Once again, the Franchise Council of Australia (FCA) has commissioned franchise focused research firm, FRANData, to ‘take the pulse’ of the broader franchise community. 

The aim is to provide insights on the status and experiences of the Australian franchise sector during the June 2021 Quarter.

This is the sixth survey now, since and including March 2020.

This recent survey covers the June Quarter 2021. 

148 franchise brands responded to the survey, covering 23,177 business outlets employing 141,072 people.

Business sentiment

In essence, the findings show that business sentiment has plummeted in the face of ongoing lockdown restrictions. 

In the March Quarter, 6% of brands surveyed were pessimistic about business conditions in the next 6 months. This number climbed to 22% in this latest survey.

And further, 45% of respondents are expecting a revenue drop, compared to 13% in the March Quarter.

“After four successive quarters, the latest lockdowns and renewed uncertainty have shown a strong negative shift in business sentiment”, said FCA CEO Mary Aldred.

Franchises outperforming

If these figures are concerning enough in their own right, Ms Aldred’ thoughts on the broader SME community are sobering.

“Businesses that are part of a franchise network appear to be outperforming many other parts of the small-medium business sector but they are still dealing with many challenges and are nowhere near their level of revenue pre-COVID.”

Of greatest concern reported in the June Quarter 2021 were;

• 84% - the risk of further government lockdowns,
• 55% - the availability of suitable employees,
• 50% - the wellness of franchisees and support staff,
• 44% - supply chain issues due to border closures,
• 41% - the recruitment of new franchise partners into the network.

Vaccinations a key topic

With vaccination a vital plank to getting businesses open and the economy moving again, brands were asked about their position on it within their operations.

60% of brands were planning to, or were already actively encouraging staff to get vaccinated. On the topic of incentives to increase vaccination rates, 43% were unlikely or had already decided not to offer incentives to staff to get vaccinated, although 40% were still undecided.

Additionally, 73% indicated it unlikely they would impose restrictions on unvaccinated customers, while 3% planned to.

Who has been trading stronger?

In a positive outcome, 54% of franchise networks reported they had revenue increases greater than 10%.

This is up from 45% and 33% in the previous two quarters. The increase in this latest June Quarter, reflects the generally stronger trading conditions of a more stable first half the year (prior to the latest lockdowns), on the back of a difficult 2020.

Franchise brands in the health, sport, recreation and fitness industries reported stronger trading. However, those in the printing and retail food categories reported comparatively weaker performance.

Where the sales growth came from

The brands reported different regions experienced growth, with the breakdown of sales growth spread across;

• QLD - 34%
• NSW - 22%
• WA - 21%
• VIC - 10%

Who has been opening new franchise stores?

64 brand respondents opened a total of 419 new units. These new franchises were predominantly in the categories of home maintenance, retail food and service industries.

In the same period, 187 franchised units were permanently closed by 27 of the survey responding brands. These were predominantly in retail food, services, fitness and automotive categories.

Where is the growth going to be in the future?

The 148 franchise brand respondents to the survey showed that in the next 12 months, they were most likely going to focus their growth plans in;

• NSW - 42%,
• QLD - 23%,
• VIC - 22%,
• WA - 10%.

Given the sheer number of stakeholders involved across the economy, it is certainly hoped that the following quarterly survey period (Sept 21) provides justification for business sentiment to rebound.