Franchise Association of New Zealand Franchising - Franchise Association of New Zealand

What is Franchising?

Put simply, franchising is a form of business where a company (called the franchisor) expands nationally or internationally by granting a person or company (called the franchisee) the right to operate their business model in another geographic location for a set period of time. The right will usually include the ability to use the brand name, the business system and the know-how of the franchisor.

The franchisor gains its income from initial and ongoing fees paid by the franchisee. In return, it must provide a variety of services to encourage the continuing profitability and growth of the franchisee’s business.

Franchisees invest in setting up the business in their own areas and are the owners of their own businesses. They receive their income from successfully marketing their products or services under the brand name of their franchisor.

Is Franchising Reputable?

Franchising has proven to be one of the most dynamic business methods of the past 60 years. It enables companies that have a desirable product or service to expand faster by harnessing the capital, local knowledge and commitment of individuals who are in business for themselves.

Franchising provides those who wish to be self-employed the ability to go into business properly trained and equipped, with the security of a well-proven product and system behind them.

Franchising is a reputable part of daily life in New Zealand. Many of our best-known brands have franchises: New World, NZ Post, Bakers Delight, The Coffee Club, Columbus Coffee, Paper Plus, Green Acres, Paramount, VIP Home Services, Subway and, of course, McDonald’s. Franchising should not be confused with ‘pyramid selling’ or network marketing.

How Big Is Franchising?

Based on the 2017 Survey of Franchising carried out by Auckland’s Massey University and Griffith University of Queensland and sponsored by the Franchise Association, the sector is estimated to be worth over $27 billion (excluding fuel and motor retail franchises) and represents approximately 11% of New Zealand’s Gross Domestic Product.

There are over 630 franchise systems in New Zealand and over 37,000 operating units. Franchising employs over 120,000 people with 59% of them being employed on a full time basis.

There are benefits to franchising for both parties

Starting up a business is a calculated risk. It is made all the more so when figures suggest that around 4 out of 5 independent businesses cease trading within five years from their launch.

A successful business requires the right formula, which is made up of everything from product range, promotional strategy and pricing, to location, resourcing and the use of technology and systems. There are a lot of traps for the inexperienced – hence the major reason people buy franchises. They buy the experience and the formula from the franchisor in order to help minimise the risks and increase their chance of success.

Franchising has yet another key inherent benefit that influences franchisee success. The franchisor relies on your success to reap its own rewards, which means that there are real incentives for the franchisor to assist you in achieving those rewards. Good franchising is a partnership between franchisee and franchisor, and well-structured franchise systems ensure that franchisors have the necessary incentives, as well as legal obligations (via the Franchise Agreement) to provide you with the level of support that an independent business owner could never achieve.

Specific Advantages

Some of the more specific advantages to franchisees are:

The above advantages are expanded in detail in our free online Franchisee Pre-entry Online Education Programme.

" When recruiting new franchisees, we explain that we are focused on best practice and they must seek advice from professionals as per the FANZ Code of Practice. It enhances our credibility. "

GALVIN BARTLETT, Director

Paramount Services Ltd

" It is extremely important that FANZ represents us in government. Who else will advocate for franchises in New Zealand? We need Government to know about the good work that is being done to assist people into successful businesses. "

DAVID PEARSE, Managing Director

Pukeko Rental Managers

" Recruitment is a large part of our business and making sure potential franchisees are aware of our affiliation with FANZ helps authenticate our company. This relationship reassures any potential franchisees that we are part of a larger franchising regulatory body that ensures we adhere to a strict set of codes and rules. "

SCOTT JENYNS, CEO (2014-2022)

Aramex NZ (formerly Fastway Couriers)

" Amongst other initiatives, our FANZ Board has a clear focus on building and strengthening the relationship between FANZ and the Government. I believe it is incredibly important that Government agencies see FANZ as the ‘go-to’ body for any legislative changes that may impact franchising. "

IAN ROBERTSON, General Manager

Ecomist

" Credibility and networking with other franchisors is incredibly valuable. The franchise sector is very supportive and there is significant sharing of ideas and information – more so than any other association or environments I have been involved with. "

GALVIN BARTLETT, Director

Paramount Services Ltd

" Being a franchisor / General Manager can be lonely and it’s not always human nature to share stories of hard times, failure or struggles. However, when you’re connected to a group of like-minded business people who have travelled a similar path, you’ll find yourself supported & encouraged. "

JON HASSALL, Chief Operating Officer

Cafe Brands Limited

" Realising you are not alone in the world of franchising and knowing any situations you find yourself in, other members probably have been there too and therefore can advise on their experience and outcomes "

JULIE EVANS – CEO

Rodney Wayne

" Being members ensures we keep up to date with relevant issues and changes, and ensures we are aligned with Best Practice in Franchising. The NZ franchising community is very collegial and supportive. Franchisors are amazingly willing to share their knowledge with each other. "

DAWN ENGELBRECHT – Director

SKiDS

" It is important for franchises to come under the umbrella of the Franchise Association and see it as an investment to succeed in franchising. Otherwise you stand alone, without the continuing support and education that you need to build your business. "

DAVID PEARSE, Managing Director

Pukeko Rental Managers

" It is hugely important to have representation for franchising. Individual systems do not have the resource to do this on their own so to have a body acting on your behalf is great. FANZ have a strong board and base of legal members who have a real strength in this area. "

GALVIN BARTLETT, Director

Paramount Services Ltd

" The awards gives us an opportunity to put forward some of our top performing franchisees, giving them the well-deserved opportunity to be recognised and awarded on a national level. "

SCOTT JENYNS, CEO (2014-2022)

Aramex NZ (formerly Fastway Couriers)

" We joined, and continue to be a member of FANZ, because it represents what’s good and right about franchising; it’s ethical, credible and has integrity. As members, we voluntarily adhere to the FANZ Codes and Rules. "

IAN ROBERTSON, General Manager

Ecomist

" I have personally found the conferences to be a highlight of my year. What I have learned and the knowledge sharing has been of tremendous value. "

DAVID PEARSE, Managing Director

Pukeko Rental Managers

" The association provides a voice for the many franchise systems in New Zealand to ensure any legislative changes that could have an impact on franchising are made through the right government channels. The association has done an exceptional job here over the years. "

SCOTT JENYNS, CEO (2014-2022)

Aramex NZ (formerly Fastway Couriers)

" Attending the annual conference allows us to meet and discuss issues, challenges and successes with industry peers and get some fantastic insights into the franchising sector in general. "

SCOTT JENYNS, CEO (2014-2022)

Aramex NZ (formerly Fastway Couriers)

" It was a complete surprise that we ended up winning the Supreme Franchise System of the Year. This has been a huge boost to us and we are currently processing Franchise enquiries at a level I never thought possible. "

DAVID PEARSE, Managing Director

Pukeko Rental Managers

" “We have won several FANZ awards. The process of entering forces you to look at your business in a very analytical way that perhaps you would otherwise not take the time to do. "

DAWN ENGELBRECHT – Director

SKiDS

" Relationship building has been one of the most significant member benefits for me and the businesses I have managed. FANZ members are willing to share information, experience, knowledge and support. It’s like being in an extended family. "

IAN ROBERTSON, General Manager

Ecomist

" Whether a new or an established franchising business, we highly recommend joining FANZ. Not only do they guide you around the complexities of operating a franchised system, the backing of specialist advisors and a knowledgeable franchising community offer ongoing guidance to those looking to grow a successful franchise with strong and secure foundations. "

SCOTT JENYNS, CEO (2014-2022)

Aramex NZ (formerly Fastway Couriers)

" With employment, safety and food safety legislation ever increasing, I feel that FANZ working alongside the government is a hugely important part of the association’s role. "

JON HASSALL, Chief Operating Officer

Cafe Brands Limited

" I am proud to be a member of FANZ. It means any potential franchisee can have confidence they are entering a credible franchise system that acts with integrity and fairness, and complies with the FANZ codes of Ethics and Conduct "

IAN ROBERTSON, General Manager

Ecomist

" We tell prospective franchisees that we are proud members of FANZ and we encourage them to do the free on-line pre-entry training that is available through FANZ. "

DAWN ENGELBRECHT – Director

SKiDS

" We find the awards particularly useful for inspiring staff and franchisees and usually take a large group to the awards evening. The celebration of achievement is a real boost to morale. And of course it is a great achievement for our business to receive recognition. "

GALVIN BARTLETT, Director

Paramount Services Ltd

" Knowing that FANZ have a strong and proactive advocacy approach to legislation that may affect their members is a significant member benefit. SKiDS recommends other franchise systems to also join FANZ – if we want FANZ to have a strong voice when advocating with Government then we need to have a strong and diverse membership body to back them up. "

DAWN ENGELBRECHT – Director

SKiDS

" The education that FANZ provides is invaluable. I have attended as many seminars and conferences as I can to identify and address areas where I can improve. "

DAVID PEARSE, Managing Director

Pukeko Rental Managers

" The FANZ conference is incredibly informative and a great place to improve your knowledge about franchising. One of the other key benefits is having so many franchisors in one place at one time means it’s a great venue for networking and relationship building. "

IAN ROBERTSON, General Manager

Ecomist