January 2014 Quarter Results

FRANCHISORS REPORT RECORD CONFIDENCE IN GENERAL BUSINESS CONDITIONS

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Key Survey Highlights

• Responding Franchisors and Service Providers report continued elevated optimism across many key growth drivers.

• Franchisors sentiment toward general business conditions is very high and comparable to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).

• Franchisors remain positive about franchisee profitability prospects – arguably franchising’s most important key performance indicator.

• Franchisors forecasts indicated a negative outlook for operating costs.

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 35 franchisors and 15 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?

6. What do you see as the greatest challenge to franchise development in 2014?

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

The latest results indicated extremely positive franchisor (net 79%) and Service Provider (net 93%) sentiment toward general business conditions. These elevated 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.

The Results

Franchisor growth also remained high (net 62%), up from the previous quarter. Service Providers again provided significantly positive results (net 93%), up from a net 79% in October.

The Results

Franchisors sentiment toward accessing financing increased from 0% to a positive 9% , albeit Service Providers are more positive at a net 33%

The Results

Franchisor sentiment toward access to suitable franchisees improved this quarter, from negative net 13% to net 0% Service Providers were more optimistic at a net 47%.

The Results

Confidence in access to suitable staff dropped slightly, Franchisor sentiment to a net 3%. Service Providers also decreased in confidence (net 13%) from net 29% in the previous quarter.

The Results

Franchisor sentiment towards access to suitable locations also decreased from net 19% to 0%. Service Providers were more notably more positive at net 40%.

The Results

Franchisor and Service Provider sentiment towards franchisee sales levels both remained at a high level. Franchisors at a net 60% and Service Providers also up to 80%.

The Results

Franchisor confidence in operating costs remained negative, during this quarter at a net negative 18%. Correspondingly, Service Provider sentiment was a net negative 40%, which has decreased from the last quarter.

The Results

Sentiment toward future franchisee profitability was positive. Franchisors reported an increase from 19% to 38% and Service Providers a net 60%, up from net 36% in the last quarter.

The Results

GREATEST CHALLENGE TO FRANCHISE DEVELOPMENT

Key 2014 Challenges

Finding franchisees Economic concerns Organic franchisee

growth Finding staff Finding locations

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