FANZ at the World Franchise Council meeting in Istanbul

Graham Billings, Franchise Association of New Zealand

The September meeting of the 45 country member World Franchise Council (WFC) was held in Istanbul, Turkey. The reports from around the world told a wide variety of franchise activity and government involvement. Significant growth is being seen in such countries as Russia, Mexico, Guatemala, France and Malaysia, but very difficult environments exist in others including the Netherlands, Italy and Greece.

In many countries, governments have seen the benefit of stimulating economic activity and employment through direct or indirect funding of franchise systems and franchisees. One of the leaders of this is the government of Malaysia and their Minister of Domestic Trade, Co-operatives and Consumerism, Dato’ Sabri Bin Yaakob attended the meeting and gave a presentation on the government assistance, including grants and tax rebates, that were encouraging the development of franchising in his country.

FANZ members can obtain up to date information on the state of franchising in WFC countries from the FANZ office.

FANZ Makes Submission to the Commerce Select Committee Commerce
(Cartels and Other Matters) Amendment Bill

This bill amends the Commerce Act 1986, introducing criminal sanctions for hard-core cartel behaviour and making amendments to provisions that govern jurisdiction and penalties.

For many businesses, one of the key exemptions will be the collaborative activity exemption. The exemption is broad and looks to the substance of an arrangement not its form. It would cover arrangements like franchises, joint ventures and strategic alliances, provided the arrangement has a legitimate purpose. Under the current proposals, however, the interpretation will depend on the view taken in individual cases by either the Commerce Commission or the Courts.

In view of this, FANZ has submitted that franchise agreements should be exempt from the provisions of price fixing and market sharing. We acknowledged there is a potential difficulty in identifying a ‘genuine’ franchise, as opposed to a business arrangement of convenience and suggested that the voluntary self-regulation process of FANZ would provide such confirmation of the ‘genuine’ nature of a franchise and that accordingly membership would automatically provide exemption from the provisions.

We believe that there continues to be a lack of clarity in defining whether a franchise model is a ‘collaborative activity’ as defined under the draft Bill and that this will cause compliance costs and uncertainty in franchise systems.

The Commerce Select Committee is due to report in March next year.