AUSTRALIAN franchise companies are expanding overseas before the domestic market has been saturated, according to a new study.

Conducted by the Griffith Business School's Dean of learning and teaching, Professor Lorelle Frazer, and school marketing department head Professor Bill Merrilees, the study explored the timing of international expansion and built a profile of franchising in Australia. Professor Frazer says while there was some understanding of the magnitude of franchising exports in Australia, little was known about how franchisors plan their expansion.

"Close to 95 per cent of franchise businesses in Australia are home-grown, with just over one quarter franchising internationally," he says.

"With the dramatic growth in global franchising, there is an increasing need to understand the capabilities required to expand internationally - as well as the preferred timing."

Data was collected by surveying franchisors in Australia and through a series of case studies of businesses that have had international success.

"The results show most franchisors are expanding their operations internationally relatively early - in terms of both size and age - with most holding fewer than 30 units prior to expansion," says Professor Frazer.

"So, it's possible that international expansion is being used as a growth strategy to overcome Australia's small population - as well as the shortage of suitable franchisee investors."

Professor Frazer says another finding showed many franchisors react to approaches from overseas investors rather than proactively developing international expansion strategies, according to.

"Approximately half of the franchisors indicated they entered overseas markets in response to requests by international investors, suggesting their strategies are reactive," he says.

"The results show international expansion is not something planned from the beginning and all franchisors that did expand internationally experienced huge learning curves.

"Growth in franchising via international expansion is healthy for the sector and the economy and thus needs to be encouraged."