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FRANCHISE AWARDS DUE TO SHINE IN 25TH YEAR

Franchisors, franchisees, master franchisees and specialist advisors are being encouraged to enter the 25th Westpac New Zealand Franchise Awards.

The New Zealand Franchise Awards recognise the top performers in franchising and help promote best practice. Franchising has grown massively since 1996, so for the silver jubilee year, the Franchise Association is promising a refreshed entry and judging process to create an even more memorable awards experience for everyone. ‘This is your chance to become part of history and stand alongside “the best of the best” in franchising,’ says Robyn Pickerill, CEO of FANZ. ‘All the categories have been

reviewed and revised for this year’s awards to make them even more relevant to today’s franchising.’ In all, there are a total of 19 awards to be won. Entry is open to all Franchise Association members and franchisees of members. In each category, there’s a questionnaire to help entrants submit the relevant information, and full scoring guidelines are supplied to show where marks can be gained or lost. These can be downloaded now from the Awards website. Entries must be submitted by 5th August 2019. The Awards will be presented at the 25th Anniversary Gala Dinner in November.

BUSINESS STILL NERVOUS DESPITE BALANCED ECONOMY In line with other business surveys, the Franchising Confidence Index showed continuing uncertainty about business prospects in the coming year. According to Dr Callum Floyd of Franchize Consultants, which conducts the quarterly survey, ‘The April Index demonstrated continued subdued sentiment due to a variety of factors; not least, decreasing demand, increasing labour and other operating costs, and reduced labour supply.’ It should be noted, however, that the survey was conducted before the cancellation of the proposed CGT. The next Index is due to be published in July 2019. Sentiment reductions were reported for access to suitable franchisees and staff, operating costs per franchisee, franchisee profitability and access to financing (which hit an all-time low at negative 31 percent). Meanwhile, increases were reported for growth prospects, and to a lesser degree, available suitable locations. Franchisor comments were mixed across different industries. It’s apparent that the decline in some retail sectors means that while good sites are becoming increasingly available to other premisesbased businesses, the shortage of suitable franchisees and staff means that there are more opportunities available than people to take them up. That’s good news for franchise buyers, who will have more options. It may also encourage existing franchisees into multi-unit operations where the business model allows for that.

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Franchise prospects looking up as CGT canned Franchise growth prospects are expected to improve following the announcement that the Coalition Government will not be introducing a Capital Gains Tax.

The original report from the Tax Working Group proposed that profits from sale of appreciating assets such as businesses, intellectual property, shares and land investment property would be subject to tax. Such a tax would potentially have hit small business badly, as the potential for capital gain from starting or building a business can be a prime motivator. This applies especially to greenfields franchises, where franchisees take on new locations from scratch. With this uncertainty removed, it is now hoped that existing and future business owners can plan for the future with more confidence. Nick Stevens, Senior Business Broker at Link Ellerslie, says, ‘We are about to see huge numbers of businesses coming to the market as the baby boomers (1946 to 1964) are looking to retire. These business owners have worked hard for many years making huge sacrifices working long hours to build profitable businesses that they could sell and reap the rewards of this hard work in their retirement years. ‘It’s excellent news for all business owners and, of course, franchisors and franchisees that the CGT will not be going ahead. We have seen a real nervousness around this from both vendors and purchasers, especially on how it was going to be calculated and the introduction time-line.’

Dream Doors franchisor Derek Lilly agrees, saying, ‘The business and housing sector had taken a brief pause or slow-down in recent months. This in my opinion was a direct result of investors/people holding off buying franchises, houses and businesses, because of the likely implications of Capital Gains Tax. The total amount of money is interlinked in many more ways than you may think in the economy. I am now personally hoping for a resurgence in franchise applications as a direct result of the Government’s actions.’ From the hospitality sector, Peter Webster of Columbus Coffee says, ‘My view is that no CGT is a good thing. I am sure a number of potential buyers would have been holding back, concerned that they would be better keeping money invested in their personal home than taking the risk of investing in a small business that could then cost them in tax at the time of sale. Building a business and increasing its value with no CGT is preferable to doing the same then losing a chunk of value at sale to the IRD – especially as the threat included no indexing of initial value.’ Specialist franchise accountant Philip Morrison says that fears that the Government was out of touch with the business sector and doubts about their governance of the economy had caused high anxiety levels for many, with a resulting lack of confidence around business decisions. ‘I think that made a dent, but things are more steady now.’

Regions boosted as more families leave Auckland A new report has found that almost 33,000 people left Auckland for other parts of New Zealand over the four years to June 2017, with housing affordability and traffic being among the key reasons. The average Aucklander apparently spends around 450 hours per year in a car, either as driver or passenger - three times as much as the next highest area (Christchurch). While the exodus

from Auckland is offset by immigration and a positive inflow of New Zealanders in the 20-24 age group, there are high outflows of people in their late 20s and 30s - the peak working years for many people.

Franchise New Zealand

Winter 2019

Year 28 Issue 02

Profile for Franchise New Zealand

Franchise New Zealand - Year 28 Issue 02 – Winter 2019  

Buying power – it’s one of the biggest benefits of joining a franchise. In our cover story this issue, we outline the many benefits that a f...

Franchise New Zealand - Year 28 Issue 02 – Winter 2019  

Buying power – it’s one of the biggest benefits of joining a franchise. In our cover story this issue, we outline the many benefits that a f...

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