NEW ZEALAND Law and Practice Contributed by: Christopher Young, MinterEllisonRuddWatts
1. An Introduction to Franchising 1.1 Franchise Market Overview Franchising is a very common business model in New Zealand. The Franchising New Zealand 2024 survey conducted by Dr Simon Moore and Prof Jonathan Elms at Mas - sey University identified that in 2024 the franchise sector turnover was approximately NZD73.4 billion including business format franchises, motor vehicle sales and retail of fuel. International franchise brands operating in the New Zealand market include McDonald’s, Domino’s, Pizza Hut and Starbucks. New Zealand-founded franchise brands include Green Acres (lawn and garden care), Rodney Wayne (hair salons), Stirling Sports (athletic New Zealand does not have legislation specific to franchising that regulates the ongoing relationship between franchisors and franchisees. Instead, fran - chise arrangements are subject to a range of gen - eral laws, including those governing contracts, unfair contract terms, competition, intellectual property (IP), employment, consumer law, privacy and real estate, as well as a voluntary franchise code. A key piece of legislation is the Fair Trading Act 1986, which imposes obligations on all traders. It prohib - its unconscionable conduct, misleading or deceptive practices, and making claims that cannot be substan - tiated. While membership in the Franchise Association of New Zealand (FANZ) is voluntary, those who join must then operate in accordance with its Code of Practice and Ethics (the “FANZ Code”) and its Best Practice in Franchising Constitution . The FANZ Code promotes ethical conduct and best practice standards in fran - chising, including requirements for transparency, dis - pute resolution and fair dealing. retail) and Robert Harris (cafes). 1.2 Franchise Regulation
1.3 Definition of a Franchise Agreement In New Zealand, there is no statutory definition of “franchising”. However, FANZ provides a definition in its Constitution. A “franchise” is defined as the method of conduct - ing business under which the right to engage in the offering, selling or distributing of goods or services within New Zealand includes or is subject to at least the following features: • the grant by a franchisor to a franchisee of the right to the use of a mark, in such a manner that the business carried on by the franchisee is or is capable of being identified by the public as being substantially associated with a mark identifying, commonly connected with or controlled by the franchisor; • the requirement that the franchisee conducts the business, or that part of the business subject to the franchise agreement, in accordance with the marketing, business or technical plan or system specified by the franchisor; and • the provision by the franchisor of ongoing market - ing, business or technical assistance during the term of the franchise agreement. While FANZ membership is voluntary, and the above definition is not legally binding, it is a useful reference when interpreting what constitutes “franchising” in New Zealand. New Zealand law does not specifically cover disclo - sure requirements in a franchise context. Laws rel - evant to a particular industry provided by the fran - chise should be assessed for any requirements of this nature. Disclosure documents are best practice to ensure that prospective franchisees are informed about the fran - chise and their investment, and to mitigate risks of misrepresentation. 2. Franchise Disclosure 2.1 Mandatory Disclosure
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