Helping small businesses survive

Dr. Sudha Mani

Helping small businesses survive

Motivated by the devastation of the 2009 global financial crisis, Dr Sudha Mani’s research is influencing policymakers and improving transparency for Australian franchisees.

Despite the $155 billion contribution franchises make to the Australian economy, opening one can be a risky business, says Dr Mani.

“There are about 1240 franchise brands in Australia and almost all franchisees are small businesses – many have invested their life savings,” says Dr Mani.

“Franchisee failure causes real harm to families, both in financial and health terms.”

Never was this more apparent than during the global financial crisis in 2009.

“Hundreds of firms were filing for bankruptcy at that time, and we wanted to determine how to mitigate the risk of bankruptcies for franchisees and their franchisors,” she says.

To understand the drivers, Dr Mani and her colleagues studied US court records to identify 7242 franchisee bankruptcies over a 13-year period.

The Department of Marketing senior lecturer says her research identifies key ways to reduce the risk of franchisee failure.

“For example, franchisors can offer incentives to their franchisees to reduce the risk of franchisee insolvency, which in turn reduces the risk of franchisor insolvency,” Dr Mani says.

Dr Mani collaborated on the massive research project with Prof Kersi Antia of Western University in Canada, and Prof Kenneth Wathne from the University of Stavanger and Norwegian Business School.

Their research, published in the Journal of Marketing Research, is shaping policy, including changes to the Australian Franchising Code of Conduct 2021 and the Franchise Council of Australia's Franchisee Guidelines.

"Many have invested their life savings."

Based on Dr Mani’s recommendations, the Australian government has invested $4.3 million to create the first mandatory public Franchise Disclosure Registry to enable prospective franchisees to make informed decisions before entering into an agreement.

These influences have earned Dr Mani the Monash Business School 2021 Dean’s Award for Research Impact.

Dr Mani says better transparency will improve the wellbeing of almost 100,000 franchisees and their families, and the half-a-million Australians working in the sector.

“The public availability of disclosure documents will create better institutional norms for franchisors, help weed out offenders and improve the sector's credibility,” she says.

“Public access to disclosure documents will also enable not-for-profit institutions, researchers, and policy-makers to study Australia's franchise systems to prevent future harm.”

Dr Mani says the purpose of research is to influence change and inspire new ways of thinking.

“I hope to continue to work on impactful research that contributes to the success of organisations and their people,” she says.