turning REDUNDANCY into REINVENTION

How franchising could be just the ticket after job loss

One thousand public sector service jobs were cut in New Zealand on just one day in April 2024. By June 7 the number of public sector job losses this year, according to Radio New Zealand figures based on ministries and Public Service Association data, neared 6000.

Across our mainstream media, 350 job losses resulted from the collapse of Newshub and a further 68 roles were cut at TVNZ. Yes, the redundancy rollercoaster has rocked Aotearoa in 2024. And Kiwi economists agree, the story for the remainder of the year looks like one of increasing job losses and a gloomier economy.

Westpac chief economist Kelly Eckhold summarises the situation in the bank’s May quarterly Economic Overview (see page 16). ‘Households and businesses will feel uncomfortable this year. Growth is not at disastrous levels but is weak, and the labour market will do a greater share of the required adjustment. It’s going to be a long grind to fiscal balance. The global economy is still weak, but some green shoots suggest promise down the track. Spring will come - but we need to do the hard yards through winter first.’

What this means for franchising

Dr Callum Floyd of Franchize Consultants suggests an initial plus to this rise in unemployment is that franchisors and franchisees will likely be able to find quality staff more easily. He says, ‘Right now, one of the bigger benefits has been filling job vacancies. That had been challenging some franchisees who had been struggling to open the doors due to staff shortages. And for both franchisors and franchisees, further growth may have been constrained through lack of quality staff. In itself, this is a big boost for franchising.’

He sees the opportunities as being two-fold, depending on where Kiwis sit on the franchising continuum. ‘Prospective franchisees should look for companies with a strong track record, quality franchise system, tools and support. Whereas established franchisors should look at ways to solidify their ability to attract and successfully establish (including access finance for) new franchisees.’

Change of direction

For those keen to explore a new way of working following redundancy, franchising can offer strong appeal. ‘A good franchise offers training, guidance, a known product or service and is, generally, a lower-risk way to go into business,’ says Franchise New Zealand founding editor, Simon Lord. ‘Many franchises also offer you the chance to do something completely new. If the industry you’ve worked in all your life is in decline, that can be a huge advantage.’

Having worked with franchises for over 40 years and been made redundant three times himself before founding Franchise New Zealand,

Simon has ridden many waves of change and has seen the sector do so, too. His advice to those currently experiencing redundancy?

‘If you select a franchise with a good solid base and a sound financial model, now could be a good time to start. Franchises traditionally perform better than independent businesses during downturns, and you’ll have an enthusiastic franchisor helping to stack the odds in your favour.

‘There may also be some good new locations coming on the market as other businesses close. Choose the right franchise and you could be well-placed when the recovery comes - as it always does.’

Funding a franchise

Investing redundancy pay into a franchise purchase is a proven path to consider. Whether it’s paltry, palatable or packs a punch, a settlement sum can prove a rare gift, with the ability to supercharge your next move. Trevor Fenton knows. He ploughed his redundancy pay from his telecoms role into purchasing a Jim’s Test & Tag business.

‘I’d looked at Jim’s Test & Tag as soon as I heard the rumours of job cuts,’ he says. ‘It fitted my skills, was customer-focused, would give me flexibility of lifestyle, and would get me out of the office onto the road once more.’

As with many franchises, franchisees need not necessarily be qualified or experienced, Trevor discovered, with full training, necessary equipment, training and support offered as standard. And the trust that comes from aligning with a proven system and brand can be music to a redundant person’s ears, he says. For Trevor, being a franchisee has surpassed the expectations he’d had when taking the leap four years ago.

‘I knew I’d have to work hard and put myself out there at first, but it’s given me a great deal of flexibility and an easier life. The Jim’s Test & Tag support systems mean you can programme regular visits to keep your customers safe and legal, so you’re actually taking a problem off their shoulders, while building recurring income. No matter what the economy is doing, demand is ensured thanks to the legislation. It all adds up to a great business.’

Coffee and chocolate

The adage that, even in a recession, Kiwis will still want coffee and chocolate rings true for Columbus Coffee franchisees, Shawnee and Jesse Southon. In 2020, the pair were both working at Fox Glacier when Covid hit. ‘We were made redundant, so we decided to do a road trip and see the South Island,’ Shawnee explains.

‘We got to Oamaru and just loved the place. Then we heard there was a new Columbus outlet and, lo and behold, they were advertising for a manager. I applied and got the job then, within the year, the opportunity to buy the franchise came up,’ she says, illustrating that the path to franchise ownership isn’t always a direct one.

Redundancy meets relocation

Offering a change of scene when faced with one of life’s crossroads, franchising can present an appealing avenue to relocation. This is where redundancy led Marc Simkin.

Involved with manufacturing and operations in large New Zealand companies since leaving college, Marc experienced redundancy three times over. ‘I’d always managed teams and operations with big firms like Fisher & Paykel, but after three redundancies I thought it really was time to try something different. I’d always hankered after owning a business and getting out of Auckland was also a priority.’

He now runs his V.I.P. Home Services cleaning franchise from the laidback coastal community of Mangawhai.

Working style

Switching work styles as well as environments can be an opportunity afforded by franchising when redundancy prompts action. This was a double plus for Marc when changing careers, he says. Having completed triathlons, he likes to stay fit, so looked for a franchise that enabled him to integrate this healthy lifestyle into his work.

‘That narrowed my search down to a business that would keep me in condition and active,’ he says. ‘The alternative, after my last redundancy in January 2020, was the consultancy world, but that would have meant Auckland again. When I found V.I.P, I realised it was what I was looking for ... once I’d crunched the numbers it made real sense. It also gave me a lot of confidence to have such a well-proven system giving me the support I needed.’

Capital exodus?

Data from recruitment specialists Robert Walters shows a 112% surge in job applicants across New Zealand compared to the same time last year, coinciding with widespread public sector layoffs. Bridget Clarke, Senior Director, Wellington, said, ‘We have already witnessed a 45% surge in the number of individuals applying for roles in Wellington compared to the same time last year, with our other offices across New Zealand reporting even higher increases.”’

The recruitment consultancy has particularly noticed a rise in people seeking to relocate from Wellington to other regions, especially Auckland, and overseas to Australia. Its Auckland office has already experienced a 179% increase in applicants for live job vacancies, compared to last year.

Switching it up

At the age of 61, John Eban left the Christchurch company he had worked at for 42 years. Much like The Pottery Studio’s Ray Aucott (see page 13), John hadn’t planned to switch careers, but Covid hit the travel sector like no other. Whereas Ray worked in travel wholesales, John worked as an engineer.

‘There had been several rounds of voluntary and forced redundancies, and it had become a pretty unpleasant environment,’ John says. ‘I’d always been passionate about what I did, but I was pretty disillusioned, to be honest.’

Seeing an advert for Pukeko Rental Managers piqued his interest. ‘I had no experience in rental management whatsoever,’ he says. ‘But I’d always thought if I won Lotto, I would buy a few properties and run them myself, so this appealed.’ John spoke to the franchisor, agreed an exit plan with his employer and walked out of the door for the last time.

‘On the face of it, what I was doing in engineering was so specialised that you don’t think of being able to do anything else, which makes it very daunting to start again. But what I’ve realised is that, actually, I’ve had a lot of training and got a lot of skills that are transferable into other areas: project management, leadership, time and resource management. … 10 or 15 years ago, I might not have had all those skills, but now I’ve realised they are perfect for running my own business.’

Believing that buying a franchise was the perfect option for someone in his position, John says, ‘A franchise allows you to work for yourself in your own business with the added security of a safety net. There are people to talk to and help guide you in the right direction.’ Four years on, like many who have entered franchising on the back of redundancy, he hasn’t looked back.

Consideration is key

‘Whatever you decide to do, take your time, take advice and make sure you have the full support of your family,’ advises Simon. ‘Going into business is a big step so tread carefully. That way, you could be the next person to say, ‘Redundancy was the best thing that ever happened to me.’

Is it your time?

If you think franchising could be for you, read Franchising For Beginners (page 25) and What’s The Best Franchise For You on (page 34) for a roadmap on getting started. You can also head to our website to check out our up-to-the-minute franchise directory to see what’s currently available in the New Zealand franchise space.