Australian Franchised Businesses positive about 2022

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Business is looking up in 2022 according to many of the more than 1000 individual businesses representing 83 franchise systems in the first national survey of Australian franchisees.

 

 

20 January 2022

Business is looking up in 2022 according to many of the more than 1000 individual businesses representing 83 franchise systems in the first national survey of Australian franchisees.

The Australian Franchisee Survey conducted by FRANdata for the Franchise Council of Australia confirms that a growing number of franchised businesses saw an income turnaround in the closing months of 2021 and further improvement is expected over the next six months. 

Almost half (49%) of respondents expected better trading performance in 2022. The most optimistic industries included convenience stores, retail food outlets, retail stores, pet services and home services. Thirty six percent (36%) anticipated conditions to remain “about the same”.

The “Risk of Further Government Lockdowns” was identified as the greatest challenge for the next twelve months at 57%. This was closely followed by “Finding Staff” (56%) and “The Financial Performance of my Business” (53%).

More than 70% of respondents indicated they hoped to increase employment numbers over the coming twelve months. Thirty percent of these businesses hoped to employ an additional 2-4 people, 21% an additional 5- 25 people and 3% more than 25 people.

Eighty (80%) per cent of respondents found their franchisors supportive over the past twelve months. 

“The fact that a majority of survey respondents indicated they felt being part of a franchise system provided an advantage over operating an independent business shows that the franchising model provides a strong framework for small businesses,” said FCA CEO Mary Aldred.

“Since 2018, the FCA has worked consistently with all stakeholders, including franchisors and government, to improve support for franchisees, including small business advisory and education services and tighter regulatory compliance across systems.”

“The fact that being part of a franchise network has helped many small businesses make it through the pandemic impacts and restrictions is a strong indicator that franchising is achieving success in Australia,” said Mary Aldred.

80 per cent of survey respondents indicated they were receiving high levels of marketing support from their franchisor and 67% said they were receiving high levels of technology and systems support.

Between 30-40% of the sample indicated they were receiving high levels of franchisor assistance in the areas of dealing with landlords, vendor relationships, payroll and HR issues and accessing government support programs. 

Snapshot of Australian Franchisee Survey participating businesses

Responses from 1,007 franchisees representing 83 Australian franchise systems. 

The survey sample indicated that 69% of Australian franchised businesses were operated by men and 29% by women.

Whilst the majority of respondents (57%) were born in Australia, more than 40% were born overseas with India the second most common place of birth at 15%, followed by China 7% and the UK at 3%. 

A high level of education across franchise owners was evident with 18% holding a tertiary degree and a further 27% holding a Post Graduate Qualification. 52% of respondents indicated High School (22%) or Diploma/Certificate (30%) as their highest level of education.

The vast majority (73%) of franchise units were owned by single operators. A further 20% of respondents indicated the operation of 2-3 units and 7% indicated the operation of 4 or more units for their franchise system.

The survey reflected that 33% of respondents had commenced their business in the last five years (2017-2021). A further 30% commenced their business between 2012 and 2016 and 37% had now been operating their business for more than ten years. 

Responses indicate that franchises are typically operated by mature age owners with 76% of respondents aged 40 years or older. 

Franchised businesses are a significant employer in the Australian economy. The employment of more than 2 people was indicated by 81% of respondents. Single operators accounted for 19% of respondents. Almost half of all respondents (48%) indicated their business employed 2-10 people with a further 34% reporting their franchised businesses employed more than 10 people.

The majority of franchised businesses (76%) were based in capital cities. Franchised businesses also have a significant regional footprint with 24% of respondents indicating their businesses were based outside of state and territory capitals.

There is a significant variance in average weekly sales across franchise units, attributable to the type of industry, business structure and the scale of the individual business.

Higher turnover levels were evidenced from respondents working in food-based businesses which accounted for 80% of the businesses reporting turnover of more than $10,000 per week. 

For franchises with sales of less than $10,000 per week, 91% were involved in non-food businesses which in many cases were operated by mobile businesses without rental and wages overheads.