Franchising Confidence Slightly Moderated

KEY HIGHLIGHTS

For a full copy of the October 2014 report click here 

• Responding Franchisors continued an optimistic, though slightly moderated outlook across many key growth drivers.  Service Providers were mostly reflective of this sentiment.
  
  
• Franchisors sentiment toward general business conditions is higher than other general business confidence surveys (i.e. ANZ and NZIER).
  
  
• Franchisors still report positivity in their outlook for franchisee profitability levels (though somewhat subdued from last quarter) arguably franchising’s most important key performance indicator.
  
  
• Franchisors sentiment for franchisor growth decreased from the last quarter.

The Franchize Consultants’ October 2014 Franchising Confidence Index demonstrates somewhat subdued positivity across key growth drivers from reporting Franchisors and Service Providers.

• The latest results indicated positive franchisor (net 50%) toward general business conditions.  Service Provider sentiment was net 42%, these results are higher than other general business surveys including ANZ Business Outlook (27% in October) and NZIER (20% in September) business confidence surveys.
  
  
• Franchisors (net 38%) remain positive about prospects for franchisor growth.  However, this is a decrease from 63% in the previous quarter.  Service Providers are slightly more positive reporting a net 50%
  
  
• Franchisors sentiment toward access to financing increased slightly from 13% to 21%, Service Providers are more positive than franchisors at a net 42%.
  
  
• Franchisor sentiment toward access to suitable franchisees decreased this quarter, from net 17% to negative net 17%.  Service Providers showed more optimism at a net 33%.
  
  
• Confidence in access to suitable staff also decreased. Franchisors sentiment decreased from  negative net 7%, to negative net 17%, and Service Providers reported 0%.
  
  
• Franchisor sentiment towards access to suitable locations decreased from negative net 8% to negative net 17%.  Service Providers reported a net 7%.

• Franchisor sentiment towards future franchisee sales levels remained at an elevated level at a net 63%, down marginally from net 50% in the last quarter.  Service Provider sentiment increased from net 40% last quarter to net 50% this quarter.
  
  
• Franchisor confidence in franchisee operating costs decreased markedly this quarter from net 13% last quarter to negative net 38%.  Service Provider sentiment was a negative net 25%.
  
  
• Franchisor sentiment toward future franchisee profitability remained positive, with Franchisors reporting a net 17%.  However, this was down from 53% the previous quarter.  Service Providers reflected this sentiment at a net 18%

Overall, Franchize Consultants’ Franchising Confidence Index in October 2014 demonstrated more moderated confidence from reporting Franchisors and Service Providers than the previous quarter.

Franchisors continue to maintain a reasonably optimistic outlook for general business conditions, sales levels per franchisee and franchisor growth prospects.  There was a decrease in positivity, however, for franchisee profitability, arguably a franchise system’s most important key performance indicator.  Reflective of this is a decline in the perceived availability of suitable locations and staff.

Though confidence is down from the extreme levels of optimism reported earlier this year, these results are still high on average when compared to the results from the last couple of years.

For a copy of the full report visit: www.franchisingconfidence.co.nz