In September, Franchise Direct launched a site specifically for those looking for a franchise in New Zealand. The island country in the southwestern Pacific Ocean is home to over 4.8 million people and has scored high marks for its accommodating business environment.
The New Zealand Franchise Industry
The New Zealand franchise market is very well-developed, especially for the small size of the country.
As the U.S. Department of Commerce puts it:
Based on a per capita method, New Zealand has established itself firmly as the most franchised country in the world.
According to the most recent survey of the New Zealand franchise industry:
- There are over 35,000 franchise units in the country.
- Sales turnover is over $27 billion annually for business format franchising.
- The five most common franchise sectors for brands (not including miscellaneous) are: Retail (non-food); Accommodation & Food Retail; Administration & Support; Rental, Hire & Real Estate; and Other Services.
- Approximately 40% of New Zealand franchise systems are considered small, having between 1 and 20 units.
- 72% of the country’s franchise systems originated in New Zealand.
New Zealand’s largest franchise domestically is a home service franchise called Green Acres. Other popular franchises domestically and abroad include Fastway Couriers, which has become the worlds’ largest courier franchise, as well as Esquires Coffee Houses, BurgerFuel, Sherpa Kids, and more.
It won’t come as a surprise that many franchises from Australia have crossed the Tasman Sea to its close southeastern neighbor. Also unsurprisingly, well-known worldwide franchise systems such as McDonald's, KFC, Pizza Hut, Domino’s and Subway have made their mark in New Zealand too.
In summation, about 12% of the franchise systems there originated in the U.S. Of these brands, they tend to be from the food and beverage sector with a few other sectors, like property management and health & fitness, making noticeable appearances.
International franchisors often use direct franchising to begin operating in the New Zealand market, by issuing a unit franchise agreement directly from their country of origin. Master franchise agreements and area development agreements are also used for franchise expansion into the country.
National Franchise Organization
The Franchise Association of New Zealand (FANZ) is the country’s main overseer of the franchise industry. The organization became independent of the Australian-based FAANZ (Franchise Association of Australia & New Zealand) in July 1996.
The main tasks of the FANZ is to represent the franchising community at government and other industry forums in New Zealand, as well as promote best practices with the industry.
Rules and Laws Governing Franchising in New Zealand
Although there is no franchise specific legislation in New Zealand, members of the FANZ are required to comply with the Rules, Code of Practice and the Code of Ethics of the association.
According to the rules and codes of the FANZ, each member will:
- Operate according to the Rules and Code of Practice of the association in all its requirements and according to all relevant laws.
- Uphold the Code of Ethics for all members.
- Promote membership of the Franchise Association of New Zealand Incorporated and adherence to the Code of Practice.
- Adopt the highest standards of competency, practice and integrity in all matters pertaining to franchising.
- Respect the confidentiality of all information, know-how and business IP concerning a franchised business with which it is involved.
- Act in an honourable and fair manner in all its business dealings, and in such a way as to uphold and bring credit to the good name of the FANZ.
Franchisors in New Zealand aren’t required to become members of FANZ. However, membership is widely believed to bolster the credibility of the franchisor.
As for the laws that commonly apply to New Zealand franchise operation, three stand out: the Fair Trading Act 1986, the Commerce Act 1986, and the Contract and Commercial Law Act 2017. The Commerce Act 1986 was amended into the Commerce (Cartels and Other Matters) Amendment Act 2017.
Other laws franchisors should be aware of when operating in New Zealand include, but aren’t limited to:
- Defamation Act 1992
- Companies Act 1993
- Consumer Guarantees Act 1993
- Human Rights Act 1993
- Personal Property Securities Act 1999
- Employment Relations Act 2000
- Health and Safety at Work Act 2015
- Contracts and Commercial Law Act 2017