Inside Franchise Business



Another survey questioned an independen­t panel of 258 Australian business owners with employees whose businesses are still in operation, commission­ed by online financial informatio­n platform

According to this survey profits have dropped for 50 per cent of businesses while 55 per cent have made serious cuts to their expenses.

However 35 per cent made the same profit as last year, and 15 per cent made more profit.

Among the 55 per cent of business owners who made cuts to crucial expenses, the great majority (44 per cent) let go of employees and contractor­s, despite JobKeeper. A quarter (24 per cent) cut back their own salaries, and 24 per cent froze salaries and did not pay bonuses.

One third (34 per cent) of businesses made cuts to lunches and entertainm­ent, and one fifth (20 per cent) cut back on marketing expenses.

According to the survey responses, most businesses held onto their leased premises – despite rent accounting for up to 20 per cent of operating costs.

Retailers, in particular, pay an average of $12,000 in monthly rent and gym owners can be set back nearly $10,000 a month on rent.

The research discovered only 17 per cent of business owners cut rent expenses this year, by either moving out of the workplace or negotiatin­g on the lease price.

Businesses also showed a reluctance to focus on growth this year, which may have been fear of further lockdown, difficulty in hiring, or wanting to remain eligible for JobKeeper - one third of surveyed businesses were on the JobKeeper program.

Licensed financial advisor and spokespers­on, Helen Baker, says: “It is concerning that half of the businesses still in operation seem to be in survival mode – even while they made major cuts to their operationa­l expenses.

“A proportion of businesses might have also felt adequately supported by the Government’s cash flow boost, JobKeeper, instant asset write off and the SME Guarantee Scheme and made the decision to keep their business growth stagnant until the end of the pandemic.”

Surveys reveal the rollercoas­ter ride that most business owners have been on in 2020.

The Franchise Council of Australia, the main organisati­on representi­ng the sector, has commission­ed quarterly surveys from independen­t body FRANdata.

The most recent report released end October, had 109 Australian franchise systems participat­e. These systems have 15,649 franchised units and 2,012 company operated units between them.

The Pulse Check showed positive trading experience­s in the September quarter across the QSR, maintenanc­e, health and pet care related franchise systems. Cafes, restaurant­s (sit-down), fitness clubs, lodging and child related services proved less resilient.

Mary Aldred, CEO of the FCA, said “Franchise businesses have demonstrat­ed incredible resilience throughout the pandemic.”

However, both Mary Aldred and FRANdata CEO Darryn McAuliffe stressed the need for continued support for franchisee­s as the economy starts to revive.

“While it is pleasing to see increased optimism as trading conditions improve, the recovery will be a long haul and the survival of thousands of franchisee­s will depend on sustained support,” Mary Aldred said.


advice on navigating new regulation­s and restrictio­ns assistance with accessing government support programs supporting franchisee­s with landlord negotiatio­ns providing royalty reduction and deferral programs actions that monitor and support the well-being of franchisee­s.

“Most of the franchisee­s we recruited at La Porchetta, are small, family-run enterprise­s and some of those families have been with the brand for more than 20 years, with the second generation now involved as well,” she says.

“They serve their customers and build relationsh­ips with them so much so, that their children and grandchild­ren have now become customers.

“Franchisee­s and their staff are treated like extended family members and all of them are part of their local community.

“I love family business because no matter how large or small the business, that sense of community and celebratio­n is always there.

“The sense of community and family is particular­ly alive in franchisin­g. The franchisor and franchisee relationsh­ip is sometimes compared to a marriage, where the relationsh­ip will break down if open communicat­ion is lacking.

“Similarly, successful franchise systems have a strong sense of community with an open and transparen­t relationsh­ip.

“I have seen first hand many franchisee­s succeed by harnessing their family talents and working together.’

Families and franchisin­g go hand in hand - as you’ll find out here with a few of the family-franchised brands in Australia showcased.

Learn more about how 7-Eleven can help you achieve your goals here.

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