Greetings Franchising and Business Leaders

Welcome to our Franchize Bulletin July newsletter. We hope this message finds you, your family, businesses, teams and other stakeholders well during these challenging economic times.

The last few months have been very busy helping both new and established franchising networks with a range of franchising a business and established franchisor support and services. For established systems we have been helping implementing/improving franchisee business planning, updating/rewriting manual, conducting franchisee satisfaction surveys, presenting at conferences, helping implement KPIs and benchmarking, instituting/improving Franchise Advisory Councils, reviewing total franchise networks, and providing ongoing support, to mention a few areas.

It is a very tough economic environment out there, challenging different networks in different ways. Top line unit sales and/or margin compression are common current issues, as are greenfield and resales. For many, the severity and impact of staffing shortages has abated – although challenges exist with levels of staff turnover. Recent insight from respected economist Shamubeel Eaqub highlights stunning staff turnover statistics. He notes:

“Over the year to May 2024 employment barely grew (+333 people). But within that some 44% left their jobs and the same amount started a new job. Another surprising statistic is that only 10% of starters came from the same industry.“

In a franchising context, this clearly highlights the criticality of franchisee staff onboarding, including training.

Despite the backdrop, some systems are achieving new network sales highs, great levels of franchisee satisfaction and engagement, and are investing in their franchising foundations.

And in general, anecdotally at least, New Zealand franchising businesses appear to have demonstrated great resilience – once again, as they did following the GFC.

Whether you’re an established franchisor looking for support, or thinking about franchising or licensing a business, please always feel like you can reach out, at any time. I’d be happy to hear from you.

We wish you all the very best as we approach part two of 2024.

Callum

The 2024 Survey of New Zealand Franchising

We write here in support of the Franchise Association of New Zealand organised Massey University 2024 Survey of New Zealand Franchising. This is a regular survey of New Zealand franchisor companies about their networks that, in turn, provides the New Zealand franchising community, government and public with very important information. The previous survey was in 2021 and clearly much has changed since that time.

If you are a New Zealand franchisor, please make sure you are responding to the survey – which will come directly from Massey University. If you have not yet received an invitation for the survey then please let FANZ know or (email Callum), and we can put you directly in touch with the Massey researchers.

You might recall the previous 2021 Survey of New Zealand Franchising identified:

• 590 franchising brands and an estimated 32,000 franchisees in New Zealand.
• Business Format Franchising turnover of $36.8 billion, up from $27.6 billion in 2017 – an increase of 33%.
• Total franchise sector turnover (including Motor Vehicle Sales and Fuel Retail) up 27% from $46.1 billion to $58.5 billion.
• Total Business Format Franchising employment grew by 32,620 (or 26%) to 156,820.

View the Full 2021 Report Here

It is very important that this survey represents as many established franchise systems as possible.

Franchize Consultants is proud to be a sponsor of this survey once more, along with other key sponsors including Westpac, Nexia New Zealand, Stewart Germann Law, Iridium Partners, Laser Group & Exceed, and, Franchise New Zealand.

Spotlight on Services for Established Franchisors

Now is a great time to be considering work on your franchise system. We can help within anything from ad hoc advice through to a comprehensive full franchise system review. In the first instance, just make contact. We’ll be happy to take time to understand your objectives.

Recent Client Feedback

We love working with established franchisors and franchisees to optimise their franchise networks.

“We worked with Callum and the Franchize Consultants team to develop a comprehensive business planning tool for our franchise network. It was great to work together and combine their deep franchising knowledge with our business specific understanding. Highly recommend.”

Adam Johanson, CEO

BarberShopCo

Franchise Recruitment and The Unemployment Paradox

We have an article in the latest Franchise New Zealand magazine entitled The Unemployment Paradox.

The general thesis is that franchise unit growth will be strong in times of higher unemployment. We think that will not be a general experience for many franchise networks, particularly for concepts involving high investment levels – where business cases (due mostly to the current recessionary and inflationary environment) and capital availability are tighter.

Fundamentally, franchise networks with the following are likely to be best placed to benefit from rising unemployment:

1. Franchises with an ideal franchisee profile that matches new unemployed candidates
2. Franchises with a strong track record of good investment returns in tough times
3. Franchises with access to strong financial and non-financial performance information
4. Franchises with strong long-term banking partnerships
5. Franchises with strong franchise systems and support

You can view the full franchise recruitment article here

Franchise Council of Australia Conference

Late May we attended the Franchise Council of Australia’s Legal Symposium and Conference in Cairns. Australia now really is the most franchising regulated country in the world, so it was incredibly valuable once again to attend, catch up with Australian trends, friends and connections.

Key sessions for me included:

• Australian Competition & Consumer Commission updates
• Exploring Franchisor Financing & Franchise Offer Design Options
• Franchisor WHS Obligation in Franchised Businesses
• Modern Slavery and ESG
• Good Faith Life Cycle of a Franchise
• Franchising Case Updates
• Franchising Code of Conduct Review

Motorcycle News

I have a thirst for getting to know places better and part of that is getting off the beaten path. Following the FCA Conference in Cairns, I hired a 2012 Yamaha Super Tenere 1200 for 2.5 days. Starting at 5.30am on the Wednesday, I made my way up through the Daintree Rainforest to Cape Tribulation for a pie – before heading inland and up to Cooktown for the night. A bit over 500 kms in total. While no crocs or cassowaries were spotted, I encountered a dingo, some bushfire and marveled at the 000’s of huge termite hills enroute. Interesting also to see the prevalence of Sugarcane farming, and much sustained damage still from last year’s cyclone. That night I was sure the steak meal had been cooked in the aforementioned bushfire.

Day two I headed to Chillagoe, an old mining-oriented town with amazing limestone, marble and cave landforms. I arrived a bit late and challenged myself to a self guided cave walk. The place was deserted and after circa 40 meters climbing steeply down into the cave and crawling about, I started to fear bats and my navigation and decided to get out fast. That night I stepped on a cane toad walking back from the local pub – after my torch battery gave out (yes, the one I’d been using in the cave). On the way back to Cairns I encountered my first snake (a brown snake) for the trip and an accident. A young guy had just rolled his employer’s (the local council) Hilux (with a spray rig) and explained how he’d only been doing 100kph when he entered the corner on the gravel road. Hmm. At least he was okay (An ambulance was called, as serious injuries aren’t always apparent / obvious).

How can we help you?

Contact us if you’re contemplating franchising a business or would like help with an established franchise network. We’d be very happy to sit down with you to understand your situation and objectives and explain the supporting services we provide.

All the best from myself and the team at Franchize Consultants.

Callum Floyd

PS: Never hesitate to call. I’d love to hear from you.