MYOB Report: Franchisors confident in future

Australian franchisors are expecting big improvements in both the economy and revenue, according to the latest Business Monitor report from MYOB.

The report, published last week, surveyed more than 1,000 SME owners across a variety of industries, providing critical insights into the small business sector.

For most SME owners, the results reflect strong confidence in the sector, following consistent economic performance over the last year.

Amongst Australian SMEs, 15 per cent of businesses are planning to increase the number of full-time staff in their business and just under a quarter (23%) of operators revealed they intend to increase wages and salaries paid to employees in the next 12 months.

Specifically for franchisors, the results were overwhelmingly positive.

Of all the sectors surveyed, franchisors were the most optimistic in terms of expecting the economy to improve in the next 12 months (49% expected an improvement).

Additionally, franchisors were also more likely than other sectors to report an increase in revenue over the last 12 months (45%) and were amongst the most likely to expect an increase in revenue over the next 12 months (50%).

Mary Aldred, CEO of the Franchising Council of Australia (FCA) believes the results are an unsurprising reflection of the strength of the current economic environment.

“The results aren’t surprising. MYOB and the data it provides are critical in informing and providing the knowledge that drives franchising business,” Aldred said.

“I think franchising has good systems in place, so that can be one reason for the confidence…franchising is in a pretty good economic environment; the current unemployment rates and interest rates instil a level of confidence.”

Aldred acknowledged that despite certain areas on the economic spectrum experiencing difficulties, the report demonstrated that franchising as a whole was performing strongly.

“While there are some areas doing it tough, the economy is traveling well and that is reflected in the (industry) confidence. The franchise system is generally a good system for looking at MYOB data and similar reports to inform serious business decisions,” Aldred said.

Aldred also said that while the results were positive, it would be difficult to forecast growth across the entire sector without first acknowledging each industry’s unique challenges.

“Franchising is so diverse; there are so many businesses…it really depends on what sector they are operating in” Aldred said.

Retail, in particular has experienced a less than desirable start to 2018, however recent ABS reports suggest the sector is slowly improving.

“I think retail has been doing it tough for a while, with competitive margins, industrial relations, the cost of doing business and rising energy prices…however, people still need to buy things. I believe retail has a good 12 months ahead of it, as long as though particular issues are addressed.”

The results come at an interesting time for the sector, with ongoing controversy surrounding the parliamentary inquiry into the Franchising Code of Conduct suggesting instability on the franchise front.

Inside Franchise Business reported last week that embattled franchisor; Retail Food Group was once again the firing line at the inquiry following allegations from former franchisees.

Despite this, both Aldred and the franchisors surveyed remain optimistic.

“I firmly think franchising’s best days are ahead of it, but we need to seriously address the challenges in the sector, the front of those being the parliamentary inquiry,” Aldred said.

“There have been some serious issues the FCA wants to address. We are providing better information and education for our members, and implementing a complaints process along with a number of activities focused on improving compliance.”

“Despite those issues, franchising is still a major employer for the Australian economy, there is still significant economic benefit derived from franchising, both for franchisees and franchisors. We’re committed to seeing sector improvement so we can ensure a sustainable future for franchising.”

MYOB – Mind Your Own Business, is an Australian multinational corporation that provides tax, accounting and other business services software to small and medium businesses.