Franchising industry seeks gov’t help

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    The franchising industry is clamoring for government assistance to mitigate the impact of the new coronavirus disease 2019 (COVID-19) on its ranks majority of which are micro and small enterprises.

    A survey conducted by the Philippine Franchise Association (PFA) showed
    majority or 82 percent of respondents said the COVID-19 crisis has the significantly impacted their businesses with 72 percent projecting losses of over 50 percent in sales this year.

    The survey covering May 6 to May 25 during the enhanced community quarantine (ECQ) on 79 percent of the PFA member-franchisers representing over 1,100 locations in the country also showed

    70 percent will need P1 million to P20 million to recover from the crisis which they intend to use for working capital requirements, inventory and materials, and improvement of technology.

    The respondents also cited tax incentives, loans with longer grace period and relaxed requirements, provision of wage subsidies, and, ease on restrictions in trade and retail as other priority government interventions for their bounce back include

    The survey said 56 percent were not willing to reopen in the malls but of the 44 percent of those willing to do so, 60 percent were not ready to do when the survey was done.

    The survey further showed potential global recession is the number one concern among its members, some of which have foreign franchisees. Members said that global recession would lead to further decline in consumer confidence resulting in lower consumption and consumer demand.

    Other top concerns cited include the lack of comprehensive and tested emergency preparedness plan, effects on the workforce resulting to reduction in productivity, and supply chain issues such as lack of available suppliers/raw materials and logistical concerns.

    The survey also showed 63 percent of respondents expect to implement temporary furloughs while 39 percent are planning are planning retrenchment.

    In terms of productivity, 46 percent of the respondents expect productivity issues due to lack of remote work capabilities; 35 percent saw the streamlining or reduction of franchise operations; and 30 percent feared the reduction or cessation of their franchise business.

    During the ECQ, the respondents shared the pivots they have undertaken to continue their businesses such as work from home (42 percent), introduction of new products or services (39 percent) and shift to online platform (22 percent).

    The survey showed 22 percent of the respondents said they were able to generate more than 60 percent of their sales online compared with only less than 10 percent online sales prior to ECQ.

    “It is clear that the franchising sector needs help today to become a major economic contributor again. If the proposed stimulus bills aim to help critically-impacted industries, why not industries that create businesses and jobs like the franchising industry,” said Sherill Quintana, PFA president.

    In 2019, franchising contributed 7.2 percent contribution to the GDP which is equivalent to P1.4 trillion and 2.7 percent to the gross national income (GNI) which is equivalent to P51 billion. With its multiplier effect and with its 90 percent success rate for start- ups, franchising saw the creation of more than 120,000 enterprises generating more than one million jobs both locally and internationally.