Franchising Confidence Index October 2015- Key Highlights
- Responding Franchisors and Service Providers sentiment provides a more optimistic outlook across many key growth drivers.
- Franchisors sentiment toward general business conditions increased markedly from last quarter.
- Franchisors still remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator, and sentiment has increased this quarter.
- Franchisor sentiment for franchisor growth prospects also increased this quarter, as did sentiment for sales level per franchisee and access to suitable staff increased.
The Franchize Consultants’ October 2015 Franchising Confidence Index demonstrates a more optimistic outlook across overall several sector growth drivers.
- The latest results indicated positive franchisor (net 42%) sentiment toward general business conditions. These results were higher than the latest results of other more general business surveys including the ANZ Business Outlook (negative net 10% in October and NZIER (negative net 9% in October) business confidence surveys.
- Franchisors (net 47%) remain positive about prospects for franchisor growth, these results increased from 35% in the previous quarter.
- Franchisors sentiment toward access to financing increased slightly from a 19% to 21%, Service Providers reported a net 27%.
- Franchisor sentiment toward access to suitable franchisees dropped this quarter, from a net 8% to negative net 16%. Service Providers, meanwhile, were more optimistic at a net 33%.
- Franchisor sentiment towards access to suitable locations decreased from net 3% to negative net 6%. Service Providers remained unchanged at a net 20%.
- Franchisor sentiment towards future franchisee sales levels increased l, to a net 53%, up from 32% previously. Service Providers reported a net 7%.
- Franchisor confidence in franchisee operating costs remained negative during this quarter at a net negative 6%. Service Provider sentiment was reflective of this at a negative net 7%.
- Sentiment toward future franchisee profitability increased from last quarter. Franchisors reported a net 26%, and Service Providers a net 27%.
Summary & Implications
Franchize Consultants’ Franchising Confidence Index in October 2015 demonstrates an increase in positivity from the previous quarter.
Franchisors are more positive in their outlook for general business conditions, access to financing, sales levels per franchisee, franchisee profitability levels and franchisor growth prospects. The outlook for general business conditions markedly increased (i.e. from 14% to 42%).
Meanwhile, franchisors held a negative toward the availability of suitable franchisees and locations, and operating costs per franchisee. Franchisors were equivocal on the availability of suitable staff.
Encouragingly, net franchisor sentiment for future franchisee profitability, arguably a franchise systems most important key performance indicator, also showed an increase from the previous quarter.
For a copy of the full report visit: www.franchisingconfidence.co.nz
Franchising Confidence Index Background
Franchize Consultants’ Franchising Confidence Index is a quarterly survey of circa 400 New Zealand franchisors and 100 specialist service providers (e.g., consultants, banks, accountants, lawyers and publishers) to the franchising community.
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 20 franchisors and 15 Service Providers collected between Monday 19th and Friday 30th October 2015. Findings from both groups are reported separately. Respondents were asked whether they expected conditions to be ‘better,’ ‘same’ or ‘worse.’ ‘Net’ confidence is the difference between those reporting ‘better’ and ‘worse.’
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