How is the fuel crisis impacting franchised businesses?

EDITOR'S NOTE - this article was originally published 4 May 2026. At the end of the article is an update incorporating new forecasts from Westpac's May Economic Overview, released 13 May 2026.

It is rare that the franchise sector is specifically included in a broader look at the New Zealand business environment. Despite the franchise sector contributing an estimated 11% of GDP in this country, economic impacts are often overlooked. So, last week it was a refreshing change see charts from the latest survey by Franchize Consultants Ltd included in Westpac’s fortnightly update for corporate clients on the fuel crisis situation.

At the end of April 2026, Dr Callum Floyd of Franchize Consultants released the results of an independent survey of the NZ fuel cost impact on franchise systems. The survey pooled the views of 41 franchisor respondents, spanning a range of industries and system sizes. 

Moderate or significant effects of rising fuel costs had already been experienced by 98% of franchise systems, with the worst affected impacts being in cost of goods and franchisee operating costs. Over three-quarters of respondents reported franchisees being affected by reduced margins and almost 40% had also been experiencing reduced customer demand. Over half of the franchise systems in the survey reported that they are already actively reviewing pricing and some are introducing specific initiatives, including fuel surcharges, pricing adjustments, and targeted subsidies to support franchisees. Others are responding operationally through forward ordering of stock and sharing best practice approaches across their networks.

In his 29 April presentation, Kelly Eckholdt, Westpac’s senior economist, quoted the Franchize Consultants survey as evidence that the most dominant effect to date on businesses has been on margins – and that this is unsustainable in the long term. Kelly also pointed out that, despite the gloomy prognosis for clearance of the Strait of Hormuz and difficulty in predicting the long view, NZ’s just-in-time system for fuel stocks is still operating as normal at present. Since that presentation less than a week ago, fuel prices have dropped back below $3 per litre for some users of Unleaded 91 and the pressure has come off diesel prices – the average diesel price has just dipped back below the average price of Unleaded 91 across the country, according to user-generated comparison site Gaspy.nz.

How to confidently advance in the face of uncertainty

The latest ANZ Business Outlook survey data also released last week shows an unsuprisingly marked drop in business confidence since February, although a healthy 20% of respondents report increased activity over the past year and 20% still expect trading activity to increase over the coming year, indicating demand continues to rise. The confidence levels of franchisors and advisors to the franchise sector are often very similar to the ANZ findings (refer to our article on the 2026 Franchising Outlook survey, also conducted by Franchize Consultants).

Confidence levels in the April ANZ survey were not as dire as some had expected, and the Reserve Bank of New Zealand (RBNZ) last week also signalled caution in over reacting to temporary inflationary effects of the fuel crisis. Specifically, the RBNZ Governer, Dr Anna Breman stated that “…the Reserve Bank remains focused on balancing inflation control with supporting economic recovery”, also noting that although annual inflation was slightly higher in April than anticipated, “…measures of core inflation, which look through this volatility, have remained stable within the target band.” The Westpac Economic team’s weekly commentary released today assessed this as supporting their predictions that the RBNZ is unlikely to raise the official cash rate before September of this year at the earliest. (See later updates below).

The picture is changing all the time – there is an acclimatisation period that seems to follow each new global upheaval we’ve experienced in the past few years, with people and businesses taking time to figure out how to deal with the fallout before prices and expectations settle back closer to ‘normal’. 

Uncertainty is curbing business owners’ willingness to invest – and in the Franchize Consultants survey, over 60% of franchisors expected current cost pressures to persist over the medium term, with Franchize Consultants’ report recommending that franchisors should plan across multiple scenarios rather than assuming a return to previous operating conditions. The report points out that open communications and support for franchisees also remains critical, with a clear focus on understanding unit-level economics and how they will be affected by each of the multiple scenarios in a system's planning.

For a full copy of Franchize Consultants' NZ Fuel Cost Impact survey report, contact callum@franchize.co.nz 

13 May 2026 - further updates to the forecasted economic impact

In their May Economic Overview Westpac's economists are confirming their expectations of a pause in New Zealand's economic recovery - but growth is still expected in the year ahead, albeit at lower levels than the more optimistic projections that prevailed before the US-led war against Iran began in late February.

The report suggests that, "The expected economic hiatus will impact the services sector, retail spending and hospitality the hardest, reflecting the implied hit to household incomes. Tourism will also be interrupted as global uncertainty and airline fare prices remain high."

The prediction is that, with the improving economic momentum that we saw in the early part of 2026 temporarily derailed by the conflict, unemployment and inflation will rise slightly from their current levels. However, there is still such high uncertainty around the duration and continued impacts of the war that there is no clear timeframe for improved economic growth and labour markets.

With regard to inflation in particular, the Westpac report suggests, "With an extended period of pressure on margins, there is a risk that the current re-acceleration in inflation results in a more long-lasting lift in businesses’ pricing behaviour. Businesses may begin factoring in the risk of continued large cost increases when they adjust their prices."