Global Franchise 9.1

“NewZealand is one of the most sophisticated, discerning, andwell-developed franchise markets in the world, with a strong ethical framework” Geographical advantages The country’s geographic proximity to Australia can also be a plus point for those brands wishing to trial out their franchise in a smaller regional market before taking on the larger and more regulated market of Australia. However, it’s important not to underestimate the differences between the two markets. From a distance, we might consider these neighboring countries to be much the same, but there are significant variations which can trip up the unwary franchisor! For example, New Zealand is generally a highly regulated, safe and secure country where authorities are very keen to protect the wealth of the nation. When it comes to franchising, on the other hand, it has no specific franchising laws when compared to Australia, meaning that brands moving from one to the other will experience very different levels of legislation and red tape. However, despite the lack of overt regulation, New Zealand can still be considered an extremely franchise-friendly environment with a strong ethical framework through bodies such as the Franchise Association of New Zealand (FANZ). Membership and association with FANZ can, and will, add huge value and credibility to any brand looking to expand into the country. Advice for international franchisors Whilst the outlook for 2024 and 2025 remains extremely positive for franchise growth in New Zealand and most franchisors and stake holders are optimistic about the future, there are still some key challenges for brands to consider: • Franchisee funding: While banks are clearly very prepared to supply funding to franchisees, they are only willing to do so if a franchise has been proven as a concept and demonstrated to work well when moved to New Zealand. Therefore, franchisors should be wary of premature entry into this territory. Once established, however, some banks may lend franchisees up to 50% of the total investment. • Geography: New Zealand is a large country with a small population and low population density. The exception to this is Auckland, of course, which contains two million of the country’s five million citizens, but population is otherwise concentrated in clusters with significant distance between them. While transport infrastructure is excellent, it can mean the transportation of supplies might be costly. • Operational costs are higher than some nations, but still reasonable compared to the neighboring country of Australia (higher COGS, labour costs, rent and site acquisition). • Pool of talent and labor shortages are another issue which some labor-intensive local franchisees may have to face, due again to the low population density in most areas. • Cost and availability of real estate can be challenging. • Time zone differences: Huge time differences can make timely communication with franchisees more challenging. For instance, Aukland is 13 INS IGHT 34 GLOBAL FRANCHISE | ISSUE 9.1