There is a misconception that Business Franchises provide security, but how does this compare to Newsagency ownership ?

Newsagencies through their supplier contracts can offer degrees of protection from competition, rarely seen in other industry types.

As example, Delivery newsagents with a designated Territory (street to street defined) are in control of ALL papers supplied in that Territory. Anyone, including the major supermarkets, who want to sell newspapers, have to get their supply through the Territory Newsagent. These “sub-agents” then get a share of the commission earned by the Territory Newsagent.

Lotteries generally look after demographical area’s, and as long as a demographic is being serviced well, there is little need to grant additional licences in that area. Tatts/Lotteries are not usually interested in diluting trade amongst numerous outlets, they are only interested in growing overall trade.

Scenario ?   Franchise 1 coffee outlet has a vacant tenancy next door. Landlord wants a tenant for the vacancy, sees the Franchise 1 coffee outlet are successful, and may permit a Franchise 2 coffee house to rent that adjacent tenancy. Overnight, Franchise 1 looses half their trade.

Now, if that was a Newsagent instead of Franchise 1 coffee house, the adjacent tenancy would be HIGHLY UNLIKELY to viability open as a news or lottery agent. The potential new newsagency tenant would have to convince Tatts they could add to the network (as a guideline subject ro change, roughly $5000 p/wk Lotteries + $1000 p/wk Scratchy’s) without taking away from an existing outlet. (new QLD agency criteria here and new NSW agency criteria here)  They would also originally get papers and magazines off the Territory agent, earning half or less commission; yet still try to pay similar rent ?

Whilst it is always case by case and nothing is impossible, What other industry can mitigate competitive risk like this ?

A Newsagency should be top of your shortlist of business purchase considerations.