Here’s my prediction for the Rugby World Cup 2011 – New Zealand will be a big winner. It’s not as brave a call as it sounds because I’m not talking about how the All Blacks perform on the pitch: I’m talking about the benefits for business (and particularly franchises) during and following the event.

Yes, we all want the All Blacks to win and for the team to bury forever George Gregan’s famous retort ‘four more years,’ but there can be little doubt that this country will score heavily not only come September and October, but next year and in the years following.

There has been much debate already about the cost of the RWC, the expected $40 million loss (two-thirds of which will be covered by the Government in what I prefer to call an investment), the validity of estimates on television viewing numbers, price gouging by hotels and those offering private accommodation and the pace of ticket sales. On the flip side, there is the fact that the Government will receive approximately $112 million in extra tax revenue.

This debate is the norm in the run-up to events like this before visitors arrive and start flashing around their foreign currency. The scale is different, but the same debates were voiced before the last Rugby World Cup in France in 2007, the FIFA World Cup in South Africa last year and even the upcoming Olympics in London next year.

Is There Really A Pay-Back?

So what is the real pay-back for New Zealand of hosting such an event? Research shows that both the 2007 Rugby World Cup and 2010 FIFA World Cup gave their host countries significant economic boosts. The Rugby World Cup in France was estimated to deliver a total economic impact of $NZ5.7 billion, while South Africa received a $3.1 billion boost.

A recently completed Grant Thornton International report entitled South Africa 2010 FIFA World Cup, a year in review, shows that during last year’s event, 350,000 foreign visitors to South Africa spent around R8 billion ($NZ 1.4 billion), resulting in hotel average room rates being up 61%, hotel occupancy up 18%,and Visa card spend up 55%. In adition, retail sales went up 7.4%, food and beverage industry income up 10.4% and the beer market grew 12%.

This is the type of spin-off that puts money in many different pockets, not just those of the corporates. There’s the extra bar and restaurant staff who are employed, the hotel staff who work longer hours, the taxi drivers who ferry people to and fro and the shops that will serve the visitors at different times throughout the competition, to name but a few.

Those were the short term benefits for South Africa. Where the longer term growth will come in is from tourists attracted to South Africa. 92% of the visitors indicated they would recommend South Africa to friends and relatives and 90% said they would visit again.

How Will Franchises Benefit?

So why should influx of business benefit franchisors and franchisees in particular? Well, there are a number of reasons for that.

1. The value of the brand. Some 25-30% of franchises in New Zealand are international brands, meaning many visitors already know and trust them. That’s not to say visitors won’t want to experience local brands too, but if they’re looking for something familiar it will be the franchises they head for. Because individual outlets of even the largest international franchises are locally-owned, NZ small business still benefits.

2. Sampling new brands. Visitors travelling around New Zealand who experience a franchise they like in one city are potential customers of the same franchise all the time they are here. Franchisors can develop social media and loyalty programmes to capitalise on this.

3. Taking new experiences away. Rugby fans aren’t just rugby fans – many are also business people. If they find a franchise concept they like, they might be interested in taking it back to their own country.

4. Handling the rush. One of the problems that many businesses will face is handling the sudden influx of customers at particular times. Good franchises have well-developed systems to follow, which means it should be easier for them to cope with such rushes and to train short-term staff more efficiently. They also have long-term relationships with trusted suppliers which may prove invaluable. Unlike independent businesses, franchisees can often call upon the assistance of each other to help out with staffing or supplies in an emergency.

5. Developing new business The RWC has resulted in many new opportunities at the event centres and surrounding facilities, from cleaning to catering. The systems, brands and reputations of some franchises have won them some good contracts, and the ability of franchisees to band together to service these contracts has been important.

A Catalyst For The Future

In fact, thanks the the new facilities and the much-needed infrastructure spend that has occurred, New Zealand is well ahead even before the first ball is kicked in the 2011 Rugby World Cup. Would developments such as Dunedin’s magnificent new enclosed stadium and the upgrading of Eden Park, Queen’s Wharf, Auckland’s waterfront and parts of the Auckland motorway system have occurred without the impetus provided by the Rugby World Cup? It’s highly unlikely that the cumulative spend of over $NZ1 billion would have happened during the middle of the world financial crisis, yet it has provided a necessary boost in many areas.

Just as the RWC has been a catalyst for infrastructure spend, it will also act in the same way for New Zealand business. New opportunities have or will be created, especially in the service and professional services areas via various expos and trade functions and the myriad of hosting opportunities that will be available during the event.

The Reserve Bank governor, Allan Bollard, predicts that hosting the World Cup will bring $700 million to the New Zealand economy. The latest updates suggest that  up to 95,000 international visitors are heading this way and the positive spin-off from the event will continue for many years.

So there’s only one more thing to do to ensure that the RWC will provide an even bigger boost to franchising in the coming months and years, and that is for the All Blacks to win the thing. If the William Webb Ellis Trophy remains in New Zealand after 23 October, then the guaranteed financial windfall combined with the psychological boost of being top nation again will surely test Mr Bollard’s growing fears for inflation and cause a surge in levels of confidence throughout this country.

Read the Reserve Bank's analytical notes on the macroeconomic impact of the Rugby World Cup.