NEW ZEALAND Law and Practice Contributed by: Christopher Young, MinterEllisonRuddWatts
the Commerce Act, both by the Commission and pri - vate individuals. The Commission may grant clearance for cartel provi - sions under the collaborative activity exception. Clear - ance will be given if the applicant can demonstrate that all criteria for the collaborative activity exception are met. This clearance regime is voluntary and there is no statutory requirement to seek clearance for the collaborative activity exception to apply. If the proposed changes to the Commerce Act are implemented, the Commission would be empowered to grant class exemptions for defined categories of conduct to proactively exempt classes of persons or transactions from compliance with the Commerce Act prohibitions, including both the anti-competitive conduct and anti-competitive acquisition prohibitions. Exemptions would be time-limited and subject to con - ditions. The Commission could grant a class exemp - tion where it is satisfied that the relevant conduct is unlikely to substantially lessen competition, or that the public benefits outweigh the detriments. The practical impact of this change will depend on how actively the Commission chooses to exercise its powers. A separate statutory notification regime would also be introduced, allowing businesses to proceed with certain types of conduct that are likely to be in the public interest or are unlikely to substantially lessen competition after notifying the Commission, unless the Commission objects within a set timeframe. This would initially be limited to resale price maintenance and small business collective bargaining (where the value of the relevant conduct does not exceed NZD3 million per participant over 12 months) and is intended to provide a faster, cost-effective alternative to seek - ing authorisation. 7. Joint Employer Risk and Vicarious Liability 7.1 Joint Employer Laws There are currently no decisions in New Zealand where a franchisor has been held jointly liable with a franchisee for claims by employees. There is only one decision where a franchisor has been consid -
ered for joint liability with a franchisee in relation to an employee’s claims. In James v Christchurch Glass Ltd [2026] NZERA 462, the Employment Relations Authority considered whether the franchisor could be joined as a “controlling party” under Section 103B of the Employment Relations Act 2000. In that case, the franchisor’s general manger was recorded as the employee’s direct manager in the relevant individual employment agreement. The Authority found that it was “weakly arguable” that the franchisor exercised a degree of employer-type control and direction over the employee to satisfy being a controlling third party. However, the Authority found that it was not arguable that the franchisor had caused or contributed to the employee’s grievances. In any event, the employee’s application to join the franchisor as a controlling party was unsuccessful as the employee had not provided the franchisor with the requisite notice under Section 115A of the Act (meaning the requirements of Section 103B were not met). For completeness, in the health and safety space, it is conceivable that a franchisor could be held jointly liable with a franchisee for a breach of the Health and Safety at Work Act 2015 (HSWA). This could occur where the franchisor and franchisee share a health and safety duty in relation to the same matter. Impor - tantly, liability for a breach of the HSWA cannot be indemnified against. 7.2 Vicarious Liability Generally, vicarious liability is confined to relationships of, or akin to, employment and the courts have been reluctant to extend it to a person’s dealings with an independent contractor. Franchise agreements are typically, and deliberately, structured so that the fran - chisee operates as an independent contractor or pro - prietor and not as the franchisor’s employee or agent, expressly disclaiming any agency, partnership, joint venture or employment relationship. Accordingly, a franchisor is unlikely to be vicariously liable for loss or damage caused by a franchisee’s conduct towards third parties. However, a franchisor could be exposed to liability for a franchisee’s conduct in certain circumstances, including under the law related to agency and appar - ent authority, where the franchisor holds the fran -
57 FRANCHISING 2026
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