Govt wants feedback on regulation of franchising

Commerce Minister Lianne Dalziel today released a discussion document inviting those in the franchise sector to comment on whether franchising in New Zealand needs its own regulatory framework or whether the current voluntary regime offers sufficient protections.

"I was actively involved in meeting with franchisees at the beginning of the year who had been caught up in what is an alleged fraud and still subject to investigation by the relevant authorities including the Franchise Association of New Zealand (FANZ). I have initiated this review to see whether there are any issues in the franchising sector that make a case for franchise-specific regulation (as they have in Australia, for example), particularly to give more protection to franchisees," Lianne Dalziel said.

There is currently no specific legislation relating to franchising in New Zealand, although franchise agreements are subject to a range of generic laws such as contract law and intellectual property law. There is also voluntary self-regulation of the sector through the FANZ, which requires its members to adhere to a Code of Practice and a Code of Ethics.

The discussion paper seeks feedback on regulatory options that might assist the industry. These include:

information disclosure requirements,
obligations to obtain professional advice,
a cooling-off period,
mandatory mediation processes,
minimum contractual terms, and
obligations of ‘good faith’ bargaining.
Lianne Dalziel said that feedback from submissions will allow officials to provide her with a detailed assessment of the current state of play and what options are worth pursuing.

"Any proposal would have to weigh up the costs and the benefits, because franchising is an important contributor to the New Zealand economy. We therefore need to make sure that steps taken to improve the legal framework around franchising also promote sector growth, development and innovation."

Lianne Dalziel will officially launch the review at the Business Opportunities and Franchise Expo in Auckland on Saturday 16 August.

Feedback is sought from all interested parties.
Submissions close on 21 November 2008.
The discussion document is at: www.med.govt.nz/templates/MultipageDocumentTOC____37853.aspx