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New Zealand Franchising Confidence Index | July 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 | July 2019

  1. 1. July 2019 Quarter Results Franchisor Sentiment Improves
  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, saw a lift. • Franchisors sentiment for franchisor growth continues to show improved sentiment • Responding Franchisors and Service Providers both indicate improved sentiment to franchisee sales • Franchisors sentiment towards franchisee profits lifted into positives whilst Service Providers more subdued • Franchisors and Service Providers both indicated improved sentiment, whilst minor, towards operating costs although still remains negative.
  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 20 franchisors and 16 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? 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 Franchisor outlook for general business conditions (net 10%) saw a lift from net negative 15% in April to be in positive for the first time since January 2018. Service Providers sentiment toward general business conditions remained neutral.
  7. 7. The Results Franchisor sentiment for franchisor growth prospects, showed a positive improvement at net 50% up from net 35%. Service Providers perspective of the same was net 6%, up from net negative 11%.
  8. 8. The Results Franchisor sentiment toward access to financing remains a key challenge. That said, sentiment this quarter was less negative (at net negative 5%) than the previous three quarters. Service providers sentiment improved in line with franchsiors at net 6% up from net negative 22%.
  9. 9. The Results Franchisor sentiment (net negative 10%) toward access to suitable franchisees has been a key challenge since October 2017. We note, however, the sentiment is less negative than the previous seven quarters. Service Provider sentiment toward access to suitable franchisees was neutral.
  10. 10. The Results After hitting an all-time low Franchisor sentiment towards access to suitable staff has eased slightly to net negative 37%. However, this still remains a key area of concern. Service Providers sentiment was very similar at net negative 25% down on the net negative 11% previously.
  11. 11. The Results On balance franchisors expected access to suitable locations to improve (net 11%) Meanwhile, Service Providers were considerably more positive at net 53% (up from net 13%) matching previous high levels in 2011 and 2016.
  12. 12. The Results Franchisor sentiment toward future sales levels per franchisee have remained relatively positive in comparison to other key areas. July saw an increase in sentiment from net 23% to net 50%. Service Providers sentiment showed similar trends albeit with a smaller increase to net 25% up from net 11%.
  13. 13. The Results Franchisee operating costs remains the most challenging area from both Franchisors and Service Providers viewpoint. Franchisors sentiment eased slightly, after dipping to all time low in April of net negative 58%, to a net negative 30% for July. Service Providers sentiment eased slightly but remains at very low levels with net negative 69%.
  14. 14. The Results Franchisor sentiment regarding franchisee profitability levels has seen a steep increase to net 25% up from net negative 23%. Service Providers sentiment toward the same however remained low at net negative 50% in comparison to net negative 56% previously.
  15. 15. More Information www.franchisingconfidence.co.nz Including: • More detailed and complete results and analysis • All charts and illustrations
  16. 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

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