The “Franchise Survey, December 2011” was conducted by Hills based specialist franchise advisory, Smart Franchise. It found that economic uncertainty was the main concern for franchisors.
The survey found 74% of respondents expect cash flow and financial management to be the major issues for 2012.
“It worries me that some of the smaller businesses without cash reserves will struggle after Christmas,” said one respondent in the food retail sector.
Peter Knight and Kate Groom from Smart Franchise found some optimism among respondents. “It’s not all doom and gloom” said one respondent, “but it certainly highlights the need for tighter financial management”.
Other key findings included:
36% of respondents identified the need to continue their efforts for growth and expansion, noting innovation, overseas expansion and building an online presence as opportunities.
28% highlighted the need to focus on the most important things, such as finding internal efficiencies and improving systems and processes.
Financial management continues to be a major concern, with 74% of respondents noting this as an area for attention for franchisees.
“We heard the same concerns over and over again, so it became clear where the hot spots were, it’s cash flow,” said Ms Groom.
Kate said some franchisors are working closely with the banks so they are clear on their expectations moving forward. She said franchisors reported that banks will want more transparency regarding financial performance.
Peter Knight said respondents recognised there would be a greater need for tight financial management. It boils down to understanding the fundamentals in tough times, he said.
The survey highlights the need for financial education and training in the franchise sector, with 74% of respondents noting this as a major issue for their franchisees.
