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New Zealand Franchising Confidence Index | January 2012

  1. January 2012 Quarter Results
  2. Background • Quarterly survey of 413 New Zealand franchisors and 115 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 19 service providers.
  3. The Focus QUESTION AREAS 1. General business conditions 2. Franchisor growth prospects 3. Franchising growth drivers Please indicate • Access to capital whether you expect • Access to suitable franchisees the following aspects • Access to suitable locations to be better, the same • Access to suitable staff or worse over the 4. Franchisee growth & profitability prospects next 12 months • Franchisee sales levels (compared to the • Franchisee operating costs previous 12 months) • Franchisee profitability 5. How are things looking in your sector? 6. What do you expect will provide the greatest challenge to franchising development this year?
  4. The Results Both franchisor and service providers’ outlook for general business conditions have rebounded to a net 32%, following the substantial deteriorations recorded in the October 2011 survey. Note, responding franchisor sentiment in late January appears more positive than that reported by general business in the December reports of the NZIER (-3%), BNZ (3.20%) and National Bank business confidence surveys.
  5. The Results Both franchisors and service providers registered increases in sentiment for franchisor growth prospects. Franchisors net sentiment improved from net 17 % in October to net 34% in January. Meanwhile, service providers’ confidence (net 37%) improved from a net 14% in the previous quarter. However, franchisors have become notably less confident in their growth prospects over time.
  6. The Results Encouragingly, the outlook for financing has improved. Both franchisors (net 18%) and service providers (net 37%) recorded substantial improvements in sentiment for access to financing.
  7. The Results In regards to the ease of access to suitable franchisees, small uptrends are noted with franchisors (net 3%) and Service Providers (net 37%).
  8. The Results Sentiment regarding access to suitable staff for both franchisors (net 21%) and Service providers (net 26%) improve.
  9. The Results The franchisor outlook for access to suitable locations remains reasonable (net 26%), while this percentage lowers slightly from net 32% (Oct 2011) to 26% for Service providers.
  10. The Results Franchisor expectations for franchisee sales levels (net 29%) and operating costs (negative net 26%) showed slight improvements, while their outlook for franchisee profitability levels declined (negative net 8%). Service provider sentiment for franchisee sales levels decreased slightly (net 11%), but increased for franchisee operating costs (negative net 11%) and profitability levels (negative net 5%).
  11. Results Summary • The Franchize Consultants’ January 2012 Franchising Confidence Index finds a rebound in franchisor confidence, following the substantial deterioration in October 2011. However, considerable uncertainty remains. • Notable improvements are recorded for general business conditions, access to financing and franchisor growth prospects. • Meanwhile operating costs per franchisee are perceived to remain challenged, and franchisors outlook for franchisee profitability falls to the lowest level (net negative 8%) on record.
  12. More Information Including: • The Greatest Challenge to Franchising Develop,ment in 2012 • More detailed and complete results and analysis • All charts and illustrations • Franchisor and service provider comments in their entirety
  13. 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. • Web. • Web.