THE FRANCHISE COUNCIL OF AUSTRALIA…AND SUPPORT OF SMALL BUSINESS

 

The Franchise Council of Australia has welcomed the appointment of MP Julie Collins as Minister for Small Business in the new Albanese federal government and looks forward to working with Minister Collins in support of Australian small business owners.

 

 

As Small Business Minister with responsibility for the Franchising Code of Conduct, the FCA  provided an initial briefing letter to Minister Collins on changes implemented since the 2018 Joint Parliamentary Inquiry into the code and has requested an opportunity to meet in person to discuss several key issues for small business.

Franchising experienced extensive regulatory reform under the previous government and is currently under pressure implementing and adjusting to these reforms, while also striving to rebuild and recover from the COVID pandemic. 

The FCA has advised that any further financial imposts or regulatory changes would significantly undermine the ability of small businesses to achieve full recovery given the existing demands on their time, resources and wellbeing.

There are five key issues raised by our members as continuing to impact on their operations and profitability:

  • Skills and labour shortages
  • Supply chain shortages
  • CPI and inflation impacts on businesses
  • Commercial leasing challenges
  • A national approach to sustainability and single-use plastics 

Addressing the issues facing Australian small businesses needs to be a priority for economic COVID recovery.

From hamburgers to hairdressing, the number one issue for small business is availability of skills and labour. The lack of staff is holding back their ability to open and operate to full capacity. 

With record low unemployment, employers have tapped out on local staff availability. Australia desperately needs the pre-Covid levels of international students, working holiday makers and skilled visa holders to return to our shores. 

Take a look at seek.com.au  – this month, there were 12,502 job ads for ‘chefs’, 15,643 for ‘waitstaff’, and 23,408 for ‘baristas’. Those figures are about 10% up from the same time last month. Coffee anyone? 

If you own a hairdressing business, you’ll have absorbed three recent award increases, and paying penalty rates on a Sunday means around $50 per hour per stylist. Factor in even a budget haircut at $40 per hour, plus product, plus rent outgoings plus customer cancellations. It’s not worth opening. 

At a close number two, supply chain challenges are a nightmare. If businesses can’t source enough products, they can’t fill orders to customers, and can’t run to capacity. Project wait times go up and so do costs. 

A swimming pool business had material costs increase by about 180% from project start to finish because of delays, and their business had to absorb it. Thousands of small builders and construction contractors in this position, and they can’t continue for much longer.

Accelerating wages and supply chain constrictions put pressure on the CPI, which sits at number three on our list. The Consumer Price Index measures the change in price of goods and services over a period of time  and is now at 5.1%. Why is that important? Because it  puts  upward pressure on all costs. including interest rates. The result is, the whole cost of running a business is up. 

At number four, commercial leasing costs for bricks and mortar businesses are a perennial issue. The National Leasing Code of Conduct, and subsequent state legislation,  provided small business tenants with rent relief through COVID.  When those state based relief codes ended in March, the bills for deferred rent started to arrive. 

One franchisee in a high street location told me her landlord asked for $30,000 in deferred rent and threatened her with eviction if she didn’t pay immediately. Many tenants have their rent increases tied to CPI, which is a hard position to be in right now. 

We need an ongoing national leasing code to block unconscionable conduct, facilitate good faith bargaining, and support hardship assistance for small business tenants, or thousands will fall over in the coming months.

The fifth priority is the inconsistency of state-based single use plastics bans. NSW is implementing new changes, Victoria is in consultation on proposed changes, and WA has suddenly changed course giving businesses next to no time to adjust. As a result, there will be thousands of tonnes of plastic utensils dumped into landfill because they won’t be able to be used within a short deadline. In Tasmania, there is state based regulation and one Hobart council has its own special plastics requirements. 

Businesses are already leading the way on sustainability. But they need time to find alternative suppliers to implement changes. Competing and confusing state-based rules add unnecessary time and cost There should be one, streamlined and national set of single-use plastics rules. This should be high on the agenda for the National Cabinet Meeting.

Australia is relying on small businesses to succeed. Small business needs Australia to take it seriously. 

 

Mary Aldred is the CEO of the Franchise Council of Australia, the peak body for the nation’s $184 billion franchise sector. Mary commenced in the role in April 2018, bringing with her extensive experience across government, industry and the corporate sectors. As CEO, Mary has led the FCA in developing and delivering strategic priorities to strengthen the FCA’s role as an effective peak business organisation and advocate for a compliant, sustainable and profitable franchise sector.

 

Franchise Council of Australia

Phone: 03 9508 0888

Email: info@franchise.org.au

Web: www.franchise.org.au