January 2016 Quarter Results

FRANCHISORS REMAIN OPTIMISTIC IN 2016

• Franchize Consultants is the first point of contact for companies considering franchising their business

• Franchize Consultants helps established franchised (and other network format) chains review and improve performance for both franchisors and franchisees

• Franchize Consultants conducts specialist research for franchising insight and practical application

• Franchize Consultants builds franchisor executive and franchisee capability and performance through focused training and education programmes

About Franchize Consultants

Key Survey Highlights

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

• Franchisors sentiment toward general business conditions remains elevated

• Franchisors report increased confidence for franchisee profitability prospects – arguably franchising’s most important key performance indicator.

• Franchisors forecasts indicated a negative outlook for the availability of suitable locations, and 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 27 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 2016?7. What will provide the greatest opportunity to franchising development in 2016?

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 positive franchisor (net 33%) and Service Provider (net 53%) sentiment toward general business conditions. These results were shared by other more general business surveys including the ANZ Business Outlook 23% in December) and NZIER (13% in January) business confidence surveys.

The Results

Franchisor growth also remained high (net 56%), up from the previous quarter. Service Providers reported positive results at a net 47%.

The Results

Franchisors sentiment toward accessing financing increased from 21% to 30% , Service Providers were even more positive at a net 53%

The Results

Franchisor sentiment toward access to suitable franchisees was at 0% this quarter, from negative net 16% previously. Service Providers were more optimistic at a net20%.

The Results

Franchisor confidence in access to suitable staff dropped slightly, to a net negative 7%. Service Providers reported 0%.

The Results

Both Franchisor and Service Provider sentiment towards access to suitable locations decreased this month, reporting negative net 16% and 0% respectively.

The Results

Franchisor sentiment towards franchisee sales remained at an elevated level, Franchisors at a net 52% and Service Providers increased to net 53%.

The Results

Franchisor confidence in operating costs decreased this quarter, Franchisors reporting a negative net 19% Service Providers were more optimistic at net 20%

The Results

Sentiment toward future franchisee profitability was positive. Franchisors reported an increase from 26% to 44% and Service Providers a net 33%, also an increase from last quarter.

The Results

GREATEST CHALLENGE TO FRANCHISE DEVELOPMENT

Key 2016 Challenges

Finding franchisees Finding locations Franchisee investment

& ongoing cost containment

Access to finance

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