11 Sep Inflation, Interest Rates and Recruitment Key Challenges in Latest Franchise “Pulse Check” Survey
Inflation, interest rates and issues finding suitable people to hire are the biggest concerns identified in the latest Australian Franchise Sector Pulse Check survey, conducted in June 2023.
Notwithstanding several areas of concern, the survey found resilience in the sector’s outlook, with 50% of respondents (51% in March) feeling optimistic or very optimistic about business conditions over the coming six months, with 25% saying they were “indifferent” and 25% saying they were pessimistic; similarly, 36% expected to see a strengthening of revenues over the coming 90 days, compared to 52% expecting revenues to stay about the same and just 12% expecting a decline.
The quarterly survey – conducted by FRANdata on behalf of the Franchise Council of Australia – revealed mixed sentiments across Australia’s franchise sector, at a time of rising interest rates, persistently high inflation and ongoing low unemployment, and at a time many economists expect the Australian economy to slow markedly in 2024.
Rising interest rates and inflation remained the top concern of respondents, with 66% nominating these issues as being of either “high” or “very high” concern; this represents a continuation of rising concern on these measures from 39% in June 2022 and from 60% in March 2023.
Similarly, the availability of suitable people to hire as employees of franchisees remained a top concern, with 62% (down from 65% in March 2023) nominating this as a “high” or “very high” concern.
In fact, recruitment-related matters accounted for three of the top five areas of concern among Pulse Check respondents, with 44% citing franchisee recruitment as a top concern, and 36% nominating the availability of suitable people to employ in support offices.
When asked about revenue performance in the June 2023 quarter and expectations for the September quarter, responses consistently showed fitness-related franchises to be both better performed and more confident, with building and construction both less well-performed and among the most pessimistic.
Retail stores and retail food were weaker performers, but respondents from retail stores were among the most optimistic: perhaps reflecting the approach of Spring and heading toward the Christmas season, a traditionally strong trading period for retail.
Overall, the survey found franchised businesses to be in reasonably financially robust, with 78% of respondents reporting the provision of financial assistance to fewer than 5% of their units.
The Franchise Council of Australia will continue to provide quarterly snapshots of the findings from its quarterly Pulse Check surveys of the franchise sector.
The June 2023 Franchise Sector Pulse Check received responses covering 123 franchise brands, capturing 19,628 businesses (18,454 franchised units and 1,174 company-operated units) employing 91,384 people. Results from the Pulse Check were outlined and presented in the 2023 State of Franchise Report.