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INDUSTRY INSIGHT FRANCHISE SECTOR SETS THE PACE FOR RECOVERY After reporting a recovery in revenues in the December 2020 quarter, franchise business networks are far more positive about 2021. By Franchise Council of Australia CEO Mary Aldred. December quarter figures from the Australian Bureau of Statistics showing economic growth increased by 3.1 per cent lend credence to the strongly rising positivity among franchise groups indicated by the latest Australian Franchise Sector Pulse Check. The Pulse Check survey (including responses from 68 Australian franchise systems covering 14,596 outlets) showed that 33 per cent of respondents reported December 2020 quarterly revenue increases exceeding 10 per cent compared with the December 2019 quarter, reflecting the agility and performance of franchises in resilient industries. Positive trading was concentrated across the quick-service restaurant, maintenance, health, courier and freight industries. Sit-down restaurants and cafes, fitness clubs and accommodation businesses proved less resilient, with state/territory border issues remaining significant. While 53 per cent reported some level of loss making within their franchise system, 47 per cent of respondents indicated that none of their franchisees would record a trading loss in the December quarter (up from 24 per cent in the September quarter). A total of 157 new units were opened across 35 brands, predominantly in the categories of retail stores, pet services and home maintenance services. A total of 62 franchised units were permanently closed across 18 systems, predominantly cafes. There was positive sentiment for the March 2021 quarter, with 51 per cent of respondents anticipating a moderate (37 per cent) or significant (14 per cent) increase in revenue. Seventy-five per cent of respondents indicated they were optimistic about business conditions in the next six months and 15 per cent indicated they were neutral. The percentage of respondents pessimistic about business conditions for the next six months halved from 20 per cent to 10 per cent in the December quarter. The greatest concerns or challenges reported by Australian franchise systems were: • Financial performance of franchisees (38 per cent). • Landlord and commercial leasing issues (35 per cent). • Franchisee recruitment (32 per cent). • Wellness of franchisees and support staff (25 per cent). • Engagement and satisfaction of franchisees (25 per cent). • The Pulse Check survey is undertaken for the Franchise Council of Australia by FRANdata to provide insights on the status and experiences of the Australian franchise sector during each quarter. • FRANdata provides brand ratings, finance access reports and benchmarking services on participating Australian franchise systems. FRANdata also operates the Australian Franchise Registry, which holds information on more than 200 brands covering 30 per cent of the Australian franchise sector. About Mary Aldred Mary Aldred has been CEO of the Franchise Council of Australia, the peak body for the nation’s $184 billion franchise business segment, since April 2018, following extensive experience across government, industry and the corporate sectors. As CEO, Mary has led the FCA in developing and delivering strategic priorities to strengthen its role as an effective peak business organisation. 12 CONVENIENCE WORLD MAR/APR, 2021