Franchising Confidence Index January 2016. Franchising Confidence Index for January 2016. Franchisors Remain Optimistic for the coming year. Read our full summary below.
- Responding Franchisors and Service Providers sentiment demonstrates continued optimism across many key growth drivers
- Franchisors sentiment toward general business conditions remains elevated
- Franchisors remain positive about franchisee profitability levels – arguably franchising’s most important key performance indicator
- Franchisors sentiment for franchisor growth prospects and access to financing increased, however sentiment for both access to suitable staff and suitable locations remained at lower levels.
The Franchize Consultants’ January 2016 Franchising Confidence Index demonstrates an increase in confidence across many sector growth drivers.
- The latest results indicated positive franchisor (net 33%) and Service Provider (net 53%) sentiment toward general business conditions. These results were shared by the latest results of other more general business surveys including the ANZ Business Outlook (23% in December) and NZIER (13% in January) business confidence surveys.
- Both franchisors (net 56%) and Service Providers (net 47%) were positive about prospects for franchisor growth. These results show an increase from previous quarter.
- Franchisors sentiment toward access to financing also increased from a 21% to 30%, Service Providers are even more positive than franchisors at a net 53%
- Franchisor sentiment toward access to suitable franchisees increased this quarter, from negative net 16%, to 0%. Service Providers, meanwhile, were more optimistic at a net 20%.
- Franchisor confidence in access to suitable staff decreased slightly from 0% to negative net 7%. Service Providers were slightly more positive at a net 6%.
- Franchisor sentiment towards access to suitable locations increased from negative net 17% to net 12%. Service Providers reported 0%.
- Franchisor and Service Provider sentiment towards future franchisee sales levels remained at a high level. Franchisors at a net 52%, with Service Providers nearly matching this sentiment at 53%.
- Franchisor confidence in franchisee operating costs remained negative during this quarter decreasing to net negative 19%. Service Providers were more optimistic at net 20%.
- Sentiment toward future franchisee profitability increased this quarter. Franchisors reported a net 44%, and Service Providers a net 33%.
Overall, Franchize Consultants’ Franchising Confidence Index in January 2016 demonstrates an increase in the levels of optimism recorded in the previous quarter.
Franchisors continue to maintain a positive outlook for general business conditions, sales levels per franchisee, with franchisor growth prospects. We were also encouraged to record a continued positive outlook for franchisee profitability, arguably a franchise system’s most important key performance indicator. Key franchisor identified challenges for growth in 2016 included finding franchisees, availability of suitable locations, operating costs, and access to finance.
The sentiment contained within the results indicate that in 2016 both Franchisors and Service Providers expect a positive year for franchising in New Zealand.
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 27 franchisors and 15 Service Providers collected between Monday 25th January and Wednesday 5th February 2016. 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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