The American philosopher, George Santayana said, "Those who do not remember the past are condemned to repeat it".

Australia, according to the Franchise Council of Australia and other franchise pundits, is in the midst of a franchise boom. Franchise Expos are currently being run around Australia as further evidence of that boom.

However, if one looks carefully at the companies participating in these expos, there are few major franchisors. Will all the smaller companies exhibiting at these expos succeed? Statistical information says, most likely not. In fact, based on a survey carried out by IF International Group in 1995, after 10 years, 67% of all franchise chains started, were no longer in business.

There is an obvious argument that franchising has moved on and that franchisor failures are far fewer than in previous decades. Franchisor failures may well declined because of the franchise code and compulsory disclosure.

However, there has not been one recent survey specifically addressing franchisor failures and how much failures may have declined over, say, the last 10 years.

Potential franchisees should be asking themselves if Australia's 20 million people can realistically support the vast number of franchises in areas such

as:

Coffee Lounges

Mortgage Brokers

Finance Brokers

Wealth Management

Lawn Mowing, Maid Services and Dog Washing Franchise Consulting

I was the Southern Hemisphere's first franchise consultant and the only one in the country for 10 years, so I believe in the concept and the benefits that franchisees receive from ethical and well run franchisors.

However, I have lived long enough to be absolutely convinced that every boom is followed by a bust. The problem is that no one can predict when the bust will occur or who will go bust. Despite the benefits brought by the franchise code and disclosure documents, potential franchisees must always operate not on the basis of carpe diem, seize the day but rather on the basis of caveat emptor, buyer beware.

So, as George Santayana implied, potential franchisees should remember the past and be extremely careful when considering becoming franchisees of smaller, unproven franchisors. Unfortunately, not every franchise is the next McDonalds's, even though the promoters would like potential franchisees to think they are.