The Franchize Consultants’ January 2013 Franchising Confidence Index demonstrates a continuation of mixed results across overall sector growth drivers.
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- The latest results indicate a consolidation in franchisor and Service Provider (views for franchisors generally) forecasts for general business conditions. Franchisor responses improved to a net 37%, compared to 28% in October. Service Provider sentiment showed a more marked improvement from net 42% to net 66%.
- Both franchisor and Service Provider forecasts for growth improved, with franchisors increasing from 28% to 41%, and Service Providers from 38% to 61%.
- Franchisor sentiment for access to suitable franchisees dropped from net 14% to 5%. Service Providers showed an even larger decrease of net 28%, from 35% to 9%.
- This reduction in confidence was also reflected in the outlook for accessing suitable staff, with franchisors dropping negative net 5%. Service Provider confidence also dropped in this area.
- Franchisor outlook for access to suitable locations took a substantial tumble from a net 23% to negative 5%. Service Providers were more positive (net 31%).
- Both franchisors and Service Providers remain positive in their outlook for access to financing, albeit Service Providers (net 26%) are more positive than franchisors (net 13%).
- Franchisor expectations for franchisee sales levels (net 32%) and operating costs (negative net 11%) demonstrated positive improvements compared to the previous quarter.
- Franchisor outlook for franchisee profitability levels also improved from a net negative 3%, to a positive 13%. Service Providers were also more optimistic in their forecasts for franchisee profit generally, increasing from a net 0% (October 2012) to 30%.
Greatest Challenge to Franchising Development in 2013
Franchisors were asked what they perceived to be the greatest challenge to franchising development in the year ahead.
Finding franchisees or [more specifically] ‘suitable’ franchisees continued as franchisors’ top challenge to franchising development, mentioned 13 times this survey.
The second most identified and telling challenge identified by franchisors’ in 2013 related to their respective franchisees or unit-level business model.