April 2016 Quarter Results

FRANCHISING CONFIDENCE STRONG BUT MIXED

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• 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

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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 33 Franchisors and 19 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

Franchisors were still on balance quite positive about general business conditions (net 33%), the same as the previous quarter. Service Providers reported similar at a net 37%, but down from January (net 53%).

The Results

Franchisor sentiment for franchisor growth prospects decreased from a net 56% in January to a still strong 45% here. Service Providers perceptions were equivalent and held at a net 47%.

The Results

Franchisor sentiment toward access to suitable franchisees deteriorated further from a net 0% to -6%. Meanwhile, Service Providers remained more positive at a slightly improved 21%.

The Results

Franchisors remained constant and subdued in sentiment toward the availability of suitable staff at a net negative 9%, down from -7%. Service Providers were moderately more positive at a net 11%, up from 0% in January.

The Results

Franchisors were more positive this quarter in their outlook for access to suitable locations, improving from a net negative 16% to a positive 3%. Meanwhile, Service Providers outlook improved dramatically from 0% to an extremely positive net 53%.

The Results

Franchisor perceptions of franchisee sales levels decreased from a very positive net 53% to a still strong but reduced 39%. Meanwhile, Sevice Providers were particularly negative falling from a similar starting position of 53% in January, to a net negative 21% now in April.

The Results

Both Franchisor and Service Provider groups see the outlook for franchisee operating costs as more positive, albeit Franchisor views improve from a net negative -19% to only just positive 3%, and Sevice Providers move from 20 to 26%.

The Results

Finally, it is somewhat pleasing to see the outlook for franchisee profitability levels remaining in net positive territory. However, Franchisor perceptions reduced from a high net 44% to 21%. By contrast, Service Providers were increasingly optimistic, improving from a net 33% in January to 47% here in April.

The Results

Franchisor sentiment toward access to financing decreased from 30% to 21%. Service Provider perceptions of the same fell faster, from a positive 53% in January to 37% now.

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