provided by 7-Eleven.

The idea of selling hasn’t even entered the mind of Clark Rubber’s new franchisee Alan Parkinson, who is too busy getting his new business off the ground, plus settling his family into a new environment and children into new schools.

“The grass is very dull in England,” he says. “It’s much greener here.”

10 Business Migration tips for Franchisors:

1. Have a procedure in place for handling domestic franchise enquiries from outside Australia. Now that most franchisors have information about their franchises online, they can expect to receive franchise enquiries from anywhere in the world. Be responsive and professional in dealing with questions you might not otherwise get from Australian-based prospects.
2. Recommend that potential franchisees deal with a migration agent registered with the Migration Agents Registration Authority (MARA). Don’t provide visa or migration advice yourself. See www.immi.gov.au for more information about immigration guidelines and migration agents, as well as the Department of State Development (or equivalent) website in the franchisee’s destination state for details of state-sponsored visas.
3. Be prepared to say no, even if the candidate is a good fit for your business. Some prospects who might make suitable franchisees could require higher levels of field support than your system is able to provide. It is better to say no up-front until your field support levels are higher.
4. For candidates who meet your selection criteria, be prepared to provide a written offer of a franchise (subject to visa approval) which can be used for their visa application. If contacted by state or federal immigration officials, answer all questions promptly and thoroughly.
5. Allow for longer planning timeframes when dealing with business migrant candidates as their migration applications may take some time to process.
6. Bear in mind that over time, business migrant franchisees can provide you with an insight into your franchise’s suitability for export into their home country, and can be a valuable future resource as your business expands internationally.
7. Develop your own awareness and respect of the cultural and religious norms of the countries of origin of your migrant franchisees. Train your staff accordingly to avoid the potential for embarrassment and conflict.
8. Do not develop non-English promotional materials. This will act as an early filter to determine English language proficiency. If successful candidates from a LOTE (Language Other Than English) background are appointed, be prepared to make a translator available during training to ensure that detailed concepts and questions are handled correctly.
9. Comply with the Code. As long as someone is buying a franchise in Australia, the Franchising Code of Conduct still applies regardless of where they come from. Ensure all documentation is provided in accordance with the Code, and strongly encourage applicants to seek independent legal, accounting and business advice.
10. Be prepared for referrals. If you grant a franchise to a business migrant, it is possible that their friends, family or colleagues from their home country may also enquire about a franchise with you. Ensure that your existing migrant franchisee is aware that referrals are welcome, but in itself is not enough to grant a franchise as each applicant must be treated on their own merits.

Advice for Business Migrants

1. Review the Australian Government’s Department of Immigration and Multicultural Affairs website at www.immi.gov.au.
2. Make contact with a migration agent in Australia registered with the Migration Agents Registration Authority (MARA). See www.immi.gov.au for details
3. Enquire through your migration agent about state-sponsored visas and visit the relevant state government websites.
4. Look at Australian websites of brands that would otherwise interest you in your home market, and research online directories for franchises in Australia. A Google or Yahoo search using the keywords “franchise directory Australia” will provide many options for further research. Look mainly for retail businesses as most service franchises won’t meet the required investment level for a business visa application, and shortlist two or three different franchises.
5. Develop your knowledge of franchising by attending any seminars available in your home country.
6. Be prepared to make several trips to Australia to research the market, the franchise, etc, and meet with the franchisor, your migration agent, immigration officials and advisors.
7. Be aware that franchising in Australia is governed by a national set of regulations, the Franchising Code of Conduct. The Code requires franchisors to provide essential information about themselves in a disclosure document, along with a copy of the franchise contract (agreement) and a copy of the Code itself at least 14 days before you can sign a franchise agreement. Use this time to get advice on the agreement and the business proposition from your advisors.
8. Be wary of the temptation to buy an established business, franchised or not. The extra price you pay for an existing business compared to a start-up franchise can quickly be lost if you are not able to immediately operate at the same or higher level of performance as the previous operator. As most business migrants do not have the same social and cultural frames of reference (and often do not have the same language skills) as the previous owner, there is a real risk that their business’ performance will decline rapidly. This can lead to a serious loss of value in the business and consequently, a loss of faith by the new owner in their decision to relocate to Australia.
9. Avoid rushing into any decision you may later regret. Take time at each step in the process to ensure you are comfortable with the choices you are making for yourself and your family.
10. Use Australian advisors. Use Australian accountants, lawyers and business advisors to assist you in assessing the franchise and preparing yourself for business. The Franchise Advisory Centre provides business advice to prospective franchisees and can refer you to legal and accounting professionals who specialize in franchising. (See www.franchiseadvice.com.au or phone +61 (0) 7 3716 0400.)

 Jason Gehrke is Director of the Franchise Advisory Centre and has 17 years experience in franchising and is a past Franchisor of the Year winner. He is a member of the ACCC’s Franchise Consultative Panel and a committee member of the Franchise Council of Australia. Jason can be contacted on (07) 3716 0400 or email .

For more information about the Franchise Advisory Centre’s consulting and franchise training services, visit www.franchiseadvice.com.au.

Copyright 2007. This article cannot be reproduced in whole or in part without the written permission of the author. Contact for details.