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Franchise New Zealand Winter 2024 Year 33 Issue 02
ecent articles highlight the boost a declining job market could
have for franchising. Indeed, the typical story is that increased
unemployment can bolster franchising recruitment. Yet, is now a great
time to establish a new greenfield unit?
While unemployment can lead to franchise system growth, one of
the bigger benefits right now has been filling job vacancies. Some
franhisees had been struggling due to staff shortages, while others had
to constrain growth due to lack of quality staff.
Reducing staff shortages is in itself a big boost for franchising. It was
one of the most pressing constraints identified among franchisors in
Franchize Consultants’ annual Franchising Confidence Index research.
For franchise system growth, which naturally requires greenfield
franchise recruitment, there are challenges – despite a softening
labour market and increasing unemployment. Greenfield development
obviously benefits from a strong economy and wider environment.
It follows that with a tougher business environment, a new
greenfield business case may be tougher to launch – particularly
in cyclical industries.
This means, for some companies, the main franchise recruitment benefit
may be around demand for established franchisee-owned units (via
resales) and an opportunity to convert established company-owned
units to franchises.
Who can take advantage?
Given this backdrop, who can take advantage of increasing
unemployment for new franchise unit growth? The following are likely
best placed to capitalise.
1. Franchises with an ideal franchisee profile that matches new
unemployed candidates. Different sectors show softening employment
levels. Universally, however, lower-investment opportunities with
simple business models are likely to receive increased demand.
2. Franchises with a strong track record of good investment returns in
tough times. Meanwhile, those experiencing a cyclical downturn will
be more challenged for new developments, due to investor confidence
and access to finance.
3. Franchises with access to strong financial and non-financial
performance information – including franchisee benchmarking. This
helps franchisees plan, and increases confidence among lending
partners for new developments.
4. Franchises with strong long-term banking partnerships. These will
be better positioned to access finance for greenfield developments as
banks trust their business model and leadership.
5. Franchises with strong franchise systems and support. They are more
likely to attract intelligent franchise prospects and enable greater
access to finance.
Established franchisors should look at ways to solidify their ability to
attract and successfully establish new franchisees.
Franchize Consultants has
been providing small, medium
and multi-national sized
businesses with franchising
structure, strategy and
improvement advice for 35
years. It is six-time winner
of the Westpac New Zealand
Franchise Awards Service
Provider of the Year title.
Franchize Consultants
www.franchize.co.nz
Contact
Dr Callum Floyd
P 09 523 3858
M 021 669 519
callum@franchize.co.nz
Advertiser Info
Strong franchise systems would be
wise to take advantage of these times
Franchise Management
The
paradox
UNEMPLOYMENT
Get the right advice. Talk first with New Zealand’s
longest established, largest and most award
winning team. Work with a company engaged on
major projects with many of the biggest and best
emerging names in the franchise sector.
Call Dr Callum Floyd 09 523 3858 or email
callum@franchize.co.nz www.franchize.co.nz
Brilliant Commercial Cleaners
Six times winner
‘Service Provider of the Year’
Westpac New Zealand
Franchise Awards
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