July 2013 Quarter Results

FRANCHISING SENTIMENT REMAINS ELEVATED

• Franchize Consultants is the first point of contact for

companies considering franchising their business

• Franchize Consultants helps established franchised

(and other network format) chains review and improve

performance for both franchisors and franchisees

• Franchize Consultants conducts specialist research for

franchising insight and practical application

• Franchize Consultants builds franchisor executive and

franchisee capability and performance through focused

training and education programmes

About Franchize Consultants

Key Survey Highlights

• Franchisor sentiment very positive, and remain elevated,

this quarter across a range of important franchise sector

growth drivers.

• Franchisors sentiment toward general business conditions

is high and comparable to other general business

confidence surveys (i.e. ANZ, BNZ and NZIER).

• Franchisors remain positive, on balance, about franchisee

profitability prospects – arguably franchising’s most

important key performance indicator.

• Generally, both franchisors and service providers noting

improved sales conditions.

Background

• Quarterly survey of more than 400 New Zealand

franchisors and 100 specialist Service Providers (e.g.

consultants, banks, accountants, lawyers and

publishers) to the franchising community.

• Explores confidence in key measures critical to the

success of franchising, including the wider

environment, growth determinants, and franchising

health attributes and franchise system growth

prospects.

• This survey represents the views of 32 franchisors

and 16 Service Providers.

The Focus

GENERAL QUESTION AREAS

1. General business conditions

2. Franchisor growth prospects

3. Franchising growth drivers• Access to capital• Access to suitable franchisees• Access to suitable locations • Access to suitable staff

4. Franchisee growth & profitability prospects• Franchisee sales levels• Franchisee operating costs• Franchisee profitability

5. How are things looking for franchisors and Franchisees in their respective sectors?

Respondents indicate whether they expect the following aspects to be better, the sameor worse over the next 12 months (compared to the previous 12 months)

The Results

The latest results indicated highly positive franchisor (net 50%) and Service Provider (net 67%) sentiment toward general business conditions. These elevated results were shared by the latest results of other more general business surveys including the BNZ (net 59% in July), ANZ Business Outlook (53% in July) and NZIER (31% in June) business confidence surveys.

The Results

Both franchisors (net 53%) and Service Providers (net 67%) were positive about prospects for franchisor growth. Only three of 32 franchisor respondents expected franchisor growth prospects to deteriorate.

The Results

Both franchisors and Service Providers remain positive in their outlook for access to financing, on balance, albeit Service Providers (net 27%) are more positive than franchisors (net 9%).

The Results

Franchisor sentiment toward access to suitable franchisees improved this quarter, from net 0% to 9%. Service Providers, meanwhile, were more optimistic at a net 33%.

The Results

Confidence in access to suitable staff remained largely neutral, but positive and improving, on balance. Franchisor sentiment remained at a net 3%. Service Providers also increased in confidence (net 27%).

The Results

Franchisor sentiments towards access to suitable locations also rose from net 0% to 13%. Service Providers were more positive (albeit decreasingly so) at net 20%.

The Results

Franchisor and Service Provider sentiment towards franchisee sales levels both show some consolidation at a high level, overall. Franchisors’ settle at a net 53%. Service Providers improve to a high net 60%.

The Results

Franchisor confidence in operating costs remained static, but negative, during this quarter at a net negative 16%. Correspondingly, Service Provider sentiment was a net negative 20%.

The Results

Sentiment toward future franchisee profitability remained positive overall. Franchisors reported a decrease from a positive net 44% to 28%. By contrast Service Providers demonstrated greater confidence, increasing from a net 25% to 53% - the strongest sentiment Service Providers have reported toward forward franchisee profitability levels.

More Information

www.franchisingconfidence.co.nz

Including:

• More detailed and complete results and analysis

• All charts and illustrations

Franchize Consultants

• The Franchising Confidence Index, is founded, designed

and operated by Franchize Consultants, New Zealand

specialists in franchising and licensing network

development. Founded in 1989, Franchize Consultants

have a long and supporting association with New Zealand

franchising.

• For further information contact Dr Callum Floyd

• Ph. (09) 523 3858

• Mob. 021 669 519

• Email. callum@franchize.co.nz

• Web. www.franchisingconfidence.co.nz

• Web. www.franchize.co.nz