Aussie franchisors face franchise recruitment, staffing and supply chain challenges as they head in to 2022. That’s according to the latest Australian Franchise Sector “Pulse Check” survey which reveals the key concerns and expectations of 51 Australian franchise brands covering 11,875 businesses (10,594 franchised units and 1,281 company operated units).
Almost three quarters of those surveyed (73 per cent) cited the availability of suitable franchisee employees as the biggest obstacle, a rise of almost 20 per cent on figures shared in previous surveys.
The Australian Franchise Sector Pulse Check is conducted by FRANdata on behalf of the Franchise Council of Australia.
FRANdata Australia CEO Darryn McAuliffe told Inside Franchise Business Executive “The spike in concerns around finding adequate staff, especially in retail food and CBD locations, will be particularly unwelcome to franchise business owners looking to make the most of easing restrictions and improved activity.”
Supply chain issues were a major concern for more than half of respondents (55 per cent) up 47 per cent and 44 per cent on the two previous quarters.
The wellness of franchisees and support staff concerned 42 per cent of those surveyed, with franchisee recruitment still proving a challenge – as is the ability to find suitable support staff (36 per cent for both).
In the last survey, a major concern for respondents was customers’ negative or aggressive behaviour towards franchisee staff who were asking them to comply with Covid health directives. However there’s little change in the latest survey which reveals 59 per cent are concerned rather than 58 per cent in the previous quarter, with 40 per cent observing this is a ‘sometime’ event, 19 per cent reporting this happened frequently and 38 per cent of respondents indicating staff were rarely or never subjected to negative and aggressive behaviour.
As the country has slowly eased its way out of lockdowns there has been a massive drop in the number of franchisors concerned about the risk of further government shutdowns – just 25 per cent, a huge fall from the previous quarter’s 61 per cent.
Financial performance
There’s been little change in revenue increases, with just 29 per cent reporting more than 10 per cent gains. That’s a very slight drop from 31 per cent in the September quarter.
Pleasingly the number of franchisors reporting a reduction of more than 10 per cent to average franchisee revenues for the December 2021 quarter has fallen from the 24 per cent (September) to just 15 per cent.
Respondents from the dine-in restaurants, clothing and accessories, and frozen dessert industries reported the weakest performance with comparatively stronger or more resilient trading experiences occurring in the health, maintenance and takeaway industries.
Further good news comes in the shape of reduced financial help for franchisees. Only 14 per cent of surveyed franchisors provide monetary assistance to more than half their network. This figures is down from 24 per cent in the September quarter and closer to the 11 per cent and 7 per cent of the previous June and March quarters.
However there has been a rise from 52 per cent to 78 per cent of franchisors delivering financial support to a small minority (less than 5 per cent) of their franchisees.
Business conditions ahead
In the short term – the next 90 days – 41 per cent of respondents are predicting a rise in revenue, countered by over one third (35 per cent) fearing a revenue drop. About one quarter of respondents (24 per cent) expect revenues to stay about the same.
However there was a more positive outlook for business in the next six months; 73 per cent of respondents were feeling optimistic against just 8 per cent of pessimistic franchisors, and 19 per cent of respondents feeling indifferent.
The survey showed franchisors are planning 484 new franchised units in the next 12 months across their respective networks for which 56 per cent would require access to finance.
McAuliffe said “Whilst revenue growth expectations remain mixed for the start of 2022, broader business sentiment is strong for the next six months. Franchised businesses have felt well supported during the last two years and feel well positioned to take strong advantage of the expected improvement in broader trading conditions over the next six months.”
There is a caveat however. “It is important to note that the survey data was collected before the current flood events impacting Queensland and New South Wales. The fallout from this, once known, may of course have a negative impact on this quarter’s trade and forward sentiment,” said McAuliffe.
