Hayes Knight has been a key sponsor of the Franchising New Zealand Survey since the survey was recommissioned in 2010, after a period of 7 years when no nationwide survey was undertaken. The last survey was carried out in 2012 and the most recent survey results were released in July 2017. Undertaken collaboratively by Griffith and Massey Universities and supported by the Franchise Association of New Zealand, the ‘Franchising New Zealand 2017’ report provides a current profile of the sector.
For a copy of the full report please click here.
The results tell a story of significant growth as well as a trend of increasing importance as a contributor to employment and GDP. The table below provides a summary of the growth in the sector.
There is no doubt that the franchise sector has flourished in the economic environment of the past five years. Stable political and economic conditions have benefited business in general, including the franchise sector. Franchisors have been able to internally grow the number of franchise units and system revenue. The number of systems operating in New Zealand grew by 185 and of total franchise systems, 72 percent originated in New Zealand. Growth within the sector has been dominated by non-food retail, accommodation and food services and construction.
What is particularly encouraging and enhances the credibility of the sector is that the median age of franchise systems is now almost 18 years, with the median age of brands being 25 years. While 36 percent of brands began franchising in their first year of operation, the majority of franchisors tested their model for a median 4.5 years prior to franchising. This approach must contribute towards sector stability, along with demonstrating a commitment towards adopting best practice.
While the overall number of people employed in the sector increased by 22%, it is notable that the percentage of employees employed full time grew from 54.4% to 59.8%; further indicating stability in the sector.
Sixty percent of franchise brands report transacting sales online compared to 35% in 2012. Of those selling online, the median percentage of sales accounted for as online sales was 12%. Maintaining an active social media presence was rated as extremely important by 74% of franchisors.
Franchisors commented that they see the main challenges ahead as recruiting eligible and qualified franchisees, finding suitable locations and a general tightening in the availability of bank finance.