Understanding the Survival Ability of Franchise Industries during the COVID-19 Crisis in Malaysia

Abstract

Since the world was hit by the COVID-19 pandemic crisis that began in December 2019, many industries have been affected, including the franchise industry in Malaysia. Thus, the COVID-19 pandemic has had a great impact on business survival. Direct effects can be seen in reduced income, job losses, changes in customer preferences, and business relationships between franchisors and franchisees. Some franchises have had to close their operations, and others still struggled to survive during the pandemic crisis. In addressing this situation, the role of government is crucial in supporting the resilience of these franchisor entrepreneurs in an increasingly worrisome situation around the world. However, the existing literature that focuses on the role of government in developing countries such as Malaysia is still poorly understood. In addition, a study of the Malaysian franchising industry during the pandemic crisis is still inadequate, especially concerning the government’s role in the survival of local franchises during the pandemic era. Therefore, understanding the role of the government in advocating the survival of local Malaysian franchises is worth studying. A qualitative research approach was applied through multiple cases involving twelve (12) franchise business owners and four (4) franchise-related agencies in Malaysia. In-depth interviews were conducted in exploring this topic. Thematic analysis has been used by applying “Atlas.ti” in analysing the data. Hence, the findings have indicated four themes from the grounded data. There are: (i) financial assistance; (ii) virtual franchise exhibition; (iii) training and support; and (iv) business development grants. This study is expected to highlight the role of government as well as agencies involved with the franchising industry in improving policies, strategies, and programs to ensure the viability of the franchise industry during periods of pandemic outbreaks.

A Preliminary Study: Exploring Franchising Growth Factors of Franchisor and Franchisee

“…With the government's support, the franchise industry is expected to be boosted mainly by homegrown franchisors. A study finding by Aziz et al [38] clearly showed that the government and franchise-related organisations encourage franchising owners to continue and sustain their firms with financial assistance, virtual franchise exhibition, business development grants and training and support. To achieve that goal, the government has launched several programmes to provide the necessary environment, resources, and incentives to expedite the growth of franchise entrepreneurs.…”

“…The study by Aziz et al [38] proposed that continuous government financial assistance is favourably associated with the Malaysian franchising business society's capacity to survive the pandemic. This is because constant processes are critical for recognising the relevance of sustainable growth to the business environment [93].…”

Changes in SME Business Due to COVID-19—Survey in Slovakia and the Czech Republic

“…The direct effects of the coronacrisis were observed in most countries (Balasoiu 2021;Abd Aziz et al 2022;Turnea et al 2020) in terms of reduced income, job losses, customer preferences, low demand, cash flow problems, obstacles to the free flow of capital, labour and trade. Companies in some sectors have lost up to 60% of their intrinsic value in one year (Rizvi et al 2022).…”

Franchise management strategy driving franchisee performance in the service sectors in Thailand

“…Scholars have examined the growth and success of franchises within mature markets by analyzing factors such as operational systems, relationship dynamics between franchisors and franchisees, and the impact of franchising on economic development. As globalization progressed and multinational corporations sought new avenues for growth, attention shifted towards investigating the expansion of franchising into emerging markets such as Asia, South America, and Africa (Abd Aziz et al, 2022;Choo, 2005;Combs et al, 2004;Flores Villanueva et al, 2023;Michael, 2014;Zamberi Ahmad, 2012). Studies have begun to explore the challenges and opportunities presented by these markets, including cultural differences, legal and regulatory frameworks, consumer behavior, and market conditions.…”