Key Franchising Sentiment Metrics Remain Positive

Click here for the full the full report of the October 2016 Franchising Confidence Index Survey

KEY HIGHLIGHTS

• Franchisors and Service Providers sentiment continues to provide an optimistic outlook specifically across the areas of franchisee sales levels, franchisee profitability and franchisor growth prospects, and notably increased confidence in relation to access to finance.
• Franchisors sentiment toward general business conditions was substantially more positive this quarter for franchisors, with Service Providers more subdued.
• Franchisors sentiment about franchisee sales and franchisee profit levels saw increased confidence in both areas.
• Franchisor and Service Provider sentiments for franchisor growth prospects continued to show positive increases.

The Franchize Consultants’ October 2016 Franchising Confidence Index demonstrates a continued optimistic outlook across several sector growth drivers.

• The latest results indicated a substantially more positive franchisor (net 40%) sentiment toward general business conditions. These results were higher than the latest results of other more general business surveys including the ANZ Business Outlook (net 28% in September) and NZIER (net 26% in October) business confidence surveys.
  
  
• Franchisors (net 57%) showed momentum gain about prospects for franchisor growth. These results are up from the net 46% in the previous quarter.
  
  
• Franchisors sentiment toward access to financing bounced back from a net 0% to net 15%. Service Providers reported a net 0%, up from negative net 5%.
  
  
• Franchisor sentiment toward access to suitable franchisees was more subdued this quarter, up from a net 11% to a net 12%.  Service Providers, meanwhile, were far more positive with a net 16% increase to a net 21%.
  
  
• Franchisor sentiment towards access to suitable locations showed ongoing fluctuations decreasing from net 6% to net negative 13%.  Service Providers on the other hand increased to net 26%, up from net 5% in July.

• Franchisor sentiment towards future franchisee sales levels showed continued positive increases up to a net 63%, from net 51% in July.  Service Providers featured a more reserved increase from a net 30% to a net 42%.
  
  
• Franchisor confidence in franchisee operating costs improved slightly this quarter to a net 0%.  Service Provider sentiment was reflected with a drop from net 5% to a net negative 11%
• Sentiment toward future franchisee profitability continues to fluctuate up and down between Franchisor and Service Providers. Franchisors reported an increase to net 49%, with Service Providers showing a decrease to net 21%.

Summary & Implications

Franchize Consultants’ Franchising Confidence Index in October 2016 continues to demonstrate a generally positive outlook overall.

Many of the measures, which softened last quarter have seen some confidence regained, specifically, franchisors outlook for general business conditions, franchisee sales, franchisee profitability, and franchisor growth prospects.

Perhaps most notable are strong Franchisor sentiment for franchisee sales and profit improvements, backed by comments demonstrating strong sales growth in existing sites.

Combined, these views are clearly positive. However assessments locally and internationally indicate potential future economic storm clouds (originating mainly internationally) that could easily, in turn, impact local trading. Aligned, it is Franchize Consultants view that now, particularly when there is some buoyancy, is a time to evaluate franchise system structure and performance for future.

For a copy of the full report visit: www.franchisingconfidence.co.nz or

Franchising Confidence Index Background

Franchize Consultants’ Franchising Confidence Index is a quarterly survey of circa 400 New Zealand franchisors and 100 specialist service providers (e.g., consultants, banks, accountants, lawyers and publishers) to the franchising community.

The Franchising Confidence Index represents confidence in key measures critical to the success of franchising in this country by reporting attitudes toward general business conditions, as well as key franchising growth determinants including access to capital, suitable potential franchisees, staff and locations. The Franchising Confidence Index also covers franchising health attributes and outcomes by exploring franchisee sales, operating costs and profitability, and franchise system growth prospects.

The data and analysis presented represents the views of 35 franchisors and 19 Service Providers collected between Tuesday 11 October and Monday 17 October 2016.  Findings from both groups are reported separately.  Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’

Franchisee Sales and Profit Outlook Strong

KEY HIGHLIGHTS

• Responding Franchisors and Service Providers sentiment provides a more optimistic outlook specifically across franchisee sales levels and franchisee profitability.
  
  
• Franchisors sentiment toward general business conditions was slightly more sombre this quarter.

• Franchisors sentiment about franchisee profitability levels – arguably franchising’s most important key performance indicator, bounced back to levels similar to January, with sales levels showing a positive increase.
  
  
• Franchisor sentiment for franchisor growth prospects remained stable, however sentiment for access to financing decreasing sharply.

New Zealand Franchising Confidence Index | July 2016 from Franchize Consultants

The Franchize Consultants’ July 2016 Franchising Confidence Index demonstrates a more optimistic outlook across several sector growth drivers.

• The latest results indicated a more sombre franchisor (net 26%) sentiment toward general business conditions. These results were higher than the latest results of other more general business surveys including the ANZ Business Outlook (net 20% in June) and NZIER (net 19% in July) business confidence surveys.
  
  
• Franchisors (net 46%) remained stable about prospects for franchisor growth. These results are in line with the net 45% in the previous quarter.
  
  
• Franchisors sentiment toward access to financing decreased markedly from a net 21% to net 0%. Service Providers reported a net 5%, down from net 37%.
  
  
• Franchisor sentiment toward access to suitable franchisees increased markedly this quarter, from a net negative 6% to a positive 11%.  Service Providers, meanwhile, were less optimistic at a net 5%.
  
  
• Franchisor sentiment towards access to suitable locations was again positive increasing from net 3% to 6%.  Service Providers dropped back to net 5%, after having experienced a spike at net 53% in the January survey.
  
  
• Franchisor sentiment towards future franchisee sales levels showed a very positive increase to a net 51%, up from net 39% in April.  Service Providers featured a very positive increase from a net negative 21% to a positive net 30%.
  
  
• Franchisor confidence in franchisee operating costs remained negative dropping this quarter to a net negative 6%.  Service Provider sentiment was reflected at a net 5%.
  
  
• Sentiment toward future franchisee profitability bounced back this quarter, to levels similar to January. Franchisors reported a net 40%, as did Service Providers a net 40%.

Summary & Implications

Franchize Consultants’ Franchising Confidence Index in July 2016 demonstrates a strong increase in confidence levels for many areas.

Franchisors are more positive in their outlook for, sales levels per franchisee, franchisee profitability levels and to a lesser degree franchisor growth prospects, with all showing upward trends. There was also positive outlook regarding availability of suitable franchisees and locations.

The outlook for general business conditions was still steady, albeit reducing slightly (i.e. from 33% to 26%).

Meanwhile, franchisors held a negative outlook toward operating costs per franchisee, along with the availability of suitable staff.

Franchisor and Service Provider comments confirm, overall, the level of sentiment recorded. Key challenges for 2016, identified in January, clearly remain – including finding franchisees, increasing investment or operating costs and access to finance.

This survey is notable for the commentary relating to property values and/or new lending rules, and the various impact either or both may have upon prospective franchisee sentiment and ability to raise capital. Combined with an environment where competitive intensity is high, margins are not expanding, good staff are hard to come by (a problem for expanding and static franchise systems) there is clearly a need for franchising companies (including franchisors and franchisees alike) to be structured and executing their business models to the highest possible standard. 

For a copy of the full report visit: www.franchisingconfidence.co.nz

Franchising Confidence Index Background

Franchize Consultants’ Franchising Confidence Index is a quarterly survey of circa 400 New Zealand franchisors and 100 specialist service providers (e.g., consultants, banks, accountants, lawyers and publishers) to the franchising community.

The Franchising Confidence Index represents confidence in key measures critical to the success of franchising in this country by reporting attitudes toward general business conditions, as well as key franchising growth determinants including access to capital, suitable potential franchisees, staff and locations. The Franchising Confidence Index also covers franchising health attributes and outcomes by exploring franchisee sales, operating costs and profitability, and franchise system growth prospects.

The data and analysis presented represents the views of 35 franchisors and 20 Service Providers collected between Friday 22 and Friday 29 July 2016..  Findings from both groups are reported separately.  Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’

Franchize Consultants are New Zealand leaders in how to franchise a business and franchise system review

Franchising Confidence Strong But Mixed

Franchize Consultants’ April 2016 Franchising Confidence Index demonstrates sustained strong franchisor confidence levels for many areas, like general business conditions, franchisor growth prospects, franchisee sales levels and, to a lesser extent, franchisee profitability. However, sentiment reductions were evident across many of these and other measures. 

• Franchisors were still on balance quite positive about general business conditions (net 33%), the same as the previous quarter. Service Providers reported similar at a net 37%, but down from January (net 53%).
• Franchisor sentiment for franchisor growth prospects decreased from a net 56% in January to a still strong 45% here. Service Providers perceptions were equivalent and held at a net 47%.
• Franchisor sentiment toward  access to suitable franchisees deteriorated further from a net 0% to -6%. Meanwhile, Service Providers remained more positive at a slightly improved 21%.
• Franchisor sentiment toward access to financing decreased from 30% to 21%. Service Provider perceptions of the same fell faster, from a positive 53% in January to 37% now.
• Franchisors were more positive this quarter in their outlook for access to suitable locations, improving from a net negative 16% to a positive 3%. Meanwhile, Service Providers outlook improved dramatically from 0% to an extremely positive net 53%.
• Franchisors remained constant and subdued in sentiment toward the availability of suitable staff at a net negative 9%, down from -7%. Service Providers were moderately more positive at a net 11%, up from 0% in January.
• Franchisor perceptions of franchisee sales levels decreased from a very positive net 53% to a still strong but reduced 39%. Meanwhile, Sevice Providers were particularly negative falling from a similar starting position of 53% in January, to a net negative 21% now in April.
• Both Franchisor and Service Provider groups see the outlook for franchisee operating costs as more positive, albeit Franchisor views improve from a net negative -19% to only just positive 3%, and Sevice Providers move from 20 to 26%.
• Finally, it is somewhat pleasing to see the outlook for franchisee profitability levels remaining in net positive territory. However, Franchisor perceptions reduced from a high net 44% to 21%. By contrast, Service Providers were increasingly optimistic, improving from a net 33% in January to 47% here in April.

Franchisors were asked for qualitative responses on how things were looking in their sector. Positive comments included stable operations, regional strength, specific sector strength (e.g. building, food & beverage growth), improved franchisee enquiries, positive impacts from house price inflation, and an abatement of price sensitivity (sector unknown). By contrast, less positive responses (often individual) related to weakness in Auckland, difficulties finding qualified staff and franchisees, increased lease and operating costs, down phase of annual cycle, and, sector competitive intensity.

Concluding Comment

Franchize Consultants’ Franchising Confidence Index in April 2016 continues to demonstrate a generally positive outlook overall. However, many measures softened this quarter including, importantly, franchisors outlook for franchisee sales levels, franchisee profitability, and, franchisor growth prospects.

Franchisor and Service Provider comments confirm, overall, the level of sentiment recorded. However, challenges clearly remain – particularly in competitive sectors, but also relating to areas like finding staff and franchisees, and operating costs.

Franchise systems cover a huge diversity of industry sectors and often vary in strategy, structure, management and performance - even within sectors.  In turn, we believe this helps explain why some responses in common sectors do vary.

Some Service Providers also point to potential differences in the quality of franchise system leadership and performance, including some poor performing franchisors, and franchisee failures.

Franchize Consultants comments and adds, based on more than 25 years specialist franchising & licensing consulting, that not all franchise systems were created properly, and not all franchise systems are equally managed. Those establishing a franchise system must, in the simplest sense, ensure the right franchise structure is developed, select the right franchisees, and provide the right on-going management and leadership. 

For a copy of the full report visit: www.franchisingconfidence.co.nz

Franchising Confidence Index

The Franchising Confidence Index represents the views and expectations of franchising, an important domain of business within the New Zealand economy.

Franchising is a substantial and growing domain of business making up an important part of the New Zealand economy. The Franchising New Zealand 2012 survey, conducted by Massey University in collaboration with Griffith Business School, indicates New Zealand has 446 individual franchise systems comprising some 22,400 units (owned mostly by franchisees).  The survey also suggests local franchise systems employ some 100,000 people. Finally, local expert estimates of total franchise system turnover range from $15 to $25 billion – suggesting franchising is a strong contributor to New Zealand GDP – as it is around the world. Companies involved in franchising are as diverse as Foodstuffs (New World, PAK'nSAVE, Four Square), NZ Post, Fisher & Paykel, Contact Energy, McDonald’s, Columbus Coffee, Fastway Couriers, Harcourts and Fletcher Building.

The Franchising Confidence Index represents confidence in key measures critical to the success of franchising in this country by reporting attitudes toward general business conditions, as well as key franchising growth determinants including access to capital, suitable potential franchisees, staff and locations. The Franchising Confidence Index also covers franchising health attributes and outcomes by exploring franchisee sales, operating costs and profitability, and franchise system growth prospects.

The data and analysis presented represents the views of 33 franchisors and 19 Service Providers collected between Monday 11^th April and Sunday 17^th April 2016.  Findings from both groups are reported separately.  

Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’

Special thanks to our Office Manager, Shelley Cross. 

Franchisors Remain Optimistic in 2016

KEY HIGHLIGHTS

• Responding Franchisors and Service Providers sentiment demonstrates continued optimism across many key growth drivers
• Franchisors sentiment toward general business conditions remains elevated
• Franchisors remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator
• Franchisors sentiment for franchisor growth prospects and access to financing increased, however sentiment for both access to suitable staff and suitable locations remained at lower levels.

The Franchize Consultants’ January 2016 Franchising Confidence Index demonstrates an increase in confidence across many sector growth drivers.

• The latest results indicated  positive franchisor (net 33%) and Service Provider (net 53%) sentiment toward general business conditions. These results were shared by the latest results of other more general business surveys including the ANZ Business Outlook (23% in December) and NZIER (13% in January) business confidence surveys.
  
  
• Both franchisors (net 56%) and Service Providers (net 47%) were positive about prospects for franchisor growth. These results show an increase from previous quarter.

• Franchisors sentiment toward access to financing also increased from a 21% to 30%, Service Providers are even more positive than franchisors at a net 53%.
  
  
• Franchisor sentiment toward access to suitable franchisees increased this quarter, from negative net 16%, to 0%.  Service Providers, meanwhile, were more optimistic at a net 20%.
  
  
• Franchisor confidence in access to suitable staff decreased slightly from 0% to negative net 7%.  Service Providers were slightly more positive at a net 6%.
  
  
• Franchisor sentiment towards access to suitable locations increased from negative net 17% to net 12%.  Service Providers reported 0%.

• Franchisor and Service Provider sentiment towards future franchisee sales levels remained at a high level. Franchisors at a net 52%, with Service Providers nearly matching this sentiment at 53%.

• Franchisor confidence in franchisee operating costs remained negative during this quarter decreasing to net negative 19%.  Service Providers were more optimistic at net 20%.

• Sentiment toward future franchisee profitability increased this quarter. Franchisors reported a net 44%, and Service Providers a net 33%.

Overall, Franchize Consultants’ Franchising Confidence Index in January 2016 demonstrates an increase in the levels of optimism recorded in the previous quarter.

Franchisors continue to maintain a positive outlook for general business conditions, sales levels per franchisee, with franchisor growth prospects.  We were also encouraged to record a continued positive outlook for franchisee profitability, arguably a franchise system’s most important key performance indicator.  Key franchisor identified challenges for growth in 2016 included finding franchisees, availability of suitable locations, operating costs, and access to finance.

The sentiment contained within the results indicate that in 2016 both Franchisors and Service Providers expect a positive year for franchising in New Zealand.

For a copy of the full report visit: www.franchisingconfidence.co.nz

Franchising Confidence Index Background

Franchize Consultants’ Franchising Confidence Index is a quarterly survey of circa 400 New Zealand franchisors and 100 specialist service providers (e.g., consultants, banks, accountants, lawyers and publishers) to the franchising community.

The Franchising Confidence Index represents confidence in key measures critical to the success of franchising in this country by reporting attitudes toward general business conditions, as well as key franchising growth determinants including access to capital, suitable potential franchisees, staff and locations. The Franchising Confidence Index also covers franchising health attributes and outcomes by exploring franchisee sales, operating costs and profitability, and franchise system growth prospects.

The data and analysis presented represents the views of 27 franchisors and 15 Service Providers collected between Monday 25th January and Wednesday 5^th February 2016.  Findings from both groups are reported separately.  Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’

Franchising Confidence Improves in October

KEY HIGHLIGHTS

• Responding Franchisors and Service Providers sentiment provides a more optimistic outlook across many key growth drivers
  
  
• Franchisors sentiment toward general business conditions increased markedly from last quarter

• Franchisors still remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator, and sentiment has increased this quarter
  
  
• Franchisor sentiment for franchisor growth prospects also increased this quarter, as did sentiment for sales level per franchisee and access to suitable staff increased

The Franchize Consultants’ October 2015 Franchising Confidence Index demonstrates a more optimistic outlook across overall several sector growth drivers.

• The latest results indicated positive franchisor (net 42%) sentiment toward general business conditions. These results were higher than the latest results of other more general business surveys including the ANZ Business Outlook (negative net 10% in October and NZIER (negative net 9% in October) business confidence surveys.
  
  
• Franchisors (net 47%) remain positive about prospects for franchisor growth, these results increased from 35% in the previous quarter.
  
  
• Franchisors sentiment toward access to financing increased slightly from a 19% to 21%, Service Providers reported a net 27%.
  
  
• Franchisor sentiment toward access to suitable franchisees dropped this quarter, from a net 8% to negative net 16%.  Service Providers, meanwhile, were more optimistic at a net 33%.
  
  
• Franchisor sentiment towards access to suitable locations decreased from net 3% to negative net 6%.  Service Providers remained unchanged at a net 20%.
  
  
• Franchisor sentiment towards future franchisee sales levels increased l, to a net 53%, up from 32% previously.  Service Providers reported a net 7%.
  
  
• Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 6%.  Service Provider sentiment was reflective of this at a negative net 7%.
  
  
• Sentiment toward future franchisee profitability increased from last quarter. Franchisors reported a net 26%, and Service Providers a net 27%.

Summary & Implications

  Franchize Consultants’ Franchising Confidence Index in October 2015 demonstrates an increase in positivity from the previous quarter.

Franchisors are more positive in their outlook for general business conditions, access to financing, sales levels per franchisee, franchisee profitability levels and franchisor growth prospects.  The outlook for general business conditions markedly increased (i.e. from 14% to 42%).

Meanwhile, franchisors held a negative toward the availability of suitable franchisees and locations, and operating costs per franchisee.  Franchisors were equivocal on the availability of suitable staff.

Encouragingly, net franchisor sentiment for future franchisee profitability, arguably a franchise systems most important key performance indicator, also showed an increase from the previous quarter. 

For a copy of the full report visit: www.franchisingconfidence.co.nz

Franchising Confidence Index Background

Franchize Consultants’ Franchising Confidence Index is a quarterly survey of circa 400 New Zealand franchisors and 100 specialist service providers (e.g., consultants, banks, accountants, lawyers and publishers) to the franchising community.

The Franchising Confidence Index represents confidence in key measures critical to the success of franchising in this country by reporting attitudes toward general business conditions, as well as key franchising growth determinants including access to capital, suitable potential franchisees, staff and locations. The Franchising Confidence Index also covers franchising health attributes and outcomes by exploring franchisee sales, operating costs and profitability, and franchise system growth prospects.

The data and analysis presented represents the views of 20 franchisors and 15 Service Providers collected between Monday 19th and Friday 30^th October 2015.  Findings from both groups are reported separately.  Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’

Click [here] for a copy of the full report of the latest report.