POSITIVE OUTLOOK FOR NZ FRANCHISORS, FRANCHISEES - LATEST
August 2013 - Confidence continues to grow in future prospects for the franchise sector, according to the results of the latest Franchising Confidence Index survey
The latest Franchising Confidence Index shows franchisors and service providers are sharing continued optimism across many key growth drivers for the franchise sector. The July 2013 survey, the latest in the quarterly series conducted by Franchize Consultants, represents the views of 32 Franchisors and 16 Service Providers to the franchise sector.
Franchisors were most positive about improvements to franchisor growth prospects, sales levels per franchisee, general business conditions, and franchisee profitability levels. Both Franchisors (net 53 percent) and Service Providers (net 67%) were positive about prospects for franchisor growth, with only 3 out of 32 Franchisor respondents expecting franchisor growth prospects to deteriorate. Small improvements were also recorded in accessing suitable franchisees and suitable locations; however, sentiment toward accessing financing deteroriated slightly.
The results also indicate highly positive Franchisor (net 50 percent) and Service Provider (net 67 percent) 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 percent in July), ANZ Business Outlook (53 percent in July) and NZIER (31 percent in June) business confidence surveys.
Notably, only one of 32 franchisor respondents expected business conditions to deteriorate over the next 12 months.
Franchisee profitability has been one of the major concerns in recent years, but the recent trend towards improvements in the area continues in the latest survey. Both Franchisor (53 percent) and Service Provider (60 percent) sentiment toward future franchisee sales levels remained high and although they shared a negative outlook on franchisee operating costs the expectations for franchisee profitability were positive overall.
Summarising the report, Dr Callum Floyd of Franchize Consultants said, ‘We continue to be encouraged by positive sentiment toward franchisee profitability – arguably a franchise system’s most important key performance indicator. Similarly, high levels of sentiment and more positive comments relating to sales growth point to an improved outlook for franchisors and franchisees alike.’
* The figures indicate ‘net’ confidence. 'Net’ confidence is the difference between those reporting ‘better’ and ‘worse’.
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