Franchise businesses continue to outperform in recovery path

Franchise Business Outperforms Franchise Buyer

FRANdata has once again taken the ‘pulse’ of the franchise community.

“Businesses which are part of a franchise network continue to outperform many other parts of the small-medium business sector…(and they’re) likely to be at the forefront of small business recovery in Australia in 2022” according to Franchise Council of Australia CEO, Mary Aldred, 

The statement comes on the back of the recently released findings from the September Quarter 2021 ‘Pulse Check’ survey into franchise businesses.

The survey included responses from 105 Australian franchise brands covering 17,119 individual business outlets employing 113,048 people.

Of note, the period concerned covered the challenging Jul - Sept 21 period, which saw a significant portion of the country in lockdowns, and substantial business disruption as a result.

Greatest concerns

The greatest concerns reported in the September Quarter were;

  • Further government lockdowns - 61%
  • Availability of suitable employees - 55%
  • Wellness of franchisees and staff - 49%
  • Supply chain issues due to border closures - 47%
  • Franchisee recruitment - 40%

Extended lockdown impact on sales

Revenue increases exceeding 10% compared to the corresponding 2020 quarter were reported in 31% of responding franchise systems (down from 54% and 45% in the previous two quarters), reversing the previous recovery trends in trading conditions up until the end of the June quarter.

Most impacted by the market with weaker sales were;

  • Retail stores,
  • Baked goods, and 
  • Retail food industries.

Industries that reported comparatively stronger trading performance were;

  • Health,
  • Maintenance services,
  • Courier, freight and logistics industries.
Shopping Centre Sales Franchise Buyer

Where did store unit growth happen?

Across the period, a total of 524 new business units were opened across the brands of 46% of respondents. These businesses were predominantly in the categories of home maintenance, retail food and general services. 

In the previous report (June 21), 419 new units were opened across 64 brand respondents.

Conversely, 48 franchised units were permanently closed by 24% of respondents, mainly in the building and construction and retail food sectors.

In the previous report (June 21), 187 franchised units were permanently closed across 27 brand respondents.

States for future business expansion

The survey reports that franchisors plan to expand their networks in these following states in the coming 12 months;

  • NSW - 41%
  • QLD - 27%
  • VIC - 23%
  • WA - 8%

Staff on the receiving end of abuse

In a clear trend of concern, 58% of franchise brand respondents were concerned about negative or aggressive behaviour being experienced by staff requesting compliance of COVID health directives.

Optimism rebound

The percentage of respondents feeling optimistic about business conditions into 2022 rebounded to 76%, significantly up from the 22% who were optimistic in the previous quarter report.

Get more information from FRANdata HERE