Franchisees’ pandemic-related struggles revealed

franchises, franchise

A new survey revealed the extent of the struggles franchisees are facing in the midst of the crisis brought by the COVID-19 pandemic.

The information comes from FRANdata’s Pulse Check survey on behalf of the Franchise Council of Australia. Representatives of 55 franchise systems covering 11,037 individual franchised business outlets contributed to the research.

The survey reveals a significant decrease in revenue in March 2020, with 30 per cent of respondents indicating revenue drops of 25-50 per cent and 28 per cent a 50-100 per cent fall in monthly revenue. Only about one in five (20 per cent) reported a revenue increase during that period.

The survey also revealed that industries showing the greatest resilience include pet-related, maintenance, and health service, while retail, restaurants and fitness clubs, showed greater vulnerability.

The survey also revealed that 33 per cent of respondents anticipate that all of their franchised business outlets would lose revenue for March and 58 per cent anticipate lesser income for this quarter. Only 11.8 per cent anticipate an increase in revenue.

Despite the challenges, 94 per cent of respondents reported that franchisors have been providing franchisees the much-needed support. Almost two-thirds of respondents (61 per cent) reported that they received financial assistance (direct and indirect), including specific assistance to navigate through changed business regulations; 29 per cent were offered assistance on available financial support packages; and 18 per cent reported their franchisors acting directly to resolve landlord issues. The food retail and sit-down restaurant category reported more help than other sectors.

Many franchises reported problems with landlords. Over a quarter (27.5 per cent, and 36 per cent when “not applicable” responses are excluded) say their landlords are “unhelpful” compared to 17.6 per cent who say otherwise, while 31.4 per cent say their landlords are “indifferent”.