1. April 2012 Quarter Results

2. Background
• Quarterly survey of 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 22 service providers.

3. The Focus
QUESTION AREAS
1. General business conditions
2. Franchisor growth prospects
3. Franchising growth drivers Please indicate
• Access to capital
• Access to suitable franchisees
whether you expect
• Access to suitable locations the following aspects
• Access to suitable staff to be better, the same
4. Franchisee growth & profitability prospects or worse over the
• Franchisee sales levels next 12 months
• Franchisee operating costs
• Franchisee profitability
(compared to the
previous 12 months)
5. How are things looking for franchisors and Franchisees in
their respective sectors?
6. What is expected to provide the greatest challenge to
franchising development this year?
7. What is the number one topic, related to being a franchisor,
that you would like to know more about?

4. The Results
Both franchisor (net 46%) and service
provider (net 65%) outlook for general
business conditions were strong, hitting the
highest levels recorded since the Franchising
Confidence Index was established. Both
results also consolidated previous gains in
January, following the substantial deterioration
in October 2011. For the first time, franchisor
sentiment appears considerably more positive
than that indicated by general business in the
April NZIER (24%), April BNZ (34%) and March
National Bank (34%) business confidence
surveys.

5. The Results
Franchisor (net 46%) and service provider (net
65%) outlook for franchisor growth prospects
also improved markedly from the previous
quarter – helping to arrest a striking downward
trend that had become more apparent over
time.

6. The Results
Perhaps disappointingly, the
aforementioned confidence improvements
did not extend to the concept of access to
finance. Both franchisors (net 16%) and
service providers (net 39%) recorded small
changes from the previous quarter.

7. The Results
In regards to the ease of access to
suitable franchisees, a significant
uptrend was noted in franchisor
sentiments (net 14%). However,
service providers’ sentiment
decreased (net 26%).

8. The Results
Franchisor confidence in access to suitable
staff demonstrates a considerable overall
downtrend since the Franchising Confidence
Index was first established. Sentiment
regarding access to suitable staff for both
franchisors (0%) and Service providers (net
4%) decreased considerably.

9. The Results
The franchisor outlook for access to
suitable locations decreased
considerably as well. The decrease in
franchisor confidence regarding access
to locations (net 14%) is balanced out
by an increase in service provider
sentiment (30%).

10. The Results
Franchisor and service provider
expectations for franchisee sales
levels grew from a net 29% and
11% to 51% and 52%, respectively.

11. The Results
Franchisor outlook for franchisee
operating costs improved slightly
(from -26% to -24%), whilst
remaining negative overall. Service
providers were similarly negative,
but more negative than the
previous data point (dropping from
-11% in April to -43%).

12. The Results
Both franchisor and service provider
sentiment toward franchisee
profitability has grown substantially,
from a net -8% and -5% to a more
positive 30% and 14%, respectively.
Presumably franchisors and service
providers expected increased sales to
more than offset any concerns for
franchisee operating costs. The net
difference (i.e., increased
profitability), if experienced, will be
welcome news for franchisees.

13. Results Summary
• Franchising sentiment built further upon the previous quarter’s
improvements, however uncertainty remains on some factors.
Importantly, the outlook for general business conditions has hit new
heights, franchisor growth prospects have solidified, and crucially, the
outlook franchisee profitability has improved.
• Notable improvements are recorded for general business conditions,
franchisor growth prospects, sales levels per franchisee and franchisee
profitability levels, despite continuing concerns for franchisee operating
costs.
• Meanwhile, access to suitable staff falls to the lowest level on record.
Access to suitable locations experiences striking decreases as well.

14. More Information
Including:
• More detailed and complete results and analysis
• All charts and illustrations
www.franchisingconfidence.co.nz

15. 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.biz