Franchising Confidence Drops in July

KEY HIGHLIGHTS

• Responding Franchisors and Service Providers sentiment provides a less optimistic outlook across many key growth drivers
• Franchisors sentiment toward general business conditions remains slightly positive, albeit down from last quarter
• Franchisors still remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator, however sentiment has decreased this quarter
• Franchisor sentiment for franchisor growth prospects decreased this quarter, and sentiment for sales level per franchisee, access to suitable staff and operating costs also remained at lower levels.

The Franchize Consultants’ July 2015 Franchising Confidence Index demonstrates a less optimistic outlook across overall sector growth drivers.

• The latest results indicated still slightly positive franchisor (net 14%) 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 2% in June) and NZIER (5% in June) business confidence surveys.
  
  
• Franchisors (net 35%) remain positive about prospects for franchisor growth, however, these results decreased from 59% in the previous quarter.
  
  
• Franchisors sentiment toward access to financing decreased from a 28% to 19%, Service Providers are slightly more positive than franchisors at a net 30%.
  
  
• Franchisor sentiment toward access to suitable franchisees dropped this quarter, from a net 17% to negative net 8%.  Service Providers, meanwhile, were more optimistic at a net 40%.
  
  
• Franchisor sentiment towards access to suitable locations decreased from net 7% to negative net 3%.  Service Providers reported a net 20%.
  
  
• Franchisor sentiment towards future franchisee sales levels remained at a positive level, at a net 32%.  Service Providers reported a net 10%.
  
  
• Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 16%.  Service Provider sentiment was reflective of this at a negative net 20%.
  
  
• Sentiment toward future franchisee profitability remained positive and but decreased from last quarter. Franchisors reported a net 19%, and Service Providers a net 20%.

Summary & Implications

Franchising sentiment has dropped in July, which should not be a surprise given the economic backdrop and the view of many economic forecasts variously noting headwinds and challenges. Examples of negative drivers are the impact of falling (and potentially low sustained) dairy prices, a possible peak in the Canterbury rebuild stimulus, and global economic uncertainties.

Not surprisingly, Franchize Consultants’ Franchising Confidence Index in July 2015 demonstrates a more subdued outlook than the previous quarter.  Although confidence is down from the extremely high levels reported last year, franchisors and service providers do remain reasonably optimistic.

As reported, franchisors, on balance, still remain positive in their outlook for general business conditions, access to financing, sales levels per franchisee, franchisee profitability levels and franchisor growth prospects – although outlook for general business conditions deteriorated most (i.e. from 41% to 14%).

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

Importantly, overall, net franchisor sentiment for future franchisee profitability was positive – but reduced. 

Franchize Consultants is of the view that franchisors should be including challenged scenarios within their forward planning, including forecasts on sustainability.  At the same time, all viable initiatives should be considered and undertaken at this time to ensure a solid franchise structure and system is in place, key franchising processes are optimised, and support staff and franchisee capability and execution is continually developed.

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Franchising Sentiment Remains Positive

For a full copy of the April 2015 report click here 

KEY HIGHLIGHTS

• Responding Franchisors and Service Providers sentiment remains positive 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 increased slightly, however sentiment for sales level per franchisee, access to suitable staff and operating costs remained at lower levels.

The Franchize Consultants’ April 2015 Franchising Confidence Index demonstrates a continued positive outlook across overall sector growth drivers.

• The latest results indicated positive franchisor (net 41%) sentiment toward general business conditions. These results were higher than the latest results of other more general business surveys including the ANZ Business Outlook (35.8% in March) and NZIER (20% in March) business confidence surveys.
• Both franchisors (net 59%) and Service Providers (net 27%) remain positive about prospects for franchisor growth. Franchisor results increased slightly from 57% in the previous quarter.
• Franchisors sentiment toward access to financing decreased from a 41% to 28%, Service Providers are slightly more positive than franchisors at a net 36%.
• Franchisor sentiment toward access to suitable franchisees remained the same this quarter, at a net 17%. Service Providers, meanwhile, were more optimistic at a net 55%.
• Franchisor confidence in access to suitable staff increased slightly from negative net 18% to negative net 7%. Service Providers reported 0%.
• Franchisor sentiment towards access to suitable locations decreased from net 12% to net 7%. Service Providers were reflective of this reporting net 9%.

• Franchisor and Service Provider sentiment towards future franchisee sales levels remained elevated. Franchisors at a net 38%. Service Providers reported a net 45%.
• Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 10%. Service Provider sentiment was a negative net 9%, also decreasing from net 6% in the previous quarter.
• Sentiment toward future franchisee profitability remained positive and increased from last quarter. Franchisors reported a net 41%, and Service Providers a net 55%.

Overall, Franchize Consultants’ Franchising Confidence Index in April 2015 demonstrates a continued positive outlook, but more subdued than the previous quarter.

Franchisors continue to maintain a positive outlook for general business conditions, sales levels per franchisee, with franchisor growth prospects also showing a slight increase.  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 included the availability of suitable staff, and operating costs.
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Franchisors Report Increased Confidence in 2015

KEY HIGHLIGHTS

For a full copy of the January 2015 report click here 

• Responding Franchisors and Service Providers sentiment demonstrates improved optimism across many key growth drivers
  
  
• Fanchisors sentiment toward general business conditions is high

• 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 operating costs remained at lower levels.

The Franchize Consultants’ January 2015 Franchising Confidence Index demonstrates an increase in confidence across overall sector growth drivers.

• The latest results indicated  positive franchisor (net 69%) and Service Provider (net 94%) sentiment toward general business conditions. These results were not reflective of  the latest results of other more general business surveys including the ANZ Business Outlook (30% in December) and NZIER (21% in January) business confidence surveys.
  
  
• Both franchisors (net 57%) and Service Providers (net 80%) were positive about prospects for franchisor growth. This these results increased from the results in the previous quarter of net 38% and net 50%, respectively.
  
  
• Franchisors sentiment toward access to financing also increased from a 21% to 41%, Service Providers are even more positive than franchisors at a net 88%.
  
  
• Franchisor sentiment toward access to suitable franchisees increased this quarter, from negative net 17%, to a net 17%.  Service Providers, meanwhile, were notably more optimistic at a net 44%.
  
  
• Franchisor confidence in access to suitable staff decreased slightly from negative net 17% to negative net 18%.  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 were more positive at net 27%.

• Franchisor and Service Provider sentiment towards future franchisee sales levels remained at a high level. Franchisors at a net 62%.  Service Providers up to a net 80%, up from net 50% in the last quarter.
  
  
• Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 3%.  Service Provider sentiment was a net 6%, increasing from negative net 25% from the last quarter.
  
  
• Sentiment toward future franchisee profitability remained positive overall. Franchisors reported a net 38%, and Service Providers a net 40%.

Overall, Franchize Consultants’ Franchising Confidence Index in January 2015 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 also showing an increase.  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 2015 included the availability of suitable staff, operating costs, finding suitable franchisees and a competitive environment.

The sentiment contained within the results indicate that in 2015 both Franchisors and Service Providers expect a strong and positive year for franchising in New Zealand.

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

Franchising Confidence Slightly Moderated

KEY HIGHLIGHTS

For a full copy of the October 2014 report click here 

• Responding Franchisors continued an optimistic, though slightly moderated outlook across many key growth drivers.  Service Providers were mostly reflective of this sentiment.
  
  
• Franchisors sentiment toward general business conditions is higher than other general business confidence surveys (i.e. ANZ and NZIER).
  
  
• Franchisors still report positivity in their outlook for franchisee profitability levels (though somewhat subdued from last quarter) arguably franchising’s most important key performance indicator.
  
  
• Franchisors sentiment for franchisor growth decreased from the last quarter.

The Franchize Consultants’ October 2014 Franchising Confidence Index demonstrates somewhat subdued positivity across key growth drivers from reporting Franchisors and Service Providers.

• The latest results indicated positive franchisor (net 50%) toward general business conditions.  Service Provider sentiment was net 42%, these results are higher than other general business surveys including ANZ Business Outlook (27% in October) and NZIER (20% in September) business confidence surveys.
  
  
• Franchisors (net 38%) remain positive about prospects for franchisor growth.  However, this is a decrease from 63% in the previous quarter.  Service Providers are slightly more positive reporting a net 50%
  
  
• Franchisors sentiment toward access to financing increased slightly from 13% to 21%, Service Providers are more positive than franchisors at a net 42%.
  
  
• Franchisor sentiment toward access to suitable franchisees decreased this quarter, from net 17% to negative net 17%.  Service Providers showed more optimism at a net 33%.
  
  
• Confidence in access to suitable staff also decreased. Franchisors sentiment decreased from  negative net 7%, to negative net 17%, and Service Providers reported 0%.
  
  
• Franchisor sentiment towards access to suitable locations decreased from negative net 8% to negative net 17%.  Service Providers reported a net 7%.

• Franchisor sentiment towards future franchisee sales levels remained at an elevated level at a net 63%, down marginally from net 50% in the last quarter.  Service Provider sentiment increased from net 40% last quarter to net 50% this quarter.
  
  
• Franchisor confidence in franchisee operating costs decreased markedly this quarter from net 13% last quarter to negative net 38%.  Service Provider sentiment was a negative net 25%.
  
  
• Franchisor sentiment toward future franchisee profitability remained positive, with Franchisors reporting a net 17%.  However, this was down from 53% the previous quarter.  Service Providers reflected this sentiment at a net 18%

Overall, Franchize Consultants’ Franchising Confidence Index in October 2014 demonstrated more moderated confidence from reporting Franchisors and Service Providers than the previous quarter.

Franchisors continue to maintain a reasonably optimistic outlook for general business conditions, sales levels per franchisee and franchisor growth prospects.  There was a decrease in positivity, however, for franchisee profitability, arguably a franchise system’s most important key performance indicator.  Reflective of this is a decline in the perceived availability of suitable locations and staff.

Though confidence is down from the extreme levels of optimism reported earlier this year, these results are still high on average when compared to the results from the last couple of years.

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

Franchising Sentiment Mostly Positive

Click here for a copy of the full July 2014 report

KEY HIGHLIGHTS

• Responding Franchisors sentiment is still positive and remains elevated across many key growth drivers, however Service Providers were less positive generally and markedly in some areas.
  
  
• Franchisors sentiment toward general business conditions tops other general business confidence surveys (i.e. ANZ and NZIER).
  
  
• Franchisors remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator.
  
  
• Franchisors sentiment for franchisor growth increased from the last quarter.

The Franchize Consultants’ July 2014 Franchising Confidence Index demonstrates mixed results from reporting Franchisors and Service Providers.

• The latest results indicated positive franchisor (net 53%) toward general business conditions.  Service Provider (net 27%) sentiment was less positive, and was reflective of other general business surveys including ANZ Business Outlook (40% in July) and NZIER (32% in June) business confidence surveys.
  
  
• Franchisors (net 63%) remain positive about prospects for franchisor growth.  However, Service Providers have reported a decrease in results from 69% in the previous quarter to 27% this quarter.
  
  
• Franchisors sentiment toward access to financing increased slightly from 3% to 13%, Service Providers are slightly less positive than franchisors at a net 7%.
  
  
• Franchisor sentiment toward access to suitable franchisees increased this quarter, from negative net 3% to 17%.  Service Providers also showed more optimism than previously at a net 47%.
  
  
• Confidence in access to suitable staff increased. Franchisors sentiment increased slightly from negative net 19% to negative net 7%, and Service Providers matched this also reporting a negative net 7%.
  
  
• Franchisor sentiment towards access to suitable locations decreased from 7% to negative net 8%.  Service Providers reported a net 7%.

• Franchisor sentiment towards future franchisee sales levels remained at an elevated level at a net 70%.  Service Providers dropped from 85% last quarter to net 40% this quarter.
  
  
• Franchisor confidence in franchisee operating costs increased this quarter to net 13%. from a negative net 6% last quarter.  Service Provider sentiment was a negative net 33%.
  
  
• Franchisor sentiment toward future franchisee profitability remained positive, with Franchisors reporting a net 53%.  

Overall, Franchize Consultants’ Franchising Confidence Index in July 2014 demonstrated mixed results from reporting Franchisees and Service Providers.  The subdued sentiment from Service Providers is shared by other recent general business surveys.

Franchisors continue to maintain an optimistic outlook for general business conditions, sales levels per franchisee and franchisor growth prospects.  We were also encouraged to record a slight increase in positivity for franchisee profitability, arguably a franchise system’s most important key performance indicator.  In contrast, however, it is interesting to note a decline in the perceived availability of suitable locations and staff as other dimensions recover.