Results from the latest FCI survey of New Zealand franchising confidence.

1. October 2012 Quarter Results
FRANCHISORS FORECAST IMPROVED TOP LINE.
MARGIN PRESSURE CONTINUES

2. About Franchize Consultants
• Franchize Consultants is the first point of contact for
companies considering franchising their business
• Franchize Consultants helps established franchised
(and other network format) chains review and improve
performance for both franchisors and franchisees
• Franchize Consultants conducts specialist research for
franchising insight and practical application
• Franchize Consultants builds franchisor executive and
franchisee capability and performance through focused
training and education programmes

3. Key Survey Highlights
• The October 2012 Franchising Confidence Index
demonstrates a continuation of mixed results across
overall sector drivers
• Franchisors were most positive in their outlook for general
business conditions, franchisor growth prospects and
sales levels per franchisee.
• Meanwhile, franchisor forecasts indicated a continuing
negative/poor outlook for franchisee operating costs and
profitability levels
• Written answers revealed muted improvement in
sentiment, though still challenging with specific sub-
sectors

4. Background
• Quarterly survey of more than 400 New Zealand
franchisors and 100 specialist service providers (e.g.
consultants, banks, accountants, lawyers and
publishers) to the franchising community.
• Explores confidence in key measures critical to the
success of franchising, including the wider
environment, growth determinants, and franchising
health attributes and franchise system growth
prospects.
• This survey represents the views of 37 franchisors
and 26 service providers.

5. The Focus
GENERAL QUESTION AREAS
1. General business conditions
2. Franchisor growth prospects
3. Franchising growth drivers Respondents indicate
• Access to capital whether they expect
• Access to suitable franchisees
• Access to suitable locations the following aspects
• Access to suitable staff to be better, the same
4. Franchisee growth & profitability prospects
or worse over the
• Franchisee sales levels next 12 months
• Franchisee operating costs (compared to the
• Franchisee profitability
previous 12 months)
5. How are things looking for franchisors and Franchisees in
their respective sectors?

6. The Results
Franchisor responses improved to a net 28%,
compared to 22% in July. Similarly, service
provider sentiment improved to 42% (current)
from 34%.

7. The Results
Franchisor outlook for franchisor growth
prospects declined from a net positive 54% to
28%, however service providers’ outlook for
franchisor growth generally showed an
increase from 20% in July to 38%.

8. The Results
Confidence levels regarding access to finance
remained relatively stable for franchisors with
only a small drop to 14%; however service
providers showed, a marked increase of
optimism with a considerable 35% increase.

9. The Results
Both franchisor and service provider sentiment
toward access to suitable franchisees improved
– franchisors seemed to be slightly more
cautious however, with only a slight 7%
increase.

10. The Results
Franchisor confidence in access to suitable
staff demonstrates a drop from the July
survey, decreasing from 12% to 6%.
Service providers did not share this opinion,
however, with an increase of net 22%.

11. The Results
Franchisor sentiments towards access to
suitable locations were relatively stable from
July to this quarter, showing only a very slight
increase of 2%. Service providers displayed a
more dramatic increase of 21%.

12. The Results
Franchisor and service provider sentiment
towards franchisee sales levels echo each
other in their downward trend over the last
two quarters. They have both shown a
decrease to 22% (franchisors) and 19% (service
providers).

13. The Results
Both franchisors and service providers
continue to forecast stormy waters for
franchisee operating costs, ending at a net
negative 17% and 23%, respectively.

14. The Results
Overall sentiment toward future franchisee
profitability levels also declined.
Franchisors forecast a net negative 3%, and
service providers forecast a net 0%. Both
groups are clearly concerned.

15. More Information
Including:
• More detailed and complete results and analysis
• All charts and illustrations
www.franchisingconfidence.co.nz

16. Franchize Consultants
• The Franchising Confidence Index, is founded, designed
and operated by Franchize Consultants, New Zealand
specialists in franchising and licensing network
development. Founded in 1989, Franchize Consultants
have a long and supporting association with New Zealand
franchising.
• For further information contact Dr Callum Floyd
• Ph. (09) 523 3858
• Mob. 021 669 519
• Email. callum@franchize.co.nz
• Web. www.franchisingconfidence.co.nz
• Web. www.franchize.co.nz