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Franchise businesses dealt with devastating revenue hit

Adrian Flores
Adrian Flores
21 July 2020 1 minute readShare
revenue hit

A national survey has found a significant proportion of franchise businesses reported revenue of less than 50 per cent of the revenue they previously brought in prior to the COVID-19 pandemic.

The Franchise Council of Australia’s “Pulse Check” survey found that 46 per cent of survey respondents reported revenue was less than 50 per cent compared to the June 2019 quarter, with the hardest hit businesses including cafés, restaurants, fitness clubs, accommodation and child-related services.

On the other hand, 35 per cent of respondents recorded increases in June revenues, with takeaway food, maintenance, health, freight and baked goods-related franchises reporting improved trading conditions.

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Representatives of 70 Australian franchise systems covering 12,373 franchised units and 1,514 company-operated units contributed to the survey.

The survey found greatest challenges in the June 2020 quarter were landlord issues (54 per cent), the “wellness” of franchisees and support staff (54 per cent), and franchisee financial performance (52 per cent).

 

The survey demonstrated a high level of franchisor support for franchisees, with 69 per cent of respondents indicating they were providing direct or indirect financial support to 100 per cent of their franchise units.

Meanwhile, 24 per cent of respondents indicated they were providing direct or indirect financial support to less than 25 per cent of their units.

In addition, 68 per cent of franchisors reported taking specific actions to monitor and support the wellbeing of franchisees, up from 8 per cent at the start of the pandemic, while 97 per cent of respondents indicated they were providing “assistance with accessing government support programs” and “advice around navigating new regulations and restrictions”.

“COVID-19 has hit hard across the board for small businesses, and this study provides a deep dive into each industry sector and the issues they are grappling with the most,” said FCA chief executive Mary Aldred.

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“Unfair and inflexible commercial leasing issues is a theme that consistently gets raised by small businesses and franchisees as a key concern.”

Franchise businesses dealt with devastating revenue hit
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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