Franchise confidence bounces back for 2016

Franchising confidence in New Zealand improved in October.
Franchising confidence in New Zealand improved in October.

After a dip in July, confidence in the franchise sector is bouncing back but franchisees are still high in demand according to the latest Franchising Confidence Index survey.

Results from the Franchize Consultants survey, as published on Franchise New Zealand, found that franchisors are extremely positive in their outlook for general business conditions (net 42 percent), access to financing (21 percent), sales levels per franchisee (53 percent), franchisee profitability levels (26 percent) and franchisor growth prospects (47 percent).

The survey revealed the biggest risk to growth prospects comes from the availability of suitable franchisees (negative net 16 percent, up from negative 8 percent) and the availability of suitable locations (negative net 6 percent). Expected operating costs per franchisee, while still a negative net 6 percent, improved from negative 16 percent last quarter.

Sentiment toward franchisee profitability, arguably a franchise system’s key health and growth driver, increased from a net 19 percent to 26 percent, as reported by responding franchisors. Service providers were also more positive in their sentiment this quarter, reporting a net 27 percent.

The outlook for general business conditions is a key measure for this research because it can be compared with many other general business confidence surveys.

Franchisors were encouragingly positive (net 42 percent) this quarter, up 14 percent.  Service Providers reported 7 percent, which is also an increase.

The net 42 percent positivity experienced by franchisors is markedly higher than that of other research involving general business, including ANZ Business Outlook, (net 10 percent in October) and NZIER business survey, which is now in the red (negative net 9 percent in October).


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