Why more of us are buying a franchise during COVID
Since the onset of COVID-19, franchises in the home business service segment have recorded a high level of growth. Photo: Stocksy

Why more people are buying franchises in Australia during COVID

In the midst of job uncertainty in the wake of COVID-19, more people are choosing to buy a franchise, according to the industry, with pet grooming and cleaning businesses among the most popular.

From hamburgers to hair to finance and fitness, there are 1300 franchise brands in Australia, with a total of 90,000 outlets, according to the Franchise Council of Australia’s chief executive Mary Aldred.

Since the onset of COVID-19, those in the home business service segment, such as pet grooming services, pool services and cleaning franchises, have recorded a high level of growth, she said.

“It’s pretty understandable,” Ms Aldred said. “In the pet grooming area, obviously lots of people are working from home and talking to our pet grooming members, the number of dogs and pet ownership has skyrocketed.

“A lot of them are saying even animal shelters are reporting shortages, which is great, but because people are spending more time with their pets, they’re walking them and saying, ‘Harry, my Jack Russell, looks a bit uncomfortable or smells like he needs a wash,’ so that’s going gangbusters.”

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Pet grooming franchises are among the most popular with buyers during the pandemic. Photo: IStock/Sonja Rachbauer

Ms Aldred said pet grooming had traditionally been a popular franchise choice amongst single mothers due to the job security and flexible hours. But in recent times, one franchise had hired a former office manager, a baker, a chef and a real estate industry professional.

The FCA’s Australia franchise sector Pulse Check survey for March – which surveyed 113 Australian franchise brands covering 21,368 businesses – found that 520 new franchise units opened across 85 brands in the March quarter, predominantly in retail stores and home-maintenance services.

Forty one per cent of respondents reported Queensland as their strongest performing state or territory during the past 12 months, followed by NSW (23 per cent), Western Australia (16 per cent ) and Victoria ( 11 per cent).

In the wake of COVID and the impact on the travel industry, Ms Aldred said that in addition to home business service franchises, tourism and aviation professionals were venturing into logistics and freight franchises in response to the boom in online shopping.

“It may have been someone who may have been qualified in a job for 10 to 20 years and lost that job through COVID and doesn’t have an immediate chance, at least in the medium term, of getting a job in the same industry,” she said.

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Pool services are another franchise business that has seen an uptick in popularity during COVID. Photo: IStock/Photitos2016

“And they’ve gone, ‘Well, I can work the hours that suit me; there’s some financial independence there. I’m not on my own running a business. I have got back-of-house support with IT, marketing, a brand name behind me.’

“That’s been really encouraging to see. I do think franchising has a very important role to play on that road to COVID recovery,” she said.

Meanwhile, industry research company IBIS’s Franchising in Australia report for July 2021 found the franchising industry was forecast to “endure challenging trading conditions over the next five years”.

“Industry revenue is projected to rise at an annualised 0.7 per cent over the five years through 2025-26 to $160.4 billion,” the report stated.

“The effects of the COVID-19 pandemic are projected to continue constraining industry revenue over the short term. However, industry revenue growth over the next five years is anticipated to stem from demand for service-based franchises, such as those that provide health, nutrition, well-being or professional services.”

Anyone who was considering entering into a franchise business agreement should seek professional advice, Ms Aldred said.

“Go to a franchising lawyer who specialises in this field as their area of expertise. It’s really important to understand your legal obligations and rights,” she said.

“Franchise agreements can go for a couple of hundred pages. The other thing we absolutely recommend is don’t just get legal advice, get financial advice as well because you need to understand things like not just what the upfront costings of the business that you are buying, but what the ongoing costs [will be],” she said.

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