January 2013 Quarter Results

FRANCHISORS ENTER 2013 CAUTIOUSLY OPTIMISTIC

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Key Survey Highlights

• The January 2013 Franchising Confidence Index demonstrates a continuation of mixed results across overall sector drivers, with slightly more positivity seen.

• Franchisors were most positive in their outlook for prospects for growth, general business conditions and franchisee sales levels.

• Meanwhile, franchisor forecasts indicated a continuing negative/poor outlook for franchisee operating costs, availability of staff and franchisees.

• Written answers revealed increasing positivity, though conditions are still challenging within specific sub-sectors.

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 38 franchisors and 23 Service Providers.

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)

The Results

Franchisor responses continued to improve to a net 37%, compared to 28% in October. Similarly, Service Provider sentiment showed a more marked improvement to 66% (current) from 42%.

The Results

Franchisor outlook for franchisor growth prospects increased from a net positive 28% to 41%. Service Providers’ outlook echoed this with increase from 38% in October to 61%.

The Results

Both franchisors and Service Providers remain positive in their outlook for access to financing, albeit Service Providers (net 26%) are more positive than franchisors (net 13%).

The Results

Sentiment toward access to suitable franchisees dropped this quarter. Franchisors had the lesser decrease from net 14% to 5%, whereas Service Providers dropped from net 35% to only 9%.

The Results

Confidence in access to suitable staff demonstrates a drop from both franchisors and Service Providers since the October survey. Franchisors decreased from net positive 6% to negative 5%. Service Providers dropped from net 23% to 13%.

The Results

Franchisor sentiments towards access to suitable locations took a substantial tumble this quarter, from a net positive 23% to negative 5%. Service Providers were more positive at net 31%.

The Results

Franchisor and Service Provider sentiment towards franchisee sales levels both show an increase to 32% (franchisors) and 44% (Service Providers), after both showing a decrease in October.

The Results

Both franchisors and Service Providers show a slight increase in confidence for franchisee operating costs (even though still remaining below zero) ending at a net negative 11% and 4%, respectively.

The Results

Overall sentiment toward future franchisee profitability levels also increased. Franchisors increased confidence to net 13% from negative 3%, and Service Provider confidence improved a net 30% from 0% in October.

The Results

Franchisors identified finding franchisees and franchisee business model-related concerns as the two top challenges to franchising development in 2013

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More Information

www.franchisingconfidence.co.nz

Including:• More detailed and complete results and

analysis• All charts and illustrations

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