The document summarizes the results of a quarterly survey of New Zealand franchisors and franchise service providers. It finds that while franchisor sentiment remains positive, confidence levels dropped slightly from record highs in the previous quarter across most measures. In particular, outlooks for general business conditions, access to financing, and franchisee sales levels declined. However, a majority of franchisors still believe solid franchise propositions can secure bank funding as before. The full results are available on the Franchizing Confidence website.

1. July 2012 Quarter Results
FRANCHISING OUTLOOK POSITIVE, BUT REDUCED. FUNDING STILL
AVAILABLE FOR SOLID FRANCHISEE PROPOSITIONS

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• Franchize Consultants is the first point of contact for
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performance for both franchisors and franchisees
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3. Key Survey Highlights
• Franchisor sentiment remains mostly positive, with
reductions noted from the record measures reported in
April 2012
• Sentiment reductions reported on outlook for general
business conditions, access to both financing and
suitable franchisees, and franchisee sales and
profitability levels
• The majority (66%) of franchisor respondents indicate
a solid franchisee proposition is just as likely to be
funded by one of the main banks as it once was
• Sixty one percent of franchisor respondents agree that
their growth is not being constrained by access to bank
funding for new franchisees

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 41 franchisors
and 19 service providers.

5. The Focus
GENERAL QUESTION AREAS
1. General business conditions
2. Franchisor growth prospects
3. 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 same
4. 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 in
their respective sectors?

6. Special Additional Focus
FUNDING –RELATED QUESTION
1. Thinking about my own franchise network, I believe a solid
franchisee proposition is just as likely to be funded by one of Respondents select
the main banks as it once was their level of
2. I believe the growth of my franchise network is ‘not’ being agreement with each
constrained by access to bank funding for new franchisees statement: Strongly
3. I believe that there may be more that my franchise network Agree, Agree, Neutra
can do to make my system more fundable l, Disagree or
4. I am interested in learning more about how my franchise
Strongly Disagree.
system could become more fundable
Note: Service providers were also asked for their views on the first three statements from a
broader franchise sector viewpoint.

7. The Results
Both franchisor (net 22%) and service
provider (net 34%) outlook for general
business conditions remain positive, but have
dropped after last survey’s record increase.

8. The Results
Franchisor outlook for franchisor growth
prospects improved slightly from the previous
quarter at net 54%, however service providers’
outlook for franchisor growth generally
showed a marked drop to 18% from 65% in
April).

9. The Results
Confidence levels regarding access to finance
remained relatively stable for franchisors at
15%; however service providers showed,
again, a marked decrease at a low net 7% (a
decrease of 32% from last quarter).

10. The Results
Franchisors and service providers remain only
slightly positive in their outlook toward ease
of access to suitable franchisees, reporting a
net 7% and 4%, respectively

11. The Results
Franchisor confidence in access to suitable
staff demonstrates a slight increase from the
bottom level results last quarter, increasing to
net 12% from 0% in April. Service provider
sentiment for access to suitable staff for
franchisors generally deteriorated slightly to a
net 1% from 4% (in April).

12. The Results
Franchisor and service provider outlook for
franchisor access to suitable locations were at
directional odds (i.e. one grew, one
decreased), settling at a net 21% and 6%
respectively.

13. The Results
Franchisor and service provider expectations
for franchisee sales levels both decreased this
quarter, showing the only measure in which
opinions were reasonably aligned. Franchisors
dropped to 34% and service providers to
39%, respectively.

14. The Results
Franchisor and service provider outlook for
franchisee operating costs remained negative
at a net -12% and -17%, respectively.

15. The Results
Franchisor and service providers report a
positive net outlook for franchisee
profitability at a net 5% and 20%, respectively.
Comparisons to the previous period indicate
contrasting views. Franchisors are less
positive. Service providers are more positive.

16. The Results: Special Funding Questions
Surprisingly, franchisor respondents
mostly agreed that funding has not
changed due to the tough
economic climate, with 27/41
(66%) indicating either Strongly
Agree or Agree.
This sentiment was largely mirrored
by service providers, with 13/19
(69%) indicating Strongly Agree or
Agree to the aligned statement ‘I
believe a solid franchisee
proposition is just as likely to be
funded by one of the main banks as
it once was.’

17. The Results: Special Funding Questions
Franchisor respondents mostly
agreed that their respective
franchise network’s growth was not
being constrained by access to bank
funding for new franchises. A solid
61% reported either Strongly Agree
or Agree with this statement.
Service providers were somewhat
supportive of this view, with 10/19
(53%) noting Strongly Agree or
Agree to the statement ‘I do not
believe the growth of New Zealand
franchising is being constrained by
access to bank funding for new
franchisees.’

18. More Information
Including:
• More detailed and complete results and analysis
• All charts and illustrations
www.franchisingconfidence.co.nz

19. 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.biz