Franchise Regulation Overview

New Zealand Franchising
30 October 2008

Background
New Zealand does not currently have any specific laws governing franchising. Instead it relies on the generic laws of contract, intellectual property, consumer protection and competition. Earlier this year, reports surfaced of a number of high profile alleged scams involving franchises. Although all appeared to involve fraud, these cases raised the question of whether the legal framework for franchising needed to be revised in order to protect franchisees.

Discussion Document
On 16 August 2008 the New Zealand Ministry of Economic Development released a discussion document to discuss the options for regulating business format franchising.

The discussion document recognises the imbalance of power in the relationship between franchisor and franchisee and suggests the following options to address this issue:

1. retain the current regulatory environment under generic legislation and
self-regulation
2. introduce an education initiative targeted at franchisors and franchisees; or
3. introduce legislation based on the Franchising Association of New Zealand

Incorporated Code of Practice and the Australian Franchising Code of Conduct, either as a co-regulatory regime or as a public enforcement regime, including provisions such as:

* compulsory disclosure of information pre-contract
* mandatory professional advice for franchisees
* a cooling-off period
* enhanced dispute resolution procedure, with possible mandatory mediation; and
* an obligation of good faith

The Submissions for the discussion document close on 21 November 2008.

For more information please contact Mark Abell, Chris Wormald or Babette Marzheuser-Wood.

Field Fisher Waterhouse LLP
35 Vine Street
London
EC3N 2AA

t: +44 (0)20 7861 4000
www.ffw.com