July 2015 Quarter Results

FRANCHISING CONFIDENCE DROPS IN JULY

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

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Key Survey Highlights

• Responding Franchisors and Service Providers reported subdued sentiment across many key growth drivers.

• Franchisors sentiment toward general business conditions is still in positive territory, but down from last quarter

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

• Franchisors forecasts indicated a negative outlook for the access to suitable franchisees, suitable staff 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 37 franchisors and 10 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

The latest results indicated lower franchisor (net 14%) and Service Provider (net negative net 10%) sentiment toward general business conditions. Franchisor 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.

The Results

Franchisor growth prospects also decreased (net 35%), down from 59% in the previous quarter. Service Providers were also less optimistic reporting 0%.

The Results

Franchisors sentiment toward accessing financing decreased from 28% to 19% , Service Providers were also slightly less positive than last quarter at 30%, dropping from net 36%

The Results

Franchisor sentiment toward access to suitable franchisees dropped this quarter, to a negative net 8%. Service Providers were more optimistic reporting net 40%.

The Results

Franchisor confidence in access to suitable staff reported a negative net 6% . Service Providers were up from last quarter from 0% to 30%

The Results

Franchisor sentiment towards access to suitable locations decreased from net 7% to negative net 3% Service Providers reported a more positive 20%.

The Results

Franchisor sentiment towards franchisee sales remained positive, at a net 32%, though this is down from net 38% last quarter. Service Providers decreased to net 10% from 45%

The Results

Franchisor confidence in operating costs were also lower than the previous quarter. Franchisors reporting a negative net 16% and Service Providers reporting negative net 20%

The Results

Sentiment toward future franchisee profitability dropped this quarter. Franchisors reported a decrease from net 41% to net 19% and Service Providers a net 20%, down from net 55% in the last quarter.

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