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New Zealand Franchising Confidence Index | January 2018

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Results from the latest Franchize Consultants Franchising Confidence Index.

Franchize Consultants are franchising and licensing consulting specialists, focusing on:

1. Helping companies franchise a business
2. Helping established chains improve performance
3. Building franchise and chain management capability

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New Zealand Franchising Confidence Index | January 2018

  1. 1. January 2018 Quarter Results FRANCHISING STARTS 2018 WITH SUBDUED ECONOMIC OUTLOOK
  2. 2. • 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 About Franchize Consultants
  3. 3. Key Survey Highlights • Franchisors sentiment toward general business conditions remains neutral • Franchisors sentiment for franchisee profitability, arguably franchising’s most important key performance indicator, indicates improved confidence • Responding Franchisors and Service Providers both report improved sentiment for access to finance • Franchisors and Service Providers forecasts indicated a negative outlook for franchisee operating costs.
  4. 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 32 franchisors and 14 Service Providers.
  5. 5. The Focus GENERAL QUESTION AREAS 1. General business conditions 2. Franchisor growth prospects 3. Franchising growth drivers • Access to capital • Access to suitable franchisees • Access to suitable locations • Access to suitable staff 4. Franchisee growth & profitability prospects • Franchisee sales levels • Franchisee operating costs • Franchisee profitability 5. How are things looking for franchisors and Franchisees in their respective sectors? 6. What do you see as the greatest challenge to franchise development in 2018? 7. What will provide the greatest opportunity to franchising development in 2018? Respondents indicate whether they expect the following aspects to be better, the same or worse over the next 12 months (compared to the previous 12 months)
  6. 6. The Results The latest results indicated neutral franchisor (net 3%) and Service Provider (net 0%) sentiment toward general business conditions.
  7. 7. The Results Franchisor growth prospects dipped slightly (net 23%), down 5% from the previous quarter. Service Providers reported similar sentiment movement at net 0%.
  8. 8. The Results Franchisors sentiment toward accessing financing was neutral at net 0%, up from net negative 13%. Service Providers were similar at a net 7%, up from net negative 7%.
  9. 9. The Results Franchisor sentiment toward access to suitable franchisees continues to remain the key challenge at a net negative 28% this quarter, from net negative 20% previously. Service Providers were neutral at net 7%.
  10. 10. The Results Franchisor confidence in access to suitable staff dropped slightly, to a net negative 16%, to remain at low levels, generally. Service Providers reported a similar result at a net 0%.
  11. 11. The Results Franchisors and Service Providers were slightly more subdued in their sentiment towards access to suitable locations this quarter, reporting net 7% and net 14%, respectively.
  12. 12. The Results Franchisors and Service Providers were similar in their sentiment towards franchisee sales levels, both dipping slightly. Franchisors reported a net 28% and Service Providers 7%.
  13. 13. The Results The greatest challenge for both Franchisors and Service Providers is Operating Costs per Franchisee with both reporting declines to a net negative 29%, and net negative 50%, respectively.
  14. 14. The Results Franchisors, whilst still subdued, reported slightly more positively on Franchisee Profitability Levels, at net 9% up from net 7%. Service Providers were less positive at a net negative 39%, down from a net negative 7%.
  15. 15. The Results GREATEST CHALLENGE TO FRANCHISE DEVELOPMENT Key 2018 Challenges  Finding franchisees  Increasing compliance and other legal requirements  Franchisee investment & ongoing cost containment
  16. 16. More Information www.franchisingconfidence.co.nz Including: • More detailed and complete results and analysis • All charts and illustrations
  17. 17. 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

Results from the latest Franchize Consultants Franchising Confidence Index. Franchize Consultants are franchising and licensing consulting specialists, focusing on: 1. Helping companies franchise a business 2. Helping established chains improve performance 3. Building franchise and chain management capability

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