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Franchising Strategies for Indigenous Business Development

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Franchising Strategies for Indigenous Business Development Beyond Main Street: Franchising Strategies for Indigenous Business Development Cary Di Lernia Lecturer The University of Sydney Business School The University of Sydney Sydney Australia [email protected] Andrew Terry Professor of Business Regulation The University of Sydney Business School The University of Sydney Sydney Australia [email protected] Presented at the Economics and Management of Networks Conference Agadir, Morocco 21-23 November 2013 1 Abstract Australia’s Indigenous population today faces disparities which tarnish Australia’s image as ‘the lucky country’: a life expectancy of 10 years less than non Indigenous Australians, lower education standards, poorer health, greater unemployment. The list goes on. Having developed a culture which enabled them to survive, and, indeed thrive, for over 60,000 years in all areas of Australia’s massive landmass and challenging climate and conditions, Indigenous culture has foundered upon the rock of european invasion and settlement just over two hundred years ago. Successive Australian governments from both sides of the political spectrum can claim precious little success in effectively dealing with the challenges faced by Indigenous Australians living within, and alongside, modern europeanised and increasing asianised Australia. With over $25bn in services being spent in 2010 – 2011 for Australia’s 575,000 reported indigenous people ($44,128, or about €30,000, per capita), yet without the attendant results one would expect of such expenditure, government indigenous policy cannot be regarded as a success. There is increasing recognition from Indigenous leadership that there is a need to find a way out of welfare dependency and that economic empowerment is likely to be a more effective strategy: ‘We need to be participants, rather than bystanders… we need to develop Indigenous businesses and entrepreneurs’. While a multi-pronged strategy will need to be employed there are, given the significant disparities which exist, specific additional barriers which prevent Indigenous Australians from participating in the economy as any other Australian. In the face of the basic lack of conception of Western business concepts which many take for granted, a lack of basic educational skills and a dearth of indigenous business role models, targeted strategies will be required. This paper analyses the role of franchising, albeit not as practised in Main Street Australia, in addressing Indigenous business disenfranchisement. 2 1. Introduction Australia is by any measure a lucky country. It has bountiful natural resources, a high standard of living, and legal, economic and commercial systems which enable the realistic aspirations of the vast majority of its 23 million population to be realised. However, Australia’s Indigenous population – the world’s oldest surviving culture which dates back 60,000 years, some 59,760 years before white invasion and settlement – is largely disenfranchised. On any measure very significant disparities exist between Indigenous Australians and non-Indigenous Australia. This sad reality continues despite significant mining royalties which flow into remote communities by virtue of Native Title legislation granting land rights to Indigenous communities and a massive welfare budget. There can be little argument with the proposition that ‘economic disadvantage leads to social dysfunction and has a dramatic negative impact on education, health and general well being’.1 The plight of Indigenous Australia is stark and compelling proof of this proposition. A massive welfare budget is recognition of the extent of Indigenous disadvantage but even the most generous government thinktank would question its effectiveness in lifting Indigenous Australia from its current predicament. New models need to be considered. In this context the words of Kirk Magleby resonate: The development community should wean itself away from aid models in favor of genuine enterprise sustainability through pervasive local ownership.2 There can be little argument with the proposition that ‘increasing Indigenous participation in enterprise development activity would provide widespread economic and social benefits for Indigenous communities’.3 To this end, there is an extensive range of government, industry, and community organizations offering specific enterprise support programs and services to Indigenous people – so much so that the government itself has recognised that ‘the sheer number and complexity of programs and services [is] often 1 Gunya Australia, Indigenous Economic Development Scheme: A solution to create employment opportunities within Indigenous communities (Discussion Paper, 2007) 3. 2 Kirk Magleby, Microfranchises as a Solution to World Poverty (31 October 2013) Brigham Young University, Ballard Centre for Economic Self-Reliance <http://marriottschool.byu.edu/selfreliance/wiki/UserFiles/Kirk_Magleby.pdf> 17. 3 Gunya Australia, Indigenous Economic Development Scheme: A solution to create employment opportunities within Indigenous communities (Discussion Paper, 2007) 3. 3 confusing and daunting to emerging Indigenous entrepreneurs’.4 What is clear is that despite the “smorgasbord”5 of support programs and services to encourage Indigenous business participation, successive governments, both State and Federal, have ‘failed to engage Indigenous Australians in sustainable economic development’.6 There is a need to consider new models. It is against this complex milieu that franchising – albeit not in its familiar downtown main street guise – is proposed as an Indigenous enterprise development strategy worthy of serious consideration. While governments in developing countries encourage franchising as a vehicle for stimulating economic growth there has been much less attention paid to franchising by governments in developed countries as a strategy which can be applied to foster business development in Indigenous communities. This paper considers the role of franchising in Indigenous business development in Australia and suggests that while franchising in any iteration cannot solve the problem of Indigenous business disenfranchisement, it would be remarkable if it was not part of a solution. 2. The Indigenous Business Challenge For too long Australia has held back remote Indigenous people on the fringes of the economy, trapping them in a hopeless circle of poverty, with governments adopting a socialistic and “noble savage” approach. We must have the courage to treat remote Indigenous populations like other human beings who can – indeed must – play a role in Australia’s economic future.7 Indigenous Australia Australia’s Indigenous nations – acknowledged as having developed the world’s oldest surviving culture8 – have lived across the full breadth of Australia’s massive interior and along endless stretches of its vast coastline and developed successful modes of existence which saw their culture survive and thrive over a period of 60,000 years. However, since 4 Department of Employment and Workplace Relations, The Resources Guide: A Guide to available resources and services to assist indigenous enterprise development (Australian Government, 2006) 3. 5 Ibid. 6 Gunya Australia, Indigenous Economic Development Scheme: A solution to create employment opportunities within Indigenous communities (Discussion Paper, Gunya Australia, 2007). 7 Warren Mundine, ‘Indigenous commerce must come next’, Australian Financial Review (Australia), 10 October 2012 available at <http://www.afr.com/p/opinion/Indigenous_commerce_must_come_next_y6F2m9YFWcWXPkIZ9RYj7L>. 8 Larissa Behrendt, Indigenous Australia for Dummies (Wiley Publishing, 2012) 17. 4 European invasion and settlement in 1788, Indigenous Australians have faced overwhelming difficulties which have impacted on their ability to flourish on land which has long played a definitive role in their existence. Successive Australian governments from both sides of the political spectrum can claim precious little success in effectively dealing with the challenges faced by Indigenous Australians living within, and alongside, modern Australia which is primarily westernised, but increasingly ‘asianised’. Dealing with the challenging climatic conditions posed by Australia’s geographical location and landscape saw the development of a deep relationship between Indigenous peoples and the land which sustained them, with marked differences in cultural, and indeed survival, practices between coastal and desert areas. The interconnectedness between people and their land shaped what might be referred to in the singular as ‘Indigenous culture’ although it is inaccurate to assume a single defined, homogenous set of social practices across all Indigenous peoples. Indeed, indigenous Australia is characterised by massive diversity. At the time of the English invasion of Australia over 500 Indigenous nations existed across Australia. Each nation had different cultural practices and beliefs unique to the exigencies facing that particular group in their particular area.9 To give the reader a sense of the scale here: consider the cultural diversity across Europe, from Portugal in the west, up to the UK, and across to the Balkans and Romania in the east. To refer to each country’s cultural practices, norms and beliefs with the homogenous ‘European’ does a great disservice to these unique bodies of culture and their history. Likewise for Indigenous Australia, which covered an area larger than the body referred to as ‘Europe’ today. In that space, some 145 distinct languages
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