Has Franchising Recovered Since Covid Lockdowns?

by Vanessa Lovie 23rd of May, 2024

Has Franchising Recovered Since Covid Lockdowns?

Its been 4 years since the initial Covid-19 lock downs and one of the most affected areas was franchising, with the majority of the hospitality industry closing or restricted it saw a huge decline in revenue for franchises.

Franchising revenue was strong before the COVID-19 pandemic, with rising income, positive consumer and business sentiment, and steady growth. However, this changed dramatically with the outbreak in March 2020. Lockdown periods and trading restrictions forced temporary store closures, and outdoor businesses like home gardening services had to halt operations. Work-from-home directives left office spaces empty, while food-service businesses faced strict and frequently changing operation limits. Tourism and travel were heavily impacted by state border closures and international travel bans meant less people moving about.

This saw a major decline over the two years through 2020-21 with IBIS reporting a 5.8% drop in 2020 and a futher 6.6% in 2021. In 2022, the world was open and an incease in revenue was seen, with a 1.2% jump. In 2024, whilst revenue is still down 2.4% since 2019 there is some good news coming out of the franchise sector.

What is the Franchise Marketplace Showing

There are strong demands for franchises for sale with over 1,300 currently on the market on Bsale from small home-based businesses to larger franchise groups. Franchise and Business Opportunities are showing $486 million in value with an average advertised sale price of $357,462. This proving to be a relatively low-entry level cost to become a franchisee.

Franchise Expansions

When we take a look at recent news about franchise groups there is alot of expansion happening with many of the major franchise groups celebrating milestones. Such as Opportos celebrating its 200th store opening and Zarraffa’s launching its 76th store and newest drive thru location in Molendinar VIC on Friday 15 March.

It appears Australians love a good franchise and there is support for their continued expansions. With household names in Sydney like El Jannah which has been popping up everywhere in the last few years now with 22 stores around Sydney. They have now set their sites on Victoria and are expanding into Melbourne.

Factors Driving Growth

Changing Consumer Preferences:
- Australians have increasingly favored the convenience and variety offered by food franchises. Busy lifestyles and the demand for quick, affordable meals have made fast food a popular choice.
Technological Advancements:
- Innovations in online ordering and delivery services have revolutionized the food industry. Many franchises have adopted these technologies to meet customer demand for convenience.
Post-Pandemic Adaptations:
- The lockdown periods, trading restrictions, and social distancing measures imposed following the outbreak of COVID-19 in March 2020 created significant challenges for franchised businesses. However, today, businesses and franchises are open and able to operate freely.
Strategic Expansions:
- Major franchises have implemented aggressive expansion strategies to capitalize on growing demand. For instance, Oporto’s focus on being customer-centric has fueled its growth to reach 200 restaurants.

So Has Franchising Recovered Since Covid lockdowns?

The signs look good. A number of businesses and franchises were affected during the pandemic with many business advisors saying 'only the strong will survive' and this has proven true in the franchising space. 2022 and 2024 are showing similar revenue and franchise groups are reporting expansions, so the signs look promising.

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