Franchisee sales, operating costs and profitability are concerns for the New Zealand franchise sector according to the latest survey by Franchize Consultants. The July quarter New Zealand Franchising Confidence Index reveals falling sentiment across many key franchising indicators including sales levels of franchisees, operating costs per franchisee, franchisee profitability levels, and franchisor growth prospects.  

Franchisors (net -29 percent), and service providers (net -46 percent), expect franchisee operating costs to be higher over the next 12 months.

And the drop in positive sentiment about franchisee profitability is alarming, according to Franchize Consultants director Callum Floyd. Only a net 16 percent of franchisors (compared to 41 percent in April) expect franchisee profitability to improve, while service providers expect further deterioration in franchisee profitability over the coming year.

And a worrying net six percent of franchisors expect a deterioration in the access to finance, demonstrating that one of the key franchising constraints continues to trouble the franchise sector, said Floyd.

However franchisors are still positive about forthcoming growth prospects for their organisations, access to suitable franchisees and staff _ two important growth drivers. 

The fall of seven percent in franchisor confidence about forthcoming general business conditions from the net 39 percent found in the April 2010 survey is comparable to other recent business surveys, Franchize Consultants suggests.