NZ franchisors and NZ franchising professionals continue to be incredible in their response to COVID-19. Including their outstanding support to franchisees and significant adaptive undertakings at both a franchisor and franchisee level.
Notwithstanding, now almost two years since the first New Zealand COVID-19 case, and with Omicron still yet to peak, it is not surprising Franchize Consultants’ Franchising Confidence Index in 2022 indicated declining sentiment among franchisors with outlook for general business conditions falling to net negative 27%.
This weaker confidence from franchisors is to be expected and mirrors other research with general businesses. The latest ANZ New Zealand Business Outlook shows business confidence similarly falling to net negative 23% in December 2021 from net 9% in December 2020. The NZIER Quarterly Survey of Business Opinion also showed business confidence falling in the December 2021 quarter, with a net 34% of firms expecting a deterioration in general economic conditions over the coming months.
Franchize Consultants’ January 2022 Franchising Confidence Index had 37 franchisors providing a window into current and more long-term opportunities and challenges.
In terms of sentiment, franchisors are expecting a tough year ahead with net sentiment being negative on six out of the nine measures collected in the survey. Franchisor sentiment on availability of staff, access to financing, franchisee operating costs, and to a lesser extent, franchisee profitability are at an all-time low with the lowest net confidence recorded for these measures since the Franchising Confidence Index was established in 2010. Compared to 2021, all nine indicators have declined.
In the survey, franchisors identified finding suitable staff as the top challenge to their development. This was followed by COVID-19 and the uncertainty it brings, finding suitable franchisees, access to funding (or funding with reasonable interest rates), government regulations, rising inflation and supply issues.
Positive opportunities were also researched, with franchisors identifying better availability of premises/sites, increased number of potential franchisees (from people returning to New Zealand and people looking for self-employed opportunities), market share gains from failing competitors, diversification into other new products and services and new channels (e.g. e-commerce). View the full Franchize Consultants Franchising Confidence Index January 2022 Report.
New Zealand Franchising Trends and Sentiment Webinar
Dr Callum Floyd of Franchize Consultants will discuss current sentiment and trends from the survey, along with five key issues for consideration in 2022. In addition, you will also hear further perspectives from Daniel Cloete of Westpac, Brad Jacobs of The Coffee Club New Zealand and Simon Lord of Franchise New Zealand magazine.
When: 2pm-3pm, Thursday 24 February, 2022.
The Franchising Confidence Index represents the views and expectations of franchising, an important domain of business within the New Zealand economy.
Franchising is a substantial and growing domain of business making up an important part of the New Zealand economy. The recent Franchising New Zealand 2021 survey, conducted by Massey University, indicates New Zealand has 590 individual franchise systems comprising some 32,300 units (owned mostly by franchisees). The survey also suggests local franchise systems employ some 156,800 people and total franchise system turnover estimated to be around $36.8 billion – making franchising a strong contributor to New Zealand GDP – as it is around the world. Companies involved in franchising are as diverse as Foodstuffs (New World, PAK’nSAVE, Four Square), NZ Post, MTF Finance, McDonald’s, Columbus Coffee, Aramex (formerly Fastway Couriers), Harcourts and Fletcher Building.
The Franchising Confidence Index represents confidence in key measures critical to the success of franchising in this country by reporting attitudes toward general business conditions, as well as key franchising growth determinants including access to capital, suitable potential franchisees, staff and locations. The Franchising Confidence Index also covers franchising health attributes and outcomes by exploring franchisee sales, operating costs and profitability, and franchise system growth prospects.
The data and analysis presented represents the views of 37 franchisors collected between 18th January and 1st February 2022.
Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’