October 2013 Quarter Results

FRANCHISORS CONTINUE POSITIVE OUTLOOK

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Key Survey Highlights

• Responding Franchisors and Service Providers reported mostly solid optimism across many key growth drivers.

• Franchisors sentiment toward general business conditions is still 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 were equivocal on access to financing, and on balance hold a negative view on the availability of 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 32 franchisors and 14 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 positive franchisor (net 41%) and Service Provider (net 50%) 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 August), ANZ Business Outlook (54% in September) and NZIER (32% in October) business confidence surveys.

The Results

Franchisor growth also remained high (net 50%), though slightly down from the previous quarter. Service Providers remained more positive (net 79%), further building on their already positive sentiment in the previous quarter (67%).

The Results

Franchisors sentiment toward accessing financing dropped from a positive 9% to 0%, albeit Service Providers are more positive at a net 14%

The Results

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%.

The Results

Confidence in access to suitable staff remained largely neutral, but improved slightly, Franchisor sentiment to a net 9%. Service Providers also increased in confidence (net 29%).

The Results

Franchisor sentiment towards access to suitable locations also rose from net 13% to 19%. Service Providers were slightly less positive at net 20%.

The Results

Franchisor and Service Provider sentiment towards franchisee sales levels both remained at a high level. Franchisors’ at a net 53%. Though Service Providers were down slightly to 50%.

The Results

Franchisor confidence in operating costs remained negative, during this quarter at a net negative 16%. Correspondingly, Service Provider sentiment was a net negative 7%, which is elevated from the last quarter.

The Results

Sentiment toward future franchisee profitability slightly less positive. Franchisors reported a decrease from a positive net 28% to 19%. Service Providers a net 36%, also down from 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