New Zealand Franchising Confidence Index | January 2013
January 2013 Quarter Results FRANCHISORS ENTER 2013 CAUTIOUSLY OPTIMISTIC
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
Key Survey Highlights • The January 2013 Franchising Confidence Index demonstrates a continuation of mixed results across overall sector drivers, with slightly more positivity seen. • Franchisors were most positive in their outlook for prospects for growth, general business conditions and franchisee sales levels. • Meanwhile, franchisor forecasts indicated a continuing negative/poor outlook for franchisee operating costs, availability of staff and franchisees. • Written answers revealed increasing positivity, though conditions are still challenging within specific sub-sectors.
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 38 franchisors and 23 Service Providers.
The FocusGENERAL QUESTION AREAS1. General business conditions2. Franchisor growth prospects3. 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 same4. 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 intheir respective sectors?
The Results Franchisor responses continued to improve to a net 37%, compared to 28% in October. Similarly, Service Provider sentiment showed a more marked improvement to 66% (current) from 42%.
The Results Franchisor outlook for franchisor growth prospects increased from a net positive 28% to 41%. Service Providers’ outlook echoed this with increase from 38% in October to 61%.
The Results Both franchisors and Service Providers remain positive in their outlook for access to financing, albeit Service Providers (net 26%) are more positive than franchisors (net 13%).
The Results Sentiment toward access to suitable franchisees dropped this quarter. Franchisors had the lesser decrease from net 14% to 5%, whereas Service Providers dropped from net 35% to only 9%.
The Results Confidence in access to suitable staff demonstrates a drop from both franchisors and Service Providers since the October survey. Franchisors decreased from net positive 6% to negative 5%. Service Providers dropped from net 23% to 13%.
The Results Franchisor sentiments towards access to suitable locations took a substantial tumble this quarter, from a net positive 23% to negative 5%. Service Providers were more positive at net 31%.
The Results Franchisor and Service Provider sentiment towards franchisee sales levels both show an increase to 32% (franchisors) and 44% (Service Providers), after both showing a decrease in October.
The Results Both franchisors and Service Providers show a slight increase in confidence for franchisee operating costs (even though still remaining below zero) ending at a net negative 11% and 4%, respectively.
The Results Overall sentiment toward future franchisee profitability levels also increased. Franchisors increased confidence to net 13% from negative 3%, and Service Provider confidence improved a net 30% from 0% in October.
The ResultsGREATEST CHALLENGE TO FRANCHISING DEVELOPMENT Franchisors identified finding franchisees and franchisee business model-related concerns as the two top challenges to franchising development in 2013
More Information Including: • More detailed and complete results and analysis • All charts and illustrations www.franchisingconfidence.co.nz
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. firstname.lastname@example.org • Web. www.franchisingconfidence.co.nz • Web. www.franchize.co.nz