Franchisees optimistic but wary of future lockdowns

A new report highlights the continuing post-COVID recovery of franchise networks, with the sector reporting positive revenues and increased positive sentiments.

According to the latest Australian Franchise Business Pulse Check survey that comprised of responses from 113 Australian franchise systems covering 21,368 business outlets 45 per cent reported revenue increases exceeding 10 per cent for the quarter ending March 2021, an increase from 33 per cent recorded during the previous quarter. The report recorded particularly strong performances from the health, building and construction, and courier and freight-related industries.

However, the report also noted that, despite the revenue growth, 51 per cent of survey respondents are still wary of the risk of further government lockdowns that could strangle recent progress. Other challenges to tyhe sector borne out by the research include franchisee recruitment (33 per cent), compliance (32 per cent), wellness of franchisees and staff (32 per cent) and workplace relations issues (30 per cent). Cafes, sit-down restaurants, and travel businesses continued having a weak performance, being the industries most affected by the pandemic.

Despite these challenges, positive sentiment prevailed among 65 per cent of franchisees with regards to their future, anticipating a moderate (59 per cent) or significant (6 per cent) increase in revenue in the upcoming June quarter.

A total of 520 new units were also reported to have opened across 85 brands during the March quarter, mostly belonging to retail stores and home maintenance services. However, 109 franchised units were permanently closed across 28 franchise networks during that same period, predominantly in the retail food (café) category.

“Business recovery is steadily improving and the Australian economy is in a strong position which is critical boost for small business right now,” Franchise Council of Australia CEO Mary Aldred said.

“As our results show, the risk of snap state government lockdowns is the number one cause for concern across the majority of businesses surveyed. The FCA is recommending a consistent national approach on agreed thresholds for snap lockdowns, to improve business and community confidence.”