Franchising Outlook 2025: How are we feeling?

Drawing insights from 42 franchisors and 15 service providers, a report based on the 14th annual New Zealand Franchising Confidence Index survey highlights both the challenges and opportunities that franchisors anticipate in the year ahead, amidst an evolving economic landscape.

Franchisors were significantly more positive this year about the outlook for their own businesses and those of their franchisees, with confidence levels even exceeding those profiled in recent NZIER and ANZ business opinion and outlook surveys. Franchisors expressed much greater confidence in franchisees' sales and profitability levels improving this year, followed by a consequent improvement in potential franchisor growth prospects.

The top challenges perceived shifted focus in 2025, with access to finance being of less concern than the ability to find good franchisees and ongoing concerns with the impact of the economy.

Key findings from the survey results were presented at a Thursday 20 February webinar, hosted by report publisher Dr Callum Floyd of Franchize Consultants. They include:

• Improved business confidence 

Franchisor confidence in general business conditions surged from a net 26% in 2024 to 62% in 2025, reflecting cautious optimism despite ongoing economic pressures.

• Challenges to development

The most pressing challenges for franchisors included finding suitable franchisees, managing economic and inflationary pressures, securing finance, and addressing rising operating costs. Regulatory challenges and labour shortages also remain significant concerns.

• Opportunities for development

Franchisors saw promising opportunities in franchisee recruitment, economic recovery, operational efficiencies, AI-driven innovations, and multiunit expansion. Lower interest rates and increased consumer demand are expected to further stimulate growth.

• Sector sentiment

Sentiment varied across sectors, with FMCG, construction, and automotive showing positivity, while retail and hospitality continue to face cost pressures. Health, fitness, and professional services express cautious optimism, buoyed by expected economic recovery.

• Emerging trends

Digital transformation (87%), economic pressures (73%), and workforce challenges (60%) were identified as the most impactful long-term trends shaping the franchising landscape over the next 5-10 years. While the franchising sector navigates through economic uncertainties, the outlook remains positive with expectations of growth driven by strategic adaptation, technological advancements, and sector-specific opportunities. The resilience and innovation demonstrated by New Zealand franchisors position the sector well for sustainable development in the years ahead.

The Franchising Confidence Index survey is carried out annually by Franchize Consultants (NZ) Ltd and represents confidence in key measures critical to the success of franchising in this country. It provides insights into franchisor attitudes toward general business conditions, as well as key franchising growth determinants – including access to capital, suitable potential franchisees, staff and locations. It also addresses franchising health attributes and outcomes like franchisee sales, operating costs and profitability, and, franchise system growth prospects.

The data and analysis presented in the New Zealand Franchising Outlook report represents the views of 42 franchisors and 15 service providers collected between 14-31 January 2025. Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’

Franchize Consultants' report produced highlights of both the challenges and opportunities that franchisors anticipate in the year ahead, amidst an evolving economic landscape. It was also used to support Womens Refuge and The Salvation Army with contributions of $10 per survey response allocated to the respective charity by respondent choice.

The full report is available to download here.

We welcome links from other websites to this article. Please note that this article is copyright © Eden Exchange NZ Holdings Limited, Franchise New Zealand magazine and Franchise New Zealand On Line. While it may be downloaded for personal use, no part may be reproduced on any other website, in electronic or printed form or in any other form whatsoever.