Franchise New Zealand - Year 30 Issue 04 – Summer 2022 Published on December 10, 2021

Page 24

Buying a Franchise: Financial Matters

It’s a time to explore different options. But how easy is it to access funding from your bank to set up a new business, or grow an existing one by adding more capacity or more outlets?


for franchise buyers Daniel Cloete from Westpac on new opportunities, new rules and the availability of funding for franchisees


ith countries around the world opening up their economies, and New Zealand starting to follow suit, a lot of people are looking at business opportunities anew. But what will ‘the new normal’ look like, and which industries will do well in an environment where inflation and interest rates may be higher than we have been used to in recent years? Covid presented high risk for small businesses, especially in the hospitality, tourism, and retail space, whilst other industries were much less influenced. The normal benefits of franchising, such as systems, marketing and joint purchasing – not to mention the support of franchisors and other franchisees – proved to be very valuable to franchisees during this time. Now, savvy businesspeople are evaluating opportunities that may present themselves as the cycle changes. Many systems have already adapted their business models, achieving improved product margins or reduced investment levels. There may be sites available in locations where franchisees could not find a suitable store before, or at a rent ratio that now fits the franchise’s profitability model. New technology or an increased digital presence provided by their franchise system may also create new opportunities for franchise buyers. And, in some sectors, franchises have too much work and are keen to appoint new franchisees to handle it.

New rules around personal lending

Daniel Cloete

The personal lending side, in many cases, tends to be linked to business lending for franchisees. It is therefore worth noting that amendments to the current CCCFA (Credit Contracts and Consumer Finance Act) legislation have enhanced requirements from 1 December 2021. These include the following areas, which impact upon personal lending products like housing and credit cards:

• Affordability assessments in terms of collecting, verifying and evidencing extra information from customers for lending applications. • Updated suitability inquiry, assessments and informed decision conversations, etc. The result of this is that the time to turn around funding requests has increased. This means that it would certainly pay to engage with your bank (as well as your accountant or other financial advisors) as early as possible, to make sure you have the correct mix and level of funding in place to support your business purchase or growth plans.

Can I have 100% financing? This is a question we often hear from people who have found their ideal opportunity but lack the money to buy it. The answer is, ‘Yes, you can’ – subject to certain requirements. Your bank will look at how much money or equity (eg. the value of your house or other investments) you are prepared to put in yourself as secured lending – usually, at least 50 percent will be required. The balance will be loaned against the business itself if the strength of the brand justifies it. Before agreeing to such an arrangement, the bank will consider the security

Love reading? Love sharing books? Love people? If you’ve ever dreamed of buying or opening your own bookstore then what’s holding you back? We’d love to hear your ideas and get to know a little about you.

Poppies offers over 40 years’ proven book selling experience. Our self-assessment process will help you decide if this business is right for you.



Every business wants to tell their story with impact, while avoiding bumps in the road that affect reputation and brand.

• Communications strategy

We do the things that make sure franchisors are ready to deal with challenges and maximise opportunities.

• Public relations

+64 22 1201672

Poppies is not about putting a store in every town, nor about being all things to all people. Success comes from making the right choices – location, systems, ambiance and of course the books you select.

• Reputation management • Media relations • Stakeholder engagement

Poppies… your own bookstore… think about that! Contact Tony Moores (Owner/Director Poppies Group Limited) Franchise New Zealand

Summer 2022

Year 30 Issue 04

Articles inside

Equal Opportunity article cover image

Equal Opportunity

page 58
Tips For Great Franchising - Part 8 article cover image

Tips For Great Franchising - Part 8

page 54
Top Marks  article cover image

Top Marks

page 39
Inspired By Passion article cover image

Inspired By Passion

page 29
Taking It From The Top  article cover image

Taking It From The Top

page 27
Love Kids? Love sKids article cover image

Love Kids? Love sKids

page 15
New Deal - changing times bring more opportunities in franchising article cover image

New Deal - changing times bring more opportunities in franchising

pages 5-7
The Grass Is Greener article cover image

The Grass Is Greener

page 65
Hot Property article cover image

Hot Property

pages 63-64
Performance Enhancing article cover image

Performance Enhancing

page 67
Micro Roastery, Maximum Return article cover image

Micro Roastery, Maximum Return

pages 55-56
In A Good Space article cover image

In A Good Space

page 59
The Time Is Now article cover image

The Time Is Now

page 57
A Reputation To Bank On article cover image

A Reputation To Bank On

page 53
All Together Now article cover image

All Together Now

pages 50-52
Live The Life You Want article cover image

Live The Life You Want

pages 42-43
Healthy Profits article cover image

Healthy Profits

pages 47-48
Call The Accounting Specialists article cover image

Call The Accounting Specialists

pages 37-38
Too Good To Sell article cover image

Too Good To Sell

page 49
Chain Saw? Chain Store article cover image

Chain Saw? Chain Store

pages 35-36
Partners In Pizza article cover image

Partners In Pizza

pages 33-34
Business Funding For Franchise Buyers article cover image

Business Funding For Franchise Buyers

pages 24-25
Finding A Better Way article cover image

Finding A Better Way

pages 11-12
Natural Grow article cover image

Natural Grow

page 20
Beyond Covid-19 article cover image

Beyond Covid-19

pages 21-22
The Path To Success article cover image

The Path To Success

pages 13-14
Live Wires article cover image

Live Wires

page 9
Gone Fishing article cover image

Gone Fishing

page 10
Drawing On Experience article cover image

Drawing On Experience

page 23
For The Love Of Pies article cover image

For The Love Of Pies

page 19
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