Franchise businesses are everywhere in New Zealand and this method of business does not seem to be slowing down, if anything franchising is increasing in New Zealand. The last survey of franchising in New Zealand was conducted in 2017 and at that time there were 631 Franchisors operating in New Zealand. For a small country we definitely punch above our weight when it comes to franchising.
Whether you are a franchisor or a franchisee, Turner Hopkins will look for innovative ways to provide you with cost effective and practical legal services, which meet your individual requirements.
Why Choose Turner Hopkins
- We have the experience – Our staff have acted for both franchisors and franchisees for in excess of 20 years
- We have the knowledge – we have acted for and currently still act for some of the bigger names in franchising
- We have reviewed and provided advice on the franchise agreements for most of the well-known franchise systems in New Zealand so we are in a great position to provide you with expert legal advice in a very timely fashion and for a competitive price
- We have developed fixed price packages for legal services and these can be tailored to meet your individual needs.
- We have strong connections with the most respected service providers in the franchising industry including franchise accountants, consultants and bankers. We will put you in touch with the right advisor for your needs.
The Areas We Cover
Purchasing a franchise
We will assist you at every step of the way:
- Negotiation of the sale and purchase agreement
- Putting you in touch with other franchise professionals who can help you
- Review of the franchise documentation
- General advice on purchase of the franchise
- Assisting you with funding and settlement of the transaction.
Franchising your business
If you are looking at franchising your business we will:
- Put you in touch with the franchise professionals you need to help you
- Draft the documentation you need (franchise agreement, disclosure document, terms of supply, confidentiality agreements, application forms, software licence agreements, intellectual property licences, subleases or licences)
- Assist you to put systems in place to streamline the legal side of things.
Leasing for franchisors
Many franchise systems are premises based meaning there is likely to be a lease or licence which provides the franchisee with occupation rights. We can assist with:
- Helping you decide which structure will work best for you - taking the Head lease and subleasing or licensing the premises to your franchisee? or requiring the franchisee to take the lease (in which case we can advise on the clauses you need in the lease)
- Providing you with advice on negotiating your lease and making sure you have provisions which protect your branding right, provide exclusivity (if possible) and allowing you to assign the lease to a franchisee.
- Assisting you with any issues or disputes you have with your landlord.
Leasing for franchisees
Leasing is a huge component of some franchise businesses and often a serious long-term commitment. We will:
- Review the lease documentation and provide you with advice on your rights and obligations and any further terms which you will need to negotiate
- Assist you with the negotiation of those terms
- Assist you if you need any help in relation to your interactions with your landlord.
Importing a franchise system
If you are thinking about importing a franchise system into New Zealand we will:
- Review and advise you on your rights and obligations under the master franchise agreement and any special terms which are needed to suit New Zealand conditions.
- Assist you with preparation and amendment of the documentation you will need for your franchisees.
Exporting a franchise system
- Advise you on the steps you need to get your franchise system ready for export
- Make sure that you have the right structure
- Liaise with lawyers from other countries to ensure your franchise documentation meets the needs of foreign jurisdictions
We will advise you on your rights and obligations and assist with the dispute resolution process.
Sale of a franchise
We will assist in the negotiation of the terms and conditions of the sale and purchase agreement and fulfilling the requirements of the franchisor in relation to the sale of your business.
Processing renewals & sales
If you are a franchisor we can assist you in designing a system that will simplify your sale and renewal processes and make sure your franchisees meet your requirements.
We will provide you with advice on the best way to protect your intellectual property, the best structure to use and can assist with trademark applications and drafting of licence agreements.Send an Email Enquiry →
What is a franchise?
A franchise is where one person (the Franchisor) licences to another the right to run their business using the franchisor's brand and systems over a limited period of time. In return for this the franchisee will usually pay the franchisor an initial fee for the purchase of the franchise and an ongoing fee or royalty for the use of the franchisor's brand and systems and for the support provided by the franchisor for a certain period of time. The franchisor and the franchisee enter into a franchise agreement which sets out each party's rights and obligations and the franchisee is required to operate their business according to rules set out in the franchise agreement and in operational manuals developed by the franchisor.
What are the advantages of owning a franchise?
While buying a franchised business is no guarantee of success, buying a franchised business which is part of an established franchise system can have distinct benefits over and above buying an existing non-franchised business or starting your own business from scratch. These include:
- Statistics show that a franchise business is usually less risky than starting your own business from scratch.
- You are using a model to operate your business that has already been proven to succeed.
- You are using branding that is already recognised in the market place. You will not need to spend time and money to develop public recognition of a brand from scratch.
- You will receive support from the franchisor who has already has the experience in operating the business and knows what works and what doesn't.
- You will receive training, support and manuals which will assist you to operate your business successfully.
- You get the benefits of running your own business combined with the benefits of being part of larger network for instance – preferential supply arrangements in a coordinated manner.
- You have the benefit of coordinated national and local marketing paid for by contributions from all franchisees and arranged by the franchisor.
- You may find it easier to obtain finance if you are purchasing a well-known franchise business
What are the advantages of franchising your business?
- Franchising is a great way to find talented people to manage your locations and give them an incentive to work harder than they would if they were your employees. Franchised business tend to operate more successfully due to the fact they have motivated owner operators.
- You can expand your business using someone else's capital and the costs of franchising your business is usually recouped after the first couple of franchise sales.
- Franchising permits multiple units to be opened at the same time or in quick succession resulting in rapid expansion and increased market dominance.
- Due to their purchasing power franchisors can often negotiate volume discounts from vendors and suppliers.
- You get the benefit of an increased advertising marketing and advertising budget due to the contributions paid by all franchisees.
- Franchisors earn revenue from many sources, including initial franchise fees, royalties, marketing contributions, sale of products, training fees and rebates from suppliers.
Do I need a franchise lawyer?
Absolutely. A Franchise lawyer will have the experience to provide you with the assistance you need in a timely and cost effective fashion. They will be familiar with franchise agreements so you will not be paying to "up skill" a lawyer who is not experienced in franchising. They will help you understand your legal obligations and the powers of the franchisor so you know exactly what you are in for. Not all franchise agreements are made equal and a franchise lawyer will be able to tell you whether or not what is in the franchise agreement is normal and reasonable. They will also have connections in the franchise industry and will be able to point you in the direction of other franchise professionals who can assist you. Your franchise lawyer may already have experience with the franchise system you are looking at. The purchase of a franchise can be a significant investment with long term liability and in some cases can be a bigger or at least similar financial investment as your family home. Getting the right advice can make the difference between you making a good decision or a bad one.
What is a franchise agreement?
A franchise agreement is the agreement between the franchisor and the franchisee which sets out the rights and obligations of each party in relation to the franchise. It is typically weighted heavily in favour of the franchisor. The reason for this is to protect the franchisor's intellectual property and to promote consistency amongst all franchisees. Often the obligations of the franchisee are guaranteed by the franchisee's directors and/or shareholders.
What is the difference between a franchise and a licence agreement?
In its simplest form, a licence is where a person (called the "Licensor") owns or has rights to something ("the Licensed Property") allows another person (called "the Licensee") to use it in return for some form of payment. The Licensor does not pass any ownership rights to the Licensee – the Licensee is merely getting the rights to use the Licensed Property. A Licence Agreement can be quite simple or very complex. If you buy a franchise, what you are buying is licence to use certain intellectual property which usually consists of the use of a system to conduct your business in certain way (as prescribed in a manual) and a right to use various trademarks and brand names. Where it differs from a Licence is in the obligations of the franchisee which are usually quite extensive and prescriptive.