Franchising tops $20 billion turnover, 100,000 jobs

12 November 2012 - The contribution of the franchising sector to New Zealand’s economy has reached $20 billion , according to a new study by Massey University. Franchising New Zealand 2012 also estimates that the franchise sector employs 101,800 people.

The second biennial survey of the franchise sector was conducted by Massey University in collaboration with the Griffith university in Brisbane. It found that the franchise sector has shown resilience during difficult economic times, but there is scope for the industry to innovate. Dr Susan Flint-Hartle of Massey says that, on the whole, franchise businesses have been able to increase their levels of turnover, although there have been marginal decreases in size and profitability since the last survey in 2010.

'That is a reflection of the economy – the effect of a very high dollar, rising commodity prices, and the ongoing impact of the global financial crisis and the Canterbury earthquakes.'

The survey estimates the turnover for the entire franchise sector at 'between $19.4 billion and $21.0 billion. This figure includes real estate franchises (commissions only) and hotels, but not vehicles ($8 billion) and fuel ($7 billion).

Dr Flint-Hartle gave an outline of the survey's major findings at a function in Auckland this evening. The full report will be made available tomorrow, and a detailed review of many of the findings will appear on this site.

While the past two years has seen a net growth in the number of franchise systems in New Zealand, the survey estimates that there has been a  decrease in the number of franchisee units within those systems, especially in the retail sector. Over half of survey respondents reported increased sales, but a quarter also said their overall profit margins had declined.

 

Key Statistics:

• New Zealand has 446 franchise brands.
• Since the 2010 survey there has been a net growth of 23 franchisors.
• There are an estimated 22,400 franchisee businesses operating in New Zealand, making up 5 percent of the country’s small and medium-sized businesses.
• The total number of franchisee businesses has contracted slightly (down 5 percent from an estimated 23,600 in 2010).
• The annual turnover of the franchise sector is estimated to be between $19.4 and $21 billion.
• Over the past two years, the total number of people employed in the franchise sector has increased from 80,400 to 101,800, but almost 10 per cent less are now employed in full-time positions.
• 23 per cent of franchisors have entered international markets, predominantly in Australia.