Survey to measure scale of franchising sector

A new study led by the University, in partnership with Griffith University in Brisbane, aims to measure the growth of franchising and how much it contributes to the national economy.

An earlier study found there were more than 350 franchises employing 100,000 people in 14,000 businesses and that the sector had grown by 36 per cent from 2001 to 2003. But that research, organised by the Franchise Association of New Zealand, is nearly eight years old. The association believes the sector is now worth more than $14 billion and represents up to 10 per cent of New Zealand's total economic output.

School of Economics and Finance senior lecturer Susan Flint-Hartle, who is heading the survey, says the sector is known to be expanding and it is time to quantify that growth. “We want to be able to measure its overall impact and convey to the Government the full picture with accurate, up-to-date information on New Zealand franchising that will better inform policy makers.”

Franchises in New Zealand include Kiwi brands such as Robert Harris, The $2 Shop and branches of the Government’s New Zealand Post. Other examples are second-hand goods traders Cash Converters, which originated in Australia, and international restaurant chain McDonald's. Franchisors operate by selling the rights to franchisees to operate a copy business. Dr Flint-Hartle says many governments assist with international expansion of franchises. “If we know more about what is happening, it will give franchisors and franchisees confidence to expand their operations."

Dr Flint-Hartle says the sector is young and unregulated in contrast to Australia. She says working with academics from Australia will help to identify best practice and potential issues. The findings may also lead to Massey introducing courses or papers on franchising. "This would give people already working in the sector, and those thinking of joining, an understanding of how to manage, lead and expand operations. Franchising provides clear entrepreneurial and self-employment opportunities – a perfect fit with the innovative Kiwi attitude.”

An online survey will be sent to 600 franchise system owners in June. The study will look at:

• The number of business format franchisors
• The number of franchisee units
• Growth rate since 2003
• Number of people employed in business format franchise organisations
• An estimation of the turnover of the entire sector
• Numbers of home grown franchise systems
• Extent of international expansion
• Trends
• Operational practices and numbers and types of disputes.
• Measures of franchisor confidence in the business and national economy