Staff shortages are the greatest threat to franchisees right now, according to new survey

Staff shortages, supply chain issues, rising interest rates and inflationary pressures are some of the biggest issues facing Australian franchised businesses today according to the most recent Franchise Council of Australia (FCA) quarterly survey.

Ongoing staff shortages for small businesses across Australia are now at a record high, with 83% of survey respondents reporting that the greatest challenge for small businesses is the availability of suitable employees for franchisees.

It’s an alarming trend for small businesses across Australia — with 80% nominating the issue of staff shortages in the Franchise Council of Australia July survey, and 64% in March. 

The September Quarter 2022 Franchise Business ‘Pulse Check’ survey received responses from 105 brands, capturing 18,482 businesses that employ 202,223 Australians.

For 55% of the survey respondents, the second biggest issue was again the availability of suitable employees for support offices for small businesses.

Rounding out the top four challenges facing Australian franchises were supply chain issues, at 45%, and rising interest rates and inflationary pressures at 39%.

However, fewer small businesses nominated these challenges compared to the July 2022 survey — highlighting the sector’s focus on employment concerns, which represents a real challenge to current operations and future growth plans.

Franchise Council of Australia CEO Mary Aldred says further action is needed to address the ongoing challenges small businesses are facing. 

“Small businesses are the engine of the Australian economy. When they prosper, our country prospers,” Aldred said.

“The situation for small businesses across Australia in regards to staff shortages is worsening. We need urgent action at the national level to address this challenge.

“According to ABS data, 698,000 fewer people arrived in Australia in September 2022 compared to September 2019 — a reduction of 39%. It is not enough for the Australian border to be open, specific actions to increase the domestic participation rate and the attractiveness of Australia as a destination for international labour are needed.”

Despite small businesses being concerned about staff shortages and economic headwinds, the Franchise Council of Australia report reveals that small business sentiment about the next six months is improving. 

Approximately 67% of the businesses surveyed feel optimistic, which is up from 57% in the July quarterly report, with 19% neutral and only 14% pessimistic.

In the report, nearly 47% of small businesses reported an increase in their September 2022 quarter income compared to the September 2021 figures of more than 10%.

The strongest performing state or territory for franchises over the past 12 months was Queensland at 33% of respondents, which was a decrease from 46% in the July survey. 

This was followed by New South Wales at 24%, Western Australia at 21%, Victoria at 17% and South Australia at 5%

Despite this, 37% of small businesses nominated Victoria as the most likely location for expansion within the next 12 months.