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commodity prices will boost incomes in our
rural regions. Although we’re still facing
challenges, including an increasingly rocky
global outlook, most people with mortgages
in New Zealand are fixed for a relatively
short period currently. This means a large
percentage will roll off current rates onto lower
rates this year, in an environment where the
OCR has been dropping. Overall, economists
think 2025 will see the New Zealand economy
turning a corner.
Potential franchisees
For potential franchisees there are many issues to consider and many
questions to ask. Firstly, there are questions about the industry they plan
to go into. Then, questions around which specific system and location.
This is normally followed by a more detailed financial due diligence
process, some of which we covered in our ‘Due Diligence – Getting it
Right’ article.
The secret is to become an educated franchise buyer; asking the
right questions, from the right people, at each stage. Compared to a
decade ago, there is ever more information online from banks and other
professional service providers. Unfortunately, potential franchisees don’t
always use these resources, or don’t spend enough time doing proper
due diligence.
Although there are more to consider, here are some main points to direct
your initial enquiries.
Industry and trends
Before starting to look at franchise systems, ask questions about the
viability and trends in the industry you are considering.
Questions to ask yourself about your franchise should include:
• Is there a real need for this product/service?
• How stable is that need?
ast year was a tough year for many small businesses in New Zealand,
especially for industries such as hospitality, construction and retail.
Some are still struggling to return to profitability, due to a combination
of margin pressures and sales. As a result, many franchise systems have
been tweaking their business models to support franchisee profitability.
The good news is that our economists feel some of the big financial
headwinds we’ve been wrestling with are now easing, and higher
With interest rates dropping,
agriculture doing well and tourism
improving, disposable income is
projected to increase, prompting
more people to look at going into
business. Westpac’s Daniel Cloete
looks at questions to ask to become
an educated franchise buyer.
Buying a Franchise: Franchise Funding
Daniel Cloete
Franchise New Zealand Autumn 2025 Year 34 Issue 01
THINKING
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