Franchises: Buyers Beware

New Zealand Herald:

There is no such thing as buying your own job despite some people believing that purchasing a franchise does just that. Any financial investment involves uncertainty and becoming a franchisee bears risks as well as the potential for rewards.

Franchises are a growing business sector in New Zealand and people find them attractive because someone else, the franchisor, has already taken the business start-up gamble and now has knowledge and experience to share.

In New Zealand there’s no specific legislation to protect either the franchisor or the franchisee.

So it’s a case of buyer beware, particularly if the franchisor does not belong to the Franchise Association of New Zealand, the organisation’s chief executive Peter Fergusson says.

A code of ethics and practice binds members.

Their businesses are independently scrutinised every second year to make sure standards are met.

‘When a buyer sees the logo they have at least some belief that there is a set of ethics and practice behind that company, that they meet certain business standards,’ Fergusson says.