SA Franchising Looks Strong
The franchising sector is in a favourable position to ride out tougher economic conditions, chartered accountants PKF say.
Partner and national chairman of corporate recovery Michael Scales said more banks are assessing loan applications from franchise owners seeking additional funds.
“Small business owners are turning to the banks to secure more working capital to enable them to cope with their increasing expenses,” he said.
“However, in turn, higher interest rates and credit scarcity have resulted in increased borrowing costs, creating additional stress for business owners.”
Mr Scales said franchisees and franchisors need to work together during tough economic times.
“Well structured and organised franchises, which focus on the operational success of individual franchisees rather than franchise sales, are best placed to successfully navigate the current turbulent market conditions compared to independent stand-alone businesses,” Mr Scales said.
“However, it is critical that franchisors and franchisees work closely to make sure they have processes, systems and support in place to identify the early warning signs of financial difficulty and to deal with them as swiftly as possible.”
Mr Scales said franchisors should provide early and ongoing support and advice to their franchisees.
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