survey suggests economy
NOT THE BIGGEST DETERRENT
to franchise buyers

The October survey asked 246 visitors to the Franchise New Zealand website the question, ‘What is the biggest obstacle to your buying a franchise in the next few months?’ Answers were as follows:

Still looking for the right opportunity   - 44%
Availability of finance                            - 24%
Confidence in the economy                  - 13%
Personal circumstances                         - 8%
The reputation of franchising              - 5.5%
Other                                                     - 5.5%

‘Over the last couple of years, we have heard franchisors saying that the availability of finance and confidence in the economy have been major obstacles to growth, yet at the same time we have seen some franchises managing to grow both franchisee numbers and sales levels,’ says Franchise New Zealand editor Simon Lord. ‘This survey shows that people are interested in buying franchised businesses as long as the opportunity meets their needs. The franchises which have grown have been those with robust business models where franchisees have been able to achieve a worthwhile return while investing in the future.’

Availability of finance is still a major concern, however, with almost a quarter of respondents citing it in the survey. ‘It is noticeable that franchises which have gone out of their way to address franchisees’ financial concerns, whether through offering financial packages, guaranteed work like the commercial cleaning companies or even a guaranteed return on investment, have attracted increased levels of interest,’ says Mr Lord. ‘Similarly, while the banks still need security and evidence of a sound business model before lending, they are offering up to 100% finance for equipment or premises.’ There is still no sign, however, of government interest in establishing a small business loan scheme as operated in the UK and the USA, although the Franchise Association of New Zealand has started lobbying here.

‘The best news to come out of this survey is that people are actively looking at buying a franchise again and are keen to choose the right one,’ Mr Lord says. ‘Requests for copies of Franchise New Zealand magazine from the website reached their highest October level ever since the site was launched in 1997. Franchisors who can provide an effective and affordable opportunity will be well-placed in the coming months.’