I am very pleased to recommend the results of the Franchising New Zealand 2012 survey to the franchise sector. Susan is working with the Franchise Association of New Zealand to determine the role of Massey University in franchise education in New Zealand. Professor Weaven is a member of the International Society of Franchising and teaches marketing in the Griffith Business School.
Members share in the credibility that the Association has developed and share also influence and add weight to the voice of the Association as the spokesperson for franchising in New Zealand. Where possible, estimates are included for the entire population of New Zealand business format franchises. Turnover of the franchise sector provides an important measure of the contribution of franchising to the New Zealand economy.
Franchising New Zealand 2012 provides a comprehensive report on the current state of the New Zealand franchise sector. This is the second Franchising New Zealand survey in a two-year series, which aims to provide a longitudinal perspective on the development and impact of the sector. Franchising remains an important business strategy in New Zealand and continues to grow at around 5 per cent over two years.
The main objective of the survey was to obtain current information on the practices and performance of the New Zealand franchise sector, including recent trends.
Key facts
Administrative and support services (including travel agencies, office services, household and industrial cleaning, gardening, lawn mowing, etc.). Other servicesRetail trade Accommodation and hospitality Administrative and support servicesRental, rental and real estate servicesTransport, mail and warehousingFinancial and insurance servicesArt and recreation servicesEducation and trainingWholesale tradeIndustryConstructionElectricity, gas, water and waste servicesProfessional, scientific and technicalHealthcare and social servicesInformation media and.
Industry categories
Age of Franchise Systems
To further demonstrate the level of franchise experience in New Zealand, the table below divides the sample into young, emerging and mature franchise systems.
Franchising experience
Size of franchise systems
Franchised units for the 2010/2011 financial year
Franchised units for the 2011/2012 financial year
Company-‐owned units for the 2010/2011 financial year
A5 How many company-owned units were operating in your franchise in New Zealand on March 31, 2011 and March 31, 2012.
Company-‐owned units for the 2011/2012 financial year
A summary of the total units (franchise and company owned) held by respondents is shown below.
Total units for the 2010/2011 financial year
Franchise systems have been categorized by size in the table below to demonstrate the mix of small, medium and large franchise systems.
Total units for the 2011/2012 financial year
System size
Turnover of Franchise Systems
Total system turnover for 2010/2011 financial year
Total system turnover for 2011/2012 financial year
Employment
Head office employees
Franchise unit employees
Company unit employees
Challenges facing franchise systems
Franchise sector challenges
Franchising disputes
Franchise disputes
Disputes initiated by franchisor Proportion of franchisors
Disputes initiated by franchisees Proportion of franchisees
Total disputes Proportion of franchisees
Causes of disputes
Management of compliance program
Franchised unit changes
A14 Enter for the 2011/2012 financial year the number of franchise units involved in: (Please obtain data from your records or from the FANZ Code of Practice Appendix A (9) 9b) disclosures, to answer this question ).
Franchise unit changes
Reasons for unit changes
Franchisee life cycle
Franchisee attributes
Franchisee selection criteria
Franchisee recruitment methods
Availability of prospective franchisees
Franchisee recruitment methods
Marketing expenditure for franchisee recruitment
Availability of prospective franchisees over the next 12 months
Marketing expenditure on franchisee recruitment in 2011/2012 financial year
Franchisee support and performance
Business management training
HR/IR support
Business management assistance
Information in the manual Ongoing training and updates Providing HR/IR policies, procedures or templates Internal controls or audits Facilitating access to external HR/IR advice and support Compensation advice HR/IR dispute resolution Staff recruitment Access to internal HR personnel Other support Not applicable (no support provided).
Franchisee HR/IR support
Franchisee performance
Franchisee profitability
Franchise banking
Banking assistance
Preferred bank used in franchise system
Key facts
Franchise advisory council
New franchise agreements
Franchises granted in 2011/2012 Financial year
Franchising strategies
Exclusive areas Area development agreements Conversion franchising Acquisition or merger with another system Co-branded retail Multiple franchise systems Multiple franchise concepts Other.
Multiple-‐unit franchising
Muliple unit franchising
Number of mulitple unit franchisees
Master franchising
Master franchising
International franchising
However, 21 per cent of franchisors nominated that they did not hold any units in New Zealand prior to being franchised overseas.17.
New Zealand based franchisors
International expansion rights Non-‐New Zealand based franchisors
Franchising overseas
C9 Are you currently franchising abroad? .. 1) They expected a total of 70 franchisors to answer this question. C10 How many units (franchise-‐owned and company-owned together) are owned in the countries or regions below.
Franchising by country Proportion of franchisors
Domestic unit holdings prior to international expansion
Reasons for international expansion
Reasons for international expansion
While about half of franchisors surveyed agreed that product sales and customer numbers had improved over the past 12 months, only one-third of respondents indicated that profitability had increased over the same period (34 percent). Many respondents agreed that unit investment in franchise business activities remained stable during this period, including staff (61 percent), local marketing (49 percent) and availability of adequate levels of financing (68 percent). In contrast, only a third of franchisors reported increases in franchisee product sales, profitability, local marketing spend and customer numbers.
While around a third of respondents indicated that competition had not changed significantly, a full 47 percent believed that competition had increased over the past year, which together with current economic conditions and related reductions in consumer spending may be the reason to noted declines in business activities at the local market level. D1 Has the level of activity in the franchisor business in the last 12 months increased, decreased or remained stable?
Franchise activity levels over the last 12 months
D2 What effect has the economy had on individual franchisee activity over the past 12 months? .. 1) All respondents answered this question. D3 If applicable, please explain any strategic programs you have launched in the past 12 months to promote franchise profitability. Franchisors detailed a number of different strategic programs they were using to promote franchisee profitability in their systems.
Economic impact on franchisee activity over the last 12 months
Environmental sustainability
Operational changes to reduce carbon footprint
D4 Has your franchise system made any operational changes to reduce your carbon footprint and support the environment? D5 Please rank these responses to environmental sustainability in order of importance in your franchise system.
Operational Changes in Response to Sustainability
We took the initiative to remain competitive We took the initiative because it's the right thing to do Pressure from franchisees Pressure from customers Other reason.
Reasons for Response to Sustainability
Information Technology in Franchising
Use of social media
Do you use any of the following social media to communicate with franchisees and/or customers?. Therefore, it is assumed that the answers given are the most common or most important type of social media used.
Communication through social media
Information technology strategies
Online sales
IT strategies
Seven percent of respondents reported sales of between 6 and 10 percent and 20 percent of franchisors indicated that online sales contributed between 11 and 30 percent of total system sales. Just under half of franchisors (48 per cent) rated their current online sales methods as very satisfactory, with a further 32 per cent indicating that their current approach was 'satisfactory'. While a further 16 percent of respondents rated their online sales mechanism as 'somewhat satisfactory', fully 4 percent of franchisors indicated that their current system needed improvement.
Plans to sell online
Online sales (years)
Revenue distribution methods (online sales)
D14 How satisfactory is your model for distributing online sales revenue across your franchise network?
Proportion of sales derived from online sales
Franchisors were then asked to indicate to what extent franchisees were involved in the development of their online retail model. Most indicated that franchisees were not (35 percent) or had limited involvement in the design and implementation process (31 percent). While an additional 19 percent of respondents suggested their franchisees were moderately involved in this process.
Only about 15 percent of franchisors sought significant advice from franchisees in developing their online sales mechanisms. While the limited degree of franchisee involvement in the development stages may be part of the dissatisfaction reported by some franchisors in developing their online distribution operations, overall, the vast majority of respondents felt that the introduction of online sales into their franchise system had a positive impact. the effect on their relationship with franchisees (73 percent).
Revenue distribution model (online sales)
Franchisee involvement in development of online sales model
Effect of online sales on franchise relationships
