Franchising Sentiment Shows Continued Optimism

Click here for the full April 2014 report

The Franchize Consultants’ April 2014 Franchising Confidence Index demonstrates a further increase in a general trend towards improved confidence across overall sector growth drivers.

• The latest results indicated positive franchisor (net 63%) and Service Provider (net 92%) sentiment toward general business conditions. These results were shared by the latest results of other more general business surveys including the BNZ (net 64% in April), ANZ Business Outlook (67% in March) and NZIER (52% in December) business confidence surveys.
  
  
• Both franchisors (net 41%) and Service Providers (net 69%) remain positive about prospects for franchisor growth.  However, this is a decrease from the results in the previous quarter of net 62% and net 93%, respectively.
  
  
• Franchisors sentiment toward access to financing dropped from a positive 9% to 3%, Service Providers are more positive than franchisors at a net 38%.
  
  
• Franchisor sentiment toward access to suitable franchisees decreased slightly this quarter, from a neutral 0%  to negative net 3%.  Service Providers also showed less optimism than previously at a net 8%.
  
  
• Confidence in access to suitable staff decreased. Franchisor sentiment dropped from  net 3% to negative net 19%.  Service Providers also decreased to negative net 15%.
  
  
• Franchisor sentiment towards access to suitable locations increased from 0% to 7%.  Service Providers reported a net 8%.

• Franchisor and Service Provider sentiment towards future franchisee sales levels remained at a high level. Franchisors’ at a net 65%. Service Providers up to a net 85%.
  
  
• Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 6%.  Service Provider sentiment was a net negative 46%, decreasing from negative net 40% from the last quarter.
  
  
• Franchisor sentiment toward future franchisee profitability remained positive, with Franchisors reporting a net 50%.

Overall, Franchize Consultants’ Franchising Confidence Index in April 2014 demonstrates continued positivity, though not quite as high as the record levels recorded in the previous quarter.  This positive sentiment was shared by other recent general business confidence surveys.

Franchisors continue to maintain an optimistic outlook for general business conditions, sales levels per franchisee and franchisor growth prospects.  We also recorded an increase in positivity for franchisee profitability, arguably a franchise system’s most important key performance indicator.  However there was a general decline in the perceived availability of suitable locations and staff, and concern regarding rising operating costs.

Franchisors Report Record Confidence in General Business Conditions

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KEY HIGHLIGHTS

• Responding Franchisors and Service Providers sentiment is extremely positive and remains elevated across many key growth drivers.
  
  
• Franchisors sentiment toward general business conditions is high and comparable to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).
  
  
• Franchisors remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator.
  
  
• Franchisors sentiment for franchisor growth also remained very high, however sentiment for both access to suitable staff and locations showed a decreased lack of confidence.

The Franchize Consultants’ January 2014 Franchising Confidence Index demonstrates a further increase in a general trend towards improved confidence across overall sector growth drivers.

• The latest results indicated very positive franchisor (net 79%) and Service Provider (net 87%) sentiment toward general business conditions. These results were shared by the latest results of other more general business surveys including the BNZ (net 68% in January), ANZ Business Outlook (64% in December) and NZIER (52% in December) business confidence surveys.
  
  
• Both franchisors (net 62%) and Service Providers (net 93%) were positive about prospects for franchisor growth. This is a marked increase from the already positive results in the previous quarter of net 50% and net 79%, respectively.
  
  
• Franchisors sentiment toward access to financing dropped from a positive 9% to 0%, Service Providers are slightly more positive than franchisors at a net 14%.
  
  
• Franchisor sentiment toward access to suitable franchisees increased this quarter, from negative net 13%, to a neutral 0%.  Service Providers, meanwhile, were notably more optimistic at a net 47%.
  
  
• Confidence in access to suitable staff decreased. Franchisor sentiment dropped from net 9% to net 3%.  Service Providers also decreased from net 29% to 13%.
  
  
• Franchisor sentiment towards access to suitable locations dropped from net 19% to 0%.  Service Providers were more positive at net 40%.

• Franchisor and Service Provider sentiment towards future franchisee sales levels remained at a high level. Franchisors’ at a net 65%. 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 18%.  Service Provider sentiment was a net negative 40%, decreasing from negative net 7% from the last quarter.
  
  
• Sentiment toward future franchisee profitability remained positive overall. Franchisors reported a net 19%, and Service Providers a net 36%.

Overall, Franchize Consultants’ Franchising Confidence Index in January 2014 demonstrated a further increase of the generally high levels of sentiment recorded in the previous quarter.  This positive sentiment was shared by other recent general business confidence surveys and is reflective of a generally improved outlook and forecast for the economy, with business confidence levels at a 20 year high.

Franchisors continue to maintain a very positive outlook for general business conditions, sales levels per franchisee, with franchisor growth prospects nearly at record levels for this Index.  Key franchisor identified challenges for growth in 2014 included finding franchisees, potential economic factors, franchisee complacency and finding suitable locations and staff.

The sentiment contained within the results indicate 2014 could be a very strong 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 35 franchisors and 15 Service Providers collected between Monday 27^th January and Friday 31^st January 2014. 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.’

Franchisors Continue Positive Outlook

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KEY HIGHLIGHTS

• Responding Franchisors and Service Providers reported mostly solid optimism across many key growth drivers.
  
  
• Franchisors sentiment toward general business conditions is high and comparable to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).
  
  
• Franchisors remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator.
  
  
• Franchisors were equivocal on access to financing, and on balance hold a negative view on the availability of suitable staff and franchisee operating costs.

The Franchize Consultants’ October 2013 Franchising Confidence Index demonstrates a general trend towards improvement in confidence across overall sector growth drivers.

• The latest results indicated positive franchisor (net 41%) and Service Provider (net 50%) sentiment toward general business conditions – albeit slightly less so than the previous quarter. These results were shared by the latest results of other more general business surveys including the BNZ (net 59% in August), ANZ Business Outlook (54% in September) and NZIER (32% in October) business confidence surveys.
  
  
• Both franchisors (net 50%) and Service Providers (net 79%) were positive about prospects for franchisor growth. Service Providers remained more positive than franchisors, further building upon their already positive sentiment in the previous quarter (67%).
  
  
• Franchisors sentiment toward access to financing dropped from a positive 9% to 0%, Service Providers are more positive than franchisors at a net 14%.
  
  
• Franchisor sentiment toward access to suitable franchisees deteriorated this quarter, to a notable negative net 13%, from a positive 9% the previous quarter. Service Providers, meanwhile, were more optimistic at a net 29%.
  
  
• Confidence in access to suitable staff improved slightly. Franchisor sentiment grew from 3% to 9%.  Service Providers also increased from net 27% to 29%.
  
  
• Franchisor sentiment towards access to suitable locations rose from net 13% to 19%. Service Providers were less positive at net 14%.
  
  
• Franchisor and Service Provider sentiment towards future franchisee sales levels remained at a high level. Franchisors’ at a net 53%. Service Providers a net 50%, though this is down from 60% in the last quarter.
  
  
• Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 16%.  Service Provider sentiment was a net negative 7%, slightly elevated from the last quarter.
  
  
• Sentiment toward future franchisee profitability remained positive overall. Franchisors reported a net 19%, and Service Providers a net 36%.

Overall, Franchize Consultants’ Franchising Confidence Index in October 2013 demonstrated a continuation of the generally high levels of sentiment recorded in the previous quarter.  This elevated sentiment is shared by other recent general business confidence surveys and is reflective of a  generally improved outlook and forecast for the economy.

We were encouraged to record a continued and positive outlook for franchisee profitability.  By contrast, franchisors on balance held a negative view on the availability of suitable staff and operating costs per franchisee.  Franchisors were equivocal on access to financing.

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 32 franchisors and 14 Service Providers collected between Monday 14^th October and Friday 18^th  October 2013. 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 Sentiment Remains Elevated

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KEY HIGHLIGHTS

• Franchisor sentiment very positive, and remain elevated, this quarter across a range of important franchise sector growth drivers.
  
  
• Franchisors sentiment toward general business conditions is high and comparable to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).
  
  
• Franchisors remain positive, on balance, about franchisee profitability prospects – arguably franchising’s most important key performance indicator.
  
  
• Generally, both franchisors and service providers noting improved sales conditions.

The Franchize Consultants’ July 2013 Franchising Confidence Index demonstrates a general trend towards improvement in confidence across overall sector growth drivers.

• The latest results indicated highly positive franchisor (net 50%) and Service Provider (net 67%) sentiment toward general business conditions. These elevated results were shared by the latest results of other more general business surveys including the BNZ (net 59% in July), ANZ Business Outlook (53% in July) and NZIER (31% in June) business confidence surveys.
  
  
• Both franchisors (net 53%) and Service Providers (net 67%) were positive about prospects for franchisor growth. Only three of 32 franchisor respondents expected franchisor growth prospects to deteriorate.
  
  
• Both franchisors and Service Providers remain positive in their outlook for access to financing, on balance, albeit Service Providers (net 27%) are more positive than franchisors (net 9%).
  
  
• Franchisor sentiment toward access to suitable franchisees improved this quarter, from net 0% to 9%. Service Providers, meanwhile, were more optimistic at a net 33%.
  
  
• Confidence in access to suitable staff remained largely neutral, but positive and improving, on balance. Franchisor sentiment remained at a net 3%. Service Providers also increased in confidence (net 27%).
  
  
• Franchisor sentiment towards access to suitable locations also rose from net 0% to 13%. Service Providers were more positive (albeit decreasingly so) at net 20%.
  
  
• Franchisor and Service Provider sentiment towards franchisee sales levels both show some consolidation at a high level, overall. Franchisors’ settle at a net 53%. Service Providers improve to a high net 60%.
  
  
• Franchisor confidence in operating costs remained static, but negative, during this quarter at a net negative 16%. Correspondingly, Service Provider sentiment was a net negative 20%.
  
  
• Sentiment toward future franchisee profitability remained positive overall. Franchisors reported a decrease from a positive net 44% to 28%. By contrast Service Providers demonstrated greater confidence, increasing from a net 25% to 53% - the strongest sentiment Service Providers have reported toward forward franchisee profitability levels.

Overall, Franchize Consultants’ Franchising Confidence Index in July 2013 demonstrates continued high levels of sentiment across many key franchising growth drivers. Most notable were high and positive levels of sentiment toward franchisor growth prospects, sales levels per franchisee, general business conditions, and franchisee profitability levels.

We continue to be encouraged by positive sentiment toward franchisee profitability – arguably a franchise system’s most important key performance indicator. Similarly, high levels of sentiment and more positive comments relating to sales growth point to an improved outlook for franchisors and franchisees alike.

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 32 franchisors and 16 Service Providers collected between Monday 22 and Wednesday 31 July 2013. 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.’

Optimism Builds within the Franchising Economic Growth Engine

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KEY HIGHLIGHTS

• Franchisor sentiment very positive this quarter across a range of important franchise sector growth drivers.

• Franchisors are much more positive about general business conditions – when compared to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).

• Most importantly, franchisors are very positive about franchisee profitability prospects – arguably franchising’s most important key performance indicator.

The Franchize Consultants’ April 2013 Franchising Confidence Index demonstrates a general trend towards improvement in confidence across overall sector growth drivers.

• Franchisor sentiment for general business conditions (at net 53%) tops that indicated in recent general business forecasts, as reported in the March NZIER (23%), ANZ Business Outlook (35%) and BNZ (25%) business confidence surveys.
• Both franchisor and Service Provider forecasts for franchisor growth improved, with franchisors substantially increasing from 41% to 58%, and Service Providers from 61% to 67%.

• Franchisor sentiment for access to suitable franchisees dropped from net 5% to 0%. Conversely, Service Providers showed a large increase from net 9% to net 38%.

• This improvement in confidence was also reflected in the outlook for accessing suitable staff, with franchisors rising to a positive net 3%. Service Provider confidence also increased in this area.

• Franchisor outlook for access to suitable locations also rose from a net negative 5% to 0%. Service Providers were also positive (net 33%).

• Both franchisors and Service Providers reported improved sentiment in their outlook for access to financing. Franchisors relayed a substantial net increase of 15% to net 28%. Service Providers echoed this, rising to a net 46%.

• Franchisor expectations for franchisee sales levels rose substantially this quarter, from a net 32% to 56%.

• Franchisor confidence in operating costs remained static at net negative 11%.

• Franchisor outlook for franchisee profitability levels reached record levels this quarter, increasing from a net 13% to net 44%. Service Providers were slightly less optimistic, reducing sentiment by net 5%. 

Overall, Franchize Consultants’ Franchising Confidence Index in April 2013 demonstrates much improved optimism across many key franchising growth drivers. Most notable are high and positive levels of sentiment toward franchisor growth prospects, sales levels per franchisee, general business conditions, franchisee profitability levels, and access to financing.

The author is most buoyed by franchisors’ increase in sentiment for franchisee profitability – arguably a franchise system’s most important key performance indicator. The net positive 44% reported by franchisors is the series record – and one indicator that franchising could be set to deliver growing returns to franchisees, franchisors, suppliers and the wider economy.  .

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 36 franchisors and 24 service providers collected between Monday 8 and Friday 12 April 2013. Findings from both groups are reported separately. Respondents are asked whether they expect conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’