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New Zealand Franchising Confidence Index | January 2019

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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

Published in: Business
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New Zealand Franchising Confidence Index | January 2019

  1. 1. January 2019 Quarter Results FRANCHISING STARTS 2019 WITH A HINT OF OPTIMISM
  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, whilst still negative, improved to be similar to January 2018 results • Franchisors sentiment for franchisor growth prospects also saw improved sentiment after dropping each of the last four quarters • Responding Franchisors and Service Providers both report less negative sentiment towards operating costs per franchisee • Franchisors and Service Providers forecasts indicated access to suitable staff and suitable locations remain a key areas of concern
  4. 4. Key Survey Highlights • Franchisor outlook commentary was mixed, with positives for some regarding obvious strength in demand and sales. Those more challenged cited issues, such as immigration, tightening demand, competition, margin compression, uncertainty and challenges finding franchisees and staff. • Franchisors identified top three challenges to franchise system development in 2019 as 1) finding franchisees, 2) finding suitable staff and 3) access to finance. • Franchisors identified many improvement opportunities for the year ahead covering areas, such as technology, existing franchise growth, better selling and marketing and efficiency improvements.
  5. 5. 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 34 franchisors and 16 Service Providers.
  6. 6. 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 2019? 7. What will provide the greatest opportunity to franchising development in 2019? 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)
  7. 7. The Results Franchisor outlook for general business conditions (negative net 3%) moved closer to the January 2018 sentiment of net 3%, (up from net negative 22% in October 2018) whilst Service Providers sentiment rose substantially to net 19%, similar to that seen in October 2017 (net 13%) prior to the change in government (up from net negative 23% in October 2018).
  8. 8. The Results Franchisor sentiment for franchisor growth prospects, whilst still low showed strong improvement at net 23%, up from the previous quarter’s net 7%. Service Providers net 19% improved even more up from net negative 27% in October.
  9. 9. The Results Franchisor sentiment toward access to financing rallied to net negative 18% up from an all time low of net negative 30% in October. Service Providers confidence was less positive dropping from 0% to a net negative 6%.
  10. 10. The Results Franchisor and Service Provider sentiment toward access to suitable franchisees has been seen as a key challenge for some time, however both indicated improved sentiment with Franchisors at net negative 24% (previously net negative 48%) and Service Providers at 0% (up from net negative 15%).
  11. 11. The Results Franchisors indicated their outlook for access to suitable staff remains a key challenge with no change at net negative 31%. Service Providers confidence to access to suitable staff at a net negative 38% (down from net negative 31%).
  12. 12. The Results Franchisors, at net negative 3%, down from net 13%, were slightly more subdued this quarter in their outlook for access to suitable locations. Service Providers confidence was similar dropping to net 0% from net 8%
  13. 13. The Results Franchisors sentiment toward future sales levels per franchisee dipped slightly to a positive net 26% (from net 30%), with Service Providers sentiment showing a strong increase at net 44% (up from net 15%).
  14. 14. The Results Franchisee operating costs have been seen as the greatest challenge for some time. Whilst still challenging there is improved sentiment from Franchisors at net negative 56% up from net negative 70%, and Service Provider sentiment at net negative 25% up from net negative 56%
  15. 15. The Results Franchisors, continue to report decreasing sentiment regarding franchisee profitability levels at a net negative 12%, down from net negative 4% and the lowest point to date. Service Providers were much more positive improving to a net 19% from a net negative 31%.
  16. 16. The Results GREATEST CHALLENGE TO FRANCHISE DEVELOPMENT Key 2019 Challenges  Finding franchisees/suitable franchisees  Finding staff (zee and zor)  Access to finance
  17. 17. More Information www.franchisingconfidence.co.nz Including: • More detailed and complete results and analysis • All charts and illustrations
  18. 18. 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

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