Industry Compliance

Franchise Agreements

Vetting New Zealand franchise deeds, territorial rights, disclosure materials, and brand obligations requires specialized commercial legal representation.

Book a Franchise Deed Vetting

Voluntary FANZ Framework

Unlike Australia, New Zealand has **no specific statutory franchise law**.

The Risk of Non-Members: While members of the Franchise Association of New Zealand (FANZ) must provide standard 7-day cooling-off periods and Disclosure Documents, non-member franchisors are not bound, leaving franchisees exposed unless protected contractually.

NZ Franchise Scorecard: FANZ Member vs. Non-Member

When entering a franchise, verify if the franchisor is a FANZ member to understand your baseline rights and protections: The below table is indicative only and should not be used to replace legal advice.

Feature	FANZ Member Franchisor	Non-FANZ Member Franchisor
Disclosure Document	Mandatory. Must provide detailed financial histories and franchise counts.	Not Required. No automatic right to inspect franchisor histories.
Cooling-Off Period	Mandatory 7 Days. Can cancel the contract within 7 days of signing.	None. Contract is binding immediately upon execution.
Dispute Resolution	Mandatory mediation under FANZ Code rules before taking court action.	Subject to standard courts (often leading to expensive litigation).
Code of Ethics Vetting	Bound to act in good faith and commercial fairness.	No code of ethics applies; subject only to contract terms.

Franchise Agreement Vetting Checklist

When reviewing the franchise deed, we audit these key financial, spatial, and renewal clauses to protect your investment: The below table is indicative only and should not be used to replace legal advice.

Clause Category	Franchisee Risk / Trap	Vetting Recommendation
Royalty & Marketing Fees	Ongoing royalties (usually % of gross turnover) and marketing contributions calculated regardless of net profit.	Request marketing transparency; audit fee calculation models.
Territorial Exclusivity	Franchisor establishing online sales channels or opening neighboring outlets that cannibalize your store sales.	Draft clear geographical boundaries and online sales offsets.
Renewal Refurbishment	Mandatory fit-out upgrades at the start of renewal terms, costing tens of thousands.	Cap maximum refurbishment costs in initial deed.
Termination / Exit Rules	Deed allows franchisor to terminate immediately for minor defaults, seizing assets. Transfer fees on sale.	Insert notice remedy periods; cap transfer fees.

Territorial Rights and Exit Restraints

**The Exclusivity Myth**: Holding a franchise agreement does not guarantee sole access to local customers unless an **Exclusive Territory** is explicitly defined. We review the geographic boundary definitions (maps, postcode lists) to protect against local market saturation.

**Vetting the Exit**: Selling a franchise is more complex than selling an independent business. The franchisor holds the "right of first refusal" to buy it back and must approve any incoming purchaser, charging a "transfer fee" (which can be up to 10% of the sale price).

**The Restraint Trap**: If the franchise terminates or expires, the agreement contains strict **restraints of trade** prohibiting you from opening a similar business or serving the same customer database for a set period. We check these boundaries to ensure your post-franchise livelihood is not compromised.

Franchise Exit Checklist:

**Vett Transfer Fees**: Cap maximum fees to a fixed cost ($2k-$5k) instead of %.
**Check Landlord Covenants**: Coordinate franchise exits with commercial lease assignments.
**Review Fit-Out Ownership**: Confirm what plant/equipment you own vs. what must stay.
**Vett Restraint scope**: Limit geographic restraint radii to direct store localities.

Instruct Our Franchise Law Solicitors Today

Ensure your franchise deed contains OIO and FANZ compliance clauses, protect your local territory rights, and navigate lease coordination. Request a quote today.

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Frequently Asked Questions

A Disclosure Document is a detailed information file FANZ members must provide to prospective franchisees at least 14 days before signing. It contains the franchisor company directors' business histories, audited financial reports of the franchise system, details of current litigation, and contact lists of existing franchisees.

Under the FANZ Code of Practice, franchisees have a mandatory **7-day cooling-off period** after executing the agreement. If you decide to cancel during this window, the franchisor must refund any franchise fees paid, minus their reasonable expenses already incurred (which must be detailed in the agreement).

This varies by brand. In many retail franchises, the franchisor holds the master lease with the landlord and sub-leases the premises to you. This gives the franchisor control over the location if you default. Alternatively, you may sign the lease directly with the landlord. We coordinate lease assignments with franchise deeds to prevent mismatch liabilities.

Instruct Quay Law for Your Transaction

Contact our Remuera office to discuss your sale or purchase contract, title checks, or financing arrangements.