Franchise opportunities in New Zealand

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Franchising has a long history success in New Zealand, and now accounts for over 10% of the country’s GDP.

The role of the Franchise Association of New Zealand

In 1990 the first chapter of the Franchise Association of Australasia was officially formed. Its members conducted monthly meetings to discuss best practice in franchising and to share their experiences.

In 1996 the New Zealand chapter of the Franchise Association of Australasia broke away to form the Franchise Association of New Zealand (FANZ). The Franchise Association of New Zealand is the body that represents and promotes franchising throughout New Zealand. It is New Zealand’s representative on the World Franchise Council and the Asia Pacific Franchise Confederation. The New Zealand Government is now consulting with the FANZ on whether a franchise law should be introduced into New Zealand.

All members must abide by the FANZ Rules and Code of Ethics, and all franchisors must comply with the FANZ Code of Practice. The FANZ scrutineer ensures documents comply with the code before members are admitted. Members’ compliance is checked on a two yearly schedule to ensure that standards are maintained.

Franchise New Zealand magazine and an independent website acting on behalf of the Franchise Association of New Zealand take advertising on behalf of franchisors and franchise support firms like lawyers, consultants, accountants, etc. It is well worth visiting their websites at www.franchise.co.nz and www.franchisebusiness.co.nz prior to undertaking your own franchise.

Franchise financing

There are five major banks in New Zealand, all of which have franchise departments keen to be involved in the franchising sector. The attraction, they say, is that franchise companies have a better success rate compared to stand alone independent companies, and wholly new business can be developed through building a franchise network.

The major NZ banks have been keen to provide competitive financing arrangements for franchisees wishing to purchase a franchise from an approved franchisor. They will also help fund businesses wishing to develop a franchise network to get the preliminary strategy and operating system and documentation professionally completed.

How to look for and buy a franchise

Your first step should be to find out what it takes to succeed as a franchisee in New Zealand and decide if franchising is for you. The FANZ publishes a comprehensive book called New Zealand’s Franchisees Guide, available for purchase on their website. Your New Zealand bank will also produce useful informative brochures and booklets on various aspects of franchising.

As members’ documents are scrutinised to ensure compliance, and because they undertake to abide by the codes and rule of the Association, The FANZ urges all prospective franchisees to consider purchasing a franchise from a member. The FANZ requires that franchisor members ensure that prospective franchisees get professional advice and show proof that the advice has been given.

How to franchise an existing business

If you intend to move to New Zealand to purchase a business and wish to expand that business, franchising should be considered as a possibility.

Franchising a business properly usually involves engaging professional help. The first professional to see is a specialist franchise consultant. They will guide you through the proper process:

  1. Strategic planning a. Situation analysis
    b. Feasibility study
    c. Implementation plan
  2. System refinement – franchise manuals
  3. Legal brief – to give to a specialist franchise lawyer to draft the agreement
  4. Recruitment documentation
  5. Training on how to manage a franchise network

Although franchising is simple in concept, it is very detailed and needs to be properly done if it is to be used to its best effect. When executed appropriately, it has many advantages for both the franchisor and the franchisees.

Although New Zealand is affected by the world recession, it is reasonably well placed by comparison with the United States, the United Kingdom and other European countries. Our banks are sound and our exports of commodities are holding up relatively well.

Franchising continues to grow and is looked on by the business community as a sound and exciting method of marketing and distribution that can bring out the best in all parties involved.

Win Robinson is Managing Director of Franchize Consultants (NZ) Ltd (www.franchize.biz)

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