By Stewart Germann ONZM CFE (Partner), Franchise Attorney, Auckland, New Zealand
New Zealand is an exciting and rapidly developing franchising market. With a population of approximately 5.3 million and more than 546 franchise systems, New Zealand is the most franchised country in the world on a per capita basis. This is largely because New Zealanders have a strong affinity for proven brands and successful business models.
There are no franchise-specific laws in New Zealand. However, there are existing laws which protect franchisees, with the three main laws being the Fair Trading Act 1986, the Commerce Act 1986, and the Contract and Commercial Law Act 2017. These Acts primarily focus on misrepresentations and restrictive trade practices, which include anti-competitive behaviour.
While there is no mandatory disclosure régime in New Zealand, the Franchise Association of New Zealand (FANZ) publishes a Code of Practice and Ethics, which all members are required to follow. The Code is built around four main aims as follows:
- To encourage best practice throughout franchising.
- To provide reassurance to those entering franchising that any member displaying the logo of the FANZ is serious and has undertaken to practise in a fair and reasonable manner.
- To provide the basis of self-regulation for franchising.
- To demonstrate to everyone the positive will within franchising to regulate itself.
The Code applies to all members including franchisors, franchisees or affiliates such as accountants, lawyers and consultants and all prospective new members of the FANZ must agree to be bound by the Code before they can be considered for membership. It covers the following:
- Compliance
- Disclosure
- Certification
- Cooling Off Period
- Dispute Resolution
- Advisers
New Zealand is a sophisticated market and fairly deregulated in relation to business. The FANZ has been very successful by promoting self-regulation and high standards in franchising, and its Code is widely understood and accepted by franchisors in New Zealand. Overseas franchisors who wish to enter into New Zealand should find it relatively easy, but in all cases expert commercial and franchising law advice should be obtained.
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