April 2014 Quarter Results

FRANCHISING SENTIMENT SHOWS CONTINUED OPTIMISM

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Key Survey Highlights

• Responding Franchisors and Service Providers report continued optimism across many key growth drivers, albeit slightly reduced from last quarter

• Franchisors sentiment toward general business conditions is very high and comparable to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).

• Franchisors remain positive about franchisee profitability prospects – arguably franchising’s most important key performance indicator.

• Franchisors forecasts continue to indicate a negative outlook for operating costs.

Background

• Quarterly survey of more than 400 New Zealand franchisors and 100 specialist Service Providers (e.g. consultants, banks, accountants, lawyers and publishers) to the franchising community.

• Explores confidence in key measures critical to the success of franchising, including the wider environment, growth determinants, and franchising health attributes and franchise system growth prospects.

• This survey represents the views of 32 franchisors and 13 Service Providers.

The Focus

GENERAL QUESTION AREAS

1. General business conditions

2. Franchisor growth prospects

3. Franchising growth drivers• Access to capital• Access to suitable franchisees• Access to suitable locations • Access to suitable staff

4. Franchisee growth & profitability prospects• Franchisee sales levels• Franchisee operating costs• Franchisee profitability

5. How are things looking for franchisors and Franchisees in their respective sectors?

Respondents indicate whether they expect the following aspects to be better, the same or worse over the next 12 months (compared to the previous 12 months)

The Results

The latest results indicated continued positive franchisor (net 63%) and Service Provider (net 92%) sentiment toward general business conditions – albeit slightly subdued from last quarter. These results were shared by the latest results of other more general business surveys including the BNZ (64% in April), ANZ Business Outlook (67% in March) and NZIER (52% in March) business confidence surveys.

The Results

Franchisor growth prospects declined (net 41%), down net 21% from the previous quarter. Service Providers results mirrored this sentiment (net 69%), down from a net 93% in January.

The Results

Franchisors sentiment toward accessing financing decreased from 9% to 3% , albeit Service Providers are more positive at a net 38%

The Results

Franchisor sentiment toward access to suitable franchisees decreased slightly this quarter, from a neutral 0% to negative net 3%. Service Providers also showed less optimism than previously at a net 8%.

The Results

Confidence in access to suitable staff decreased. Franchisor sentiment dropped from net 3% to negative net 19%. Service Providers also decreased to negative net 15%.

The Results

Franchisor sentiment towards access to suitable locations increased slightly from 0% to 7%. Service Providers were less positive at net 8%, down from a net 40% in the last quarter.

The Results

Franchisor and Service Provider sentiment towards franchisee sales levels both remained at a high level. Franchisors at a net 66% and Service Providers also up to net 85%.

The Results

Franchisor confidence in operating costs remained negative during this quarter, at a net negative 6%. Service Provider sentiment was at a net negative 46%, which has decreased from the last quarter.

The Results

Franchisors sentiment toward future franchisee profitability was positive. Franchisors reporting an increase from 38% to 50%. However Service Providers a were less positive at a net 31%.

More Information

www.franchisingconfidence.co.nz

Including:• More detailed and complete results and

analysis• All charts and illustrations

Franchize Consultants

• The Franchising Confidence Index, is founded, designed and operated by Franchize Consultants, New Zealand specialists in franchising and licensing network development. Founded in 1989, Franchize Consultants have a long and supporting association with New Zealand franchising.

• For further information contact Dr Callum Floyd• Ph. (09) 523 3858• Mob. 021 669 519• Email. callum@franchize.co.nz• Web. www.franchisingconfidence.co.nz • Web. www.franchize.co.nz