New Zealand is deregulated for franchising and is the most franchised country in the world per capita. Franchising is positive with a great number of opportunities.
What are the trending franchise systems?
Franchise New Zealand magazine and website has a section “Popular Searches” and it lists six types of franchise systems as follows:
- Coffee & café
- Home-based
- White collar
- Cleaning
- Building, renovation & maintenance
- Food
Food is always very popular and many overseas food franchisors are attracted to New Zealand. Why? Farrah Rose is head in International Development at The Franchising Centre in the UK and a member of the British Franchise Association has written that “…my recent visit to this wonderful country has shown me that New Zealand is probably one of the most sophisticated, discerning, and well-developed franchise markets in the world”. I would add that we are big eaters and I love trying new food types from anywhere.
Entrepreneur Magazine has listed franchises under the following categories: health and wellness, home improvement, maintenance, personal care, recreation, retail, pets and tech businesses.
What is popular in New Zealand
Back to trending franchise systems in New Zealand – how do I view it as a franchising lawyer acting for many franchisors but also acting for franchisees who want to go into a franchise system?
In relation to food, I have to list McDonald’s and Taco Bell. Other franchise systems that are doing well and are popular include Anytime Fitness, Kumon Maths & Reading Centres, Refresh Renovations, Hire-A-Hubby, Snap Fitness 24/7 and Poolwerx to name but a few. Certainly, health and fitness is a winner with the Government and media preaching the benefits of leading a healthy lifestyle, threats about epidemics of obesity and diabetes, and the statistical reality that people are living longer and wanting to stay fit and active longer.
Franchise Codes
In New Zealand there is no specific franchise legislation but we have the Franchise Association of New Zealand (FANZ). It publishes a Code of Practice and a Code of Ethics and all members must comply with the Codes.
Regardless of what franchise system a person is looking at, you will be asked to sign a franchise agreement and it will cover the payments which must be made, including the upfront payment and ongoing royalty, the term of the franchise and rights of renewal of term, the training and support which the franchisor will provide, precise boundaries of the territory awarded to you, the nature and extent of the franchisee’s obligations, including buying supplies and services, and the right to sell or transfer the franchised business.
When a prospective franchisee is doing its due diligence in relation to any trending franchise system, a lot of information must be ascertained from the franchisor including the franchisor’s financial health and history, how it has been franchising, the total cost of taking up the franchise, realistic working capital required, types and amounts of advertising support, any requirement to buy products from the franchisor, and the launch or opening assistance.
Survey
Franchise development has experienced a significant amount of change over the last few years. The FANZ together with Massey University has undertaken a Survey of Franchising in 2024 and the results should be out in November. The last survey in 2021 confirmed that there are 590 business format franchise systems in New Zealand but I am expecting that number to break 600 because of the keen interest in franchising in an economy which embraces it.
Stewart Germann founded Stewart Germann Law Office (SGL) in 1993 as a boutique law firm at Auckland, New Zealand, specialising in franchising, licensing and business law. Stewart has over 40 years’ experience in franchising law and acts for franchisors in New Zealand, Australia, USA and the UK. SGL also act for franchisees and provides legal advice. Stewart has spoken at franchising conferences in New Zealand, Australia, Italy, South Korea and USA and he was on the Board of the Supplier Forum of the International Franchise Association (“IFA”) for 6 years until March 2007. Email: stewart@germann.co.nz | Web: www.germann.co.nz