January 2017 Quarter Results

FRANCHISORS START 2017 OPTIMISTIC

• 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

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Key Survey Highlights

• Responding Franchisors and Service Providers report continued optimism across many key growth drivers.

• Franchisors sentiment toward general business conditions remains positive, on balance.

• Franchisors sentiment remained elevated for franchisee profitability prospects – arguably franchising’s most important key performance indicator.

• Franchisors forecasts indicated a negative outlook for accessing of finance and franchisee operating costs.

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 39 franchisors and 17 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?

6. What do you see as the greatest challenge to franchise development in 2017?7. What will provide the greatest opportunity to franchising development in 2017?

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

The Results

The latest results indicated positive franchisor (net 31%) and Service Provider (net 41%) sentiment toward general business conditions. These results were shared by other more general business surveys including the ANZ Business Outlook 22% in December) and NZIER (26% in January) business confidence surveys.

The Results

Franchisor growth continued to gain strength(net 59%), up from the previous quarter. Service Providers reported positive results at a net 47%.

The Results

Franchisors sentiment toward accessing financing dipped significantly from net 15% to net negative 8% , Service Providers were in comparison more positive at a net 18%

The Results

Franchisor sentiment toward access to suitable franchisees remains a key challenge at net 10% this quarter, from net 12% previously. Service Providers were more optimistic at a net 41%.

The Results

Franchisor confidence in access to suitable staff lifted slightly, to a net negative 3%. Service Providers reported a similar result at net negative 6%.

The Results

Franchisor and Service Providers differed in their sentiment towards access to suitable locations this quarter in comparison to last, however their reported net 16% and net 12% respectively, is now very similar.

The Results

Franchisor sentiment towards franchisee sales remained at an elevated level, Franchisors at a net 56% and Service Providers increased to net 53%.

The Results

Franchisor confidence in operating costs decreased this quarter, Franchisors reporting a negative net 13%, Service Providers were slightly more positive at net 0%

The Results

Sentiment toward future franchisee profitability continued to be positive. Franchisors reported a slight decrease from net 49% to net 44% and Service Providers a net 35%, an increase from last quarter.

The Results

GREATEST CHALLENGE TO FRANCHISE DEVELOPMENT

Key 2017 Challenges Finding franchisees Finding suitable staff Franchisee investment & ongoing cost

containment

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