Survey shows franchises compare well in broader SME sector

Banjo Loans' annual SME Compass Report released yesterday favourably compares the average performance of franchisors' and franchisees' businesses to other Small to Medium Enterprises. According to a Franchise Executives summary of the report, 96% of franchisors and 85% of franchisees achieved revenue targets in 2025, compared to the national average of 69% for SMEs.

With Australia facing a later battle with inflation than New Zealand, and before the impacts of the Iran war could be foreseen, the report found that franchisors and franchisees in Australia were already considerably more concerned about inflation and tighter funding conditions than the general SME market. The report also showed that franchisees were much more likely than the average SME to review cash flow and funding options following major rate announcements such as the Reserve Bank of Australia's recent rate hike.

Earlier this month, but after the start of the current crisis in the Middle East, Westpac New Zealand's senior economists were saying that they thought the Reserve Bank of New Zealand (RBNZ) would be likely to hold steady on their plans for the Official Cash Rate. "Given the current level of spare capacity in the New Zealand economy, we think there is less risk of a meaningful lift in inflation expectations than would otherwise be the case. However, the risk is not negligible. For this reason, the RBNZ will also likely be reluctant to ease policy further even if the outlook for the economy were to weaken materially.

"But it would be folly to entirely rule out the possibility of further policy easing if the impact on the global economic outlook and export commodity prices was to prove severe. In the past, the more serious episodes of Middle East tensions have sometimes led to large falls in business confidence and output. While we are not expecting that this time, those downside risks can’t be ruled out."

Westpac New Zealand have subsequently revised upwards their forecast for inflation over the coming year to reach 2.8% by end of year - with GDP growth now forecast downwards, but still predicted to reach 2.8% by year end. Westpac's 16 March weekly report also pointed out that the New Zealand economy looks to have grown by around 1.6% over 2025, marking the first year of per-capita gains since 2022, although this information was somewhat lost in the noise from the potential impacts of the war in the Middle East.

RBNZ Governor Breman is scheduled to give an address to a Business NZ CEO Forum on 24 March, touching on the current economic outlook.