FRANCHISORS SEE BETTER TIMES AHEAD IN 2013
January 2013 - The latest Franchising Confidence Index demonstrates a continuation of mixed results across overall sector growth drivers, but with a slight increase in confidence from October 2012.
Although response varied according to industry sector, generally franchisors were most positive about prospects for growth, general business conditions and franchisee sales levels. Franchisors were also positive about access to financing and franchisee profitability levels, but projected a negative outlook for franchisee operating costs, availability of staff and franchisees.
The results of the latest survey, which is conducted quarterly by Franchize Consultants, indicate a consolidation in forecasts for general business conditions from both Franchisors and Service Providers. Franchisor responses continued to improve to a net 37%, compared to 28% in October. Service Provider sentiment showed a more marked improvement from net 42% to net 66%.
Both Franchisor and Service Provider forecasts for franchisor growth improved, with Franchisors increasing from net 28% to 41%, and Service Providers from 38% to 61%. However, confidence was down for some key drivers including access to suitable franchisees, staff, locations and financing. In fact, finding franchisees was considered to be the greatest single challenge for franchisors in the year ahead, meaning that suitable candidates should be able to find some excellent opportunities with motivated franchisors.
Recruitment may benefit from the better prospects forecast for 2013. Franchisor expectations for franchisee sales levels (net 32%) and operating costs (negative net 11%) demonstrated positive improvements compared to the previous quarter. Perhaps most critical, Franchisor outlook for franchisee profitability levels also improved from a net negative 3%, to a positive 13%. Service Providers were also more optimistic in their forecasts for franchisee profit generally, increasing from a net 0% (October 2012) to 30%. As one Service Provider commented, ‘Much better – this is the year to do things and expand the business.’
The data and analysis presented represents the views of 38 Franchisors and 23 Service Providers collected between Monday 21 and Friday 25 January 2013. Findings from both groups are reported separately. For the full report, click here.
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