New Zealand Report

1
New Zealand Report

• Estelle Logan
• Chairman, Franchise Association of New Zealand
  Inc

2

• New Zealand is second only to Singapore for ease
  of doing business
• World Bank Report, Doing Business in 2007
• Low/no tariffs
• Floating exchange rate
• Flexible labour markets
• Broad base, low-rate tax system.

3
Big Picture Facts

• Per capita GDP of US24,400
• 14th in OECD for Quality of Life
• Economic growth running at 3.0 but slowing
• Inflation at 2 in 2007 but under pressure
• Last quarter 5 (fuel prices)
• Unemployment at 3.8 and now rising

Source Statistics NZ Source The Economist
Intelligence Unit
4
Big Picture Facts

• Very open economy
• FTA with China, Chile, Brunei, Singapore
• CER Australia, CEP Thailand
• Malaysia, HK and ASEAN negotiations in progress
• Business laws straightforward and fair
• Law of contract rules firmly
• No exchange control restrictions
• Taxes straightforward

5
Demographics

• Population of 4.2 million, growth of 10 expected
  over next 10 years
• 75 in North Island
• Auckland Largest City 1.3 million, 2nd youngest
  population
• 1/3 of nations workforce
• 38 of all business enterprises
• 35 of NZ Jobs
• 77 of population European origin
• Fast-growing Asian origin (currently 10,
  projected 16 by 2026)

6
NZs Economic Performance
Source Statistics NZ
7
NZ Net Migration Finds Floor
Source Statistics NZ
8
Labour Market Pressures Easing
Source Statistics NZ
9
Consumer Spending Set to Collapse
Source Statistics NZ, Westpac-McDermott Miller
10
Economic Summary

• Growth in 2008 has hit a brick wall, courtesy of
  rising food and fuel prices and high interest
  rates
• 2009 will see a more upbeat performance with
  growth set to reach close to 3 by the end of
  that year
• The Auckland region will continue to have the
  fastest population growth over the long term
• NZ will remain relatively strong throughout
  2008/09, supported by still high interest rates
  and solid commodity prices

11
Franchising

• 350 active franchise systems
• B2B, service sectors strong
• Retail, finance sectors under pressure
• Poorly-structured systems will suffer
• Some consolidation likely
• Opportunities for overseas franchises but careful
  research and entry plans needed

12
Current Franchise Issues

• Alleged master franchise fraud
• Involved NZs largest franchise system
• Targetted at immigrants
• Huge media and Government interest
• Culpability of franchisor to be determined
• Media interest in negative franchise stories

13
Current Franchise Issues

• Regulation now on cards
• Association in favour
• Working with Government and MED
• Very positive approach
• Great support from FCA
• Other
• Election year issues

14
Other Challenges

• Spectre of recession
• High interest rates
• Low business confidence
• Election year
• Media scrutiny
• Some poor advisors

15
Association Responses

• Association growing in strength
• 226 members
• Strong leadership of sector
• Good government relations
• Credibility
• Networking
• Improving member services
• Events

16
2008/9 Events

• Westpac NZ Franchise Awards
• November 2008
• Business Opportunities Franchise Expo
• Auckland, Wellington, Christchurch)
• National Franchise Conference
• Queenstown
• Seminar Series
• Ongoing
• Regional Meetings
• National