Webinar provides a close look at NZ prospects for U.S. franchises 

In a well-attended webinar held 24th April 2025, organised by the U.S. Commercial Service and the International Trade Organisation, U.S.-based franchisors and suppliers to the sector were given a comprehensive overview of the New Zealand franchise market. 

Jonathan Watt of the U.S. Commercial Service gave an overview of the New Zealand franchise market, explaining firstly that the population of New Zealand is comparable to that of New York, Singapore, or Hong Kong, but spread across a land mass similar to the UK or Japan. The population is growing modestly at around 1.3% to 1.4% per annum, with some regional and city fringe areas experiencing growth rates of over 5%. Within the next couple of decades, it is expected that three quarters of New Zealand’s population will live in the top half of the North Island, with 40% residing in Auckland. Māori, Asian, and Pacific populations are growing more quickly than the European population, with Auckland being the most diverse region in New Zealand. 

Franchises have a significantly higher success rate in New Zealand compared to independent start ups, and whilst Kiwis are very supportive of local companies, many have a high awareness of U.S. brands, which can benefit international businesses looking to enter the market. 

Jonathan encouraged U.S. companies to consider pilot programs with New Zealand-based partners to better understand the market and consumer preferences, noting that Auckland is a significant location for testing business ideas due to its large Pacific population, serving as a launch pad for potential further expansion into the Pacific Islands. 

The 2024 Franchising New Zealand survey conducted by Massey University Business School, revealed that New Zealand has 546 business format franchises, contributing 11% to the country’s GDP. Additionally, the survey estimates that 73% of franchise brands originated in New Zealand, and nearly 20% of New Zealand’s homegrown franchise networks have entered international markets.  

New Zealand does not have specific franchise laws, unlike the U.S. and Australia, which have more regulated environments, but the Franchise Association of New Zealand (FANZ) has a combined Code of Practice and Ethics that all members must comply with, covering compliance, disclosure, certification, and dispute resolution. 

Legal considerations 

Stewart Germann of Stewart Germann Law Office in New Zealand, and well-known to many attendees as a CFE-accredited IFA member, spoke next, covering a range of important legal considerations of bringing a franchise to New Zealand from the United States. 

Best practice in New Zealand (and mandatory for FANZ members) has franchisors required to provide a disclosure document after a confidentiality agreement is signed. Stewart urged new franchisors in New Zealand to be particularly transparent about the background of directors and expectations around fees and all additional costs, in order to build a strong level of trust with potential franchisees. 

Entering a deregulated franchise market 

While New Zealand has no specific franchise legislation, there are many laws which govern business behaviours, and these are likely to change at any time, so it is important to maintain a close relationship with a franchise-experienced lawyer in the country if you are planning entry to the market. 

As an example, the Commerce Act was amended in 2017 to include expanded prohibitions on cartel provisions, including price fixing and market allocations, and was further amended in 2019 to classify cartel conduct as a criminal activity. Franchisors must beware of clauses that influence franchisees’ pricing and be cautious about their communications with competitors to avoid unintentional cartel behaviour, as evidenced by past legal cases involving significant fines.   

Other aspects of the changing law to be aware of include recent updates to Unfair Contract terms, varied interpretations of ‘unconscionable conduct’ and ‘good faith’ in legal contexts, and legal courts having the authority to modify or decline to enforce unreasonable covenants against competition.   

Stewart also noted that the deregulated market here makes it easier for U.S. franchisors to enter New Zealand, a crucial point for potential investors, and that New Zealand has a double taxation treaty with the USA, facilitating the repatriation of income and royalties. 

Franchise financing 

Daniel Cloete, the National Franchise Manager for Westpac New Zealand spoke next, advising attendees that there are four main banks funding franchise businesses in New Zealand, along with several smaller finance companies, indicating a robust financial support system for franchises.  

Westpac has been involved in the franchise scene since the 1990’s, being the first bank to establish a specialist franchise team and maintaining major sponsorships for the Westpac New Zealand Franchise Awards and the Westpac Directory of Franchising for over 30 years, which underscores their long-term commitment to the sector. 

Daniel noted that while New Zealand does not have government growth support schemes such as the SBA in the U.S., some banks will work with strong and reputable franchises to develop an understanding of their models that can facilitate smoother finance approval processes for good franchisee prospects. 

In general economic terms, the current inflation rate in New Zealand is currently tracking within the Reserve Bank’s target range of 2% to 3% and the unemployment rate in New Zealand is sitting at 5.1%. Household spending is projected to rise strongly over the coming year, indicating a favourable environment for market entry and migration is expected to positively influence economic demand and labour availability in New Zealand over the next year or two. 

The next speaker was Dr Callum Floyd of Franchize Consultants (also representing the Franchise Association of New Zealand). He explained the main functions of FANZ, a membership-based organisation established in 1996, including their important advocacy, research partnership and compliance roles and the events that help bring NZ franchising networks together every year. 

The National Franchise Conference 

The 2025 event, Fuelling Franchising Forward, will take place from 3 – 5 August in Hamilton, a riverside city approximately 1.5 hour’s drive from the Auckland International airport. New Zealand’s annual Franchise Conference is internationally recognised as a top-quality event, featuring a packed agenda with outstanding speakers, numerous panels and contemporary topics focused on franchising. A one-day Legal Symposium is being introduced for the first time this year. 

Westpac New Zealand Franchise Awards 

These annual awards now in their 30th year showcase the very best franchise brands in New Zealand, with awards presented at a Gala Dinner in Auckland, this year taking place 1 November.  

Franchisee Pre-Entry Programme 

This FANZ-initiated and hosted free training programme covers essential aspects of franchising and requires participants to complete modules and pass assessments to receive a certificate. Some franchisors require prospective franchisees to pass this program before advancing towards purchasing. 

More for U.S. franchisors to consider 

Dr Callum Floyd, Franchize Consultants 

Callum further contributed to the overview of the franchising sector in New Zealand, pointing out the unique size constraints that the relatively small population can place on development expectations for those entering from larger markets. For instance, McDonald’s has 167 units in New Zealand, and well-developed cafe and bakery businesses might reach around 80 units. Home service companies average around  200-300 franchises. 

With his Franchize Consultants hat on, and referencing research conducted last year with Franchise New Zealand media, Callum shared that most prospective franchisees in New Zealand are between the ages of 35 and 54, predominantly male, and 46% are employed full-time. The main appeals for buying a franchise include greater income potential, work-life balance, and proven business models. Investment expectations for franchises in New Zealand range from $25,000 to over $250,000, influenced by household income. The research also highlighted that many prospective franchisees seek a proven business model and brand recognition. 

In another survey completed earlier this year, measuring franchisor expectations, Franchize Consultants found that most expect business conditions to improve in the next 12 months, indicating a positive outlook despite some economic uncertainties. 

Key challenges for franchisors  

The Franchising Outlook survey indicated that finding suitable franchisees is considered as the top challenge for the year ahead, along with access to finance and high borrowing costs. Economic uncertainty is also a significant concern for franchisors in New Zealand, affecting their operations and planning. However, there is an expectation of economic recovery in the second half of the year, which presents further opportunities for franchisors. 

The three major trends impacting franchising in New Zealand are seen to be digital transformation, economic pressures, and workforce challenges. Additional factors include demographic shifts and supply chain resilience, which are also on the minds of franchisors. 

Case study 

Bryn Harrison, representing the NZ retail franchises Carpet Court (65 showrooms) and Curtain Studio (55 showrooms) gave a unique perspective for U.S. franchisors looking at the market in New Zealand. Bryn explained the success they had in working with two main flooring suppliers from the U.S., noting that one brand has become New Zealand’s third most recognized carpet brand and the other has become the number one hard floor brand. 

For each of these flooring brands, Carpet Court were able to use unchanged the same marketing strategies and advertising campaigns as in the U.S. In the soft furnishings and construction sectors at least, Bryn believes that there is almost no modification to product and marketing required for a U.S. firm looking to enter the New Zealand market. 

Nathan Bonney, Iridium Partners 

The final speaker was Nathan Bonney of Iridium Partners, specialists in helping facilitating franchise network growth. Nathan outlined some of the aspects of franchising in New Zealand that will influence the way franchisors from other countries do business here. 

Market entry considerations for master franchising  

• The 2024 Franchising New Zealand survey found that medium-sized systems in New Zealand average just 22 units, which is significantly smaller than in the U.S., necessitating tailored expectations for market entry. 

• The same survey found that 28% of franchise systems in New Zealand originate from overseas, with notable examples including McDonald’s and Subway, indicating a receptive market for international brands. 

• Real estate and labour costs in New Zealand can be higher than expected, impacting site selection and build-out costs for franchises. 

• Access to capital for franchisees is constrained, with banks requiring substantial upfront investments, which may deter quality candidates. 

• Typically, a Master Franchisee in New Zealand will open fewer units compared to the U.S., with expectations of 5 to 20 units over 5 to 10 years. 

• Aggressive growth targets, “shock and awe” marketing tactics and high upfront investments can scare off quality candidates, impacting the franchise’s success. 

• It can take 12 to 24 months to find, vet, and sign the right Master Franchisee, with an additional 6 to 12 months to open a location. 

In conclusion, Nathan pointed out that New Zealand is a small but highly developed market for franchising, which is deeply embedded in the business culture and economy. Post-Covid, there has been a notable increase in interest from expatriates and Kiwis returning home, who are looking to leverage their exposure to international brands. 

The alignment of values, capacity, capability, and long-term vision is crucial for the success of international brands in New Zealand. It is important to exercise restraint and caution, as rushing the process of finding a Master Franchisee can lead to mistakes. Finally, understanding the local market and building trust with potential suppliers, consumers and franchisees before all else is crucial for success. 

Sally Knight from Franchise New Zealand sat in and reported back on the session – original link HERE …