April 2013 Quarter Results

OPTIMISM BUILDS WITHIN THE FRANCHISING ECONOMIC GROWTH ENGINE

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Key Survey Highlights

• Franchisor sentiment very positive this quarter across a range of important franchise sector growth drivers.

• Franchisors are much more positive about general business conditions – when compared to other general business confidence surveys (i.e. ANZ, BNZ and NZIER).

• Most importantly, franchisors are very positive about franchisee profitability prospects – arguably franchising’s most important key performance indicator.

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 36 franchisors and 24 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

Franchisor responses continued to improve to a net 53%, compared to 37% in January. Conversely, Service Provider sentiment showed a decrease to 58% (current) from 66%.

The Results

Franchisor outlook for franchisor growth prospects increased from a net positive 41% to 58%. Service Providers’ outlook echoed this with increase from 61% in January to 67%.

The Results

Both franchisors and Service Providers remain positive in their outlook for access to financing, on balance, albeit Service Providers (net 26%) are more positive than franchisors (net 13%).

The Results

Franchisor sentiment toward access to suitable franchisees dropped slightly this quarter, from net 5% to 0%. Service Providers, meanwhile, were more optimistic, showing a substantial increase from net 9% to 38%.

The Results

Confidence in access to suitable staff remained largely neutral, but positive and improving, on balance. Franchisor sentiment increased to a positive net 3% from a negative net 5%. Service Providers also increased in confidence.

The Results

Franchisor sentiments towards access to suitable locations also rose from net negative 5% to 0%. Service Providers were more positive at net 33%.

The Results

Franchisor and Service Provider sentiment towards franchisee sales levels both show substantial increases, and to high levels overall. Franchisors rise 24% to a net 56%). Service Providers improve from a net 44% to 54%.

The Results

Franchisor confidence in operating costs remained static, but negative, during this quarter at a net negative 11%. Correspondingly, Service Provider sentiment dropped from a net negative 4% in January to negative 17%.

The Results

Sentiment toward future franchisee profitability levels reached record levels this quarter. Franchisors increased confidence substantially to a net 44% from 13% in January. Service Providers showed a slight decrease – but also reported good positive levels on balance.

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