Govt Looks To Iron Out Franchising

Retail Industry News:

The government is considering laws to regulate the franchise sector following an alleged scam in which nearly 200 mainly Chinese and Indian immigrants paid between $21,000 and $25,000 for non-existent ironing franchises at the end of last year.

Australia and Singapore regulate their franchise sectors.

Yesterday Commerce Minister Lianne Dalziel told the Business and Franchise Expo in Auckland that the franchise sector had been shaken by “the unhappy sight of hard-working people, many of them migrants to New Zealand, who had lost their money to a scheme that is still being investigated”.

Dalziel used the occasion to launch a Ministry of Economic Development discussion document which reviews the options for regulating the sector.

These range from doing nothing and maintaining the status quo to introducing mandatory standards for franchise agreements.

The ministry report focuses on three main issues: the amount of information franchisors need to provide prospective franchisees, how disputes between the parties may be resolved, and how public confidence in the franchise sector could be enhanced.