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PwC: Double digit growth for franchises

By Rob Starr, Content Manager, Big4.com

According to PwC’s Franchise Sector Indicator (FSI) released recently, in a challenging economic environment, franchisors have continued to achieve double digit growth in the past 12 months. However, finding suitable franchisees remains the number one challenge for franchisors with just over two thirds (68%) saying it is their biggest short term hurdle. Economic conditions were also cited as a challenge, along with funding.

Despite the challenges, franchisors are continuing to grow networks at a significant rate. Franchisors offering prospective franchisees an attractive package are having less trouble finding suitable franchisees.

Revenue for franchisees grew by 6 per cent in the last 12 months. Franchisors are forecasting franchisee growth of 9 per cent in the next 12 months and 28 per cent in the next three years. Profits are expected to reach 10 per cent in the next 12 months and 30 per cent in the next three years.

The fourth annual survey of owners and key executives at 101 franchise systems with 20 or more individual units, the FSI found once again that the franchise sector had outperformed the broader market, as a whole.

Although franchisors are saying funding is less of an issue than over the past 3 years, it remains a significant challenge. To help alleviate this, the Franchise Council of Australia (FCA) is encouraging the Federal Government to implement small business loan guarantee program that would assist those lacking funds (but otherwise meet franchisor’s criteria), to be able to secure a loan. The proposal is similar to programs in the UK & US.

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