The franchise model has always been a really powerful way to scale retail presence, but the downfall of Australian-based franchisee AF-1, which operated seven Nike stores across Sydney, has industry experts wondering if it’s showing its limits.

“Operating costs are high, consumer demand is volatile, and the margin for error is getting so tiny,” Nick Gray, retail consultant and founder of IGU Global, told Inside Retail.

“For me, the tension is that global brands are shifting faster than ever and going towards DTC, data-driven decision-making, and experience-led retail while franchisees often operate on older structures and much slower cycles.”

The AF-1 shutdown resulted in more than 110 job losses, the immediate closure of stores in the CBD, Bondi, Neutral Bay, Burwood, Chatswood, Warringah and Castle Hill, and the cancellation of all outstanding store credits and gift certificates. 

The liquidation occurred amid challenging conditions for retailers in Australia and marked the end of nearly two decades of AF-1’s Nike franchise operations in Sydney.

By 2025, the retail landscape will have undergone a transformation driven by retailers, with digital integration, evolving consumer expectations and the rise of brand centralization.

“This shift reflects a broader trend toward centralizing brand strategy, where consistency, data ownership, and customer experience outweigh the benefits of decentralized franchising,” Brian Walker, retail consultant and founder of Retail Doctor Group, told Inside Retail.

“Consumers now expect seamless, omnichannel experiences, and maintaining consistent brand standards across multiple franchisees can be challenging.”

As a result, the franchise model remains viable but is less dominant than it once was, especially for brands with the scale and resources to operate their own stores.

While the industry awaits the outcome of a new Sydney franchisee’s bid to operate Nike stores, Inside Retail examines the potential benefits for both the brand and consumers if Nike were to take control of its operations. 

Brand power in Nike’s hands

According to Walker, if Nike fully owned and operated its retail stores, the brand would unlock substantial advantages. 

“For Nike, this means prioritising brand control, customer experience, and data integration over rapid franchised growth,” Walker said.

Centralised brand control would allow Nike to create a consistently premium experience worldwide, from cutting-edge store design to unified customer engagement and merchandising. 

Full data ownership means Nike could integrate insights from every customer interaction, powering strategic decisions and tailoring experiences with precision. 

The brand would gain operational agility, rapidly deploying new technologies, sustainable practices or innovative merchandising without navigating franchise partner delays. 

Additionally, direct ownership eliminates the need for profit-sharing with franchisees, enabling Nike to retain higher margins and control pricing and promotions to maximise value.

“Owning its stores would obviously give Nike tighter control of the brand narrative at any time when it’s rebuilding consumer trust and relevance after recent challenges,” Gray shared.

“When Elliot Hill talks about taking consumers into a world of Jordan or a world of Nike Running that’s about emotional immersion and something you can only truly manage when you control the environment, the staff culture, and the service standards.”

Elevating every Nike experience

As for customers, Nike’s store ownership would mean an elevated and seamless journey at every touchpoint, whether online, in-store, or through the Nike app. 

“The franchise model remains valuable for specific markets, but in 2025, long-term brand equity increasingly depends on centralization, digital connection, and consumer intimacy,” Walker said.

Store teams would be trained under Nike’s direct guidance, delivering consistent expertise and premium service. 

Owned stores are positioned to offer exclusive access to unique product drops, customization experiences, community events, and tech integrations tailored to Nike’s brand ethos. 

Shoppers benefit from greater trust and transparency, with authenticity, ethical standards, and sustainability clearly upheld at every step.

“The benefit to customers, in my opinion, would be consistency and confidence; the benefit to the brand would be deeper equity and better integration with its digital ecosystem,” Gray explained.

It’s an investment and it’s really about whether they believe that investment is worth it,” he added.

From Gray’s perspective, customers won’t understand or care about the franchise agreement, and so the reflection of these closures will be something Nike will wear, unfortunately. 

“Ultimately, for me, this event is just another reminder that brand presence isn’t just product, it’s where, how, and through whom you show up.”