The Franchise Council of Australia (FCA) has again engaged FRANData to provide status and experiences of the Australian franchise sector during the March 2022 quarter.

In a tumultuous period, the first quarter of 2022 has seen significant trading disruptions due to the ongoing pandemic as well as NSW and QLD floods. 

The flooding, property damage and business interruption throughout southern Queensland and New South Wales resulted in trading interruptions ranging from 1-2 days to more than four weeks.

Despite the challenging period concerned, overall sentiment within franchise systems remains positive.

Findings from this latest “Pulse Check” survey were obtained from 122 participating Australian franchise brands and their 17,057 businesses.

Let’s dive into the key findings for Q1 and gain some insights into sentiment for the next 6 months.

Staffing challenges remain a concern

Respondents noted that the availability of suitable employees for franchisees was still of great concern, however of slightly less concern than the last quarter.

Respondents were specifically concerned about the following rated either high or very high as a concern:

• Availability of suitable employees for franchisees 64%
• Supply chain issues 52%
• Franchisee recruitment 41%
• Availability of suitable employees for support office 40%
• Wellness of franchisees and support staff 28% and;
• Employment Relations (workforce management, compliance, complexity, cost) 28%

Overall sentiment is up however

Looking ahead, revenue expectations have improved with the majority of respondents expecting revenue to strengthen over the coming two quarters. 

In fact, the survey showed that 71% of franchise brand respondents expected more than 95% of their franchisees to make a profit in the March quarter.

Optimism is high and in fact, respondents anticipate the opening of 888 new franchised units as well as 38% reporting an increase of 10% or more in their quarterly income compared to the previous.

The percentage of businesses feeling optimistic about business conditions in the next six months remains solid at 72%. Only 6% of franchise brand respondents were pessimistic.

 Here’s what was found related to revenue:

• 26% reported an increase of 11-25% to average March 22 quarter revenues
• 7% reported an increase of 26-50% to average March 22 quarter revenues
• 5% reported an increase of more than 50% to average March 22 quarter revenues

Additionally, 7% of Franchise brand respondents (down from 15% in Dec quarter) were expecting more than 25% of franchisees to record losses in that quarter.

The expansion states 

Franchise brands responded that they were most likely to expand across the next 12 months in the following states:

• NSW - 42%
• VIC - 35%
• QLD - 14%
• WA - 7%
• SA - 2%

In putting the survey into some broader context, Mary Aldred, CEO of the Franchise Council of Australia, gave these insights.

“Franchised businesses continue to outperform many others in the small-medium business sector and their optimistic outlook indicates they’re likely to continue to lead the sector throughout 2022.

The anticipated expansion of networks and new outlets is a terrific indicator but obviously the availability of suitable workers is still a big challenge.”