Franchising is a well established method of doing business in New
Zealand. According to a survey conducted by the Franchise Association
of NZ Inc. in 2003 and sponsored by the National Bank of New Zealand,
there are some 350 active franchise systems in NZ with a turnover
of NZ$6.9 billion. On average, new franchisees are paying NZ $132,000.00
in start-up costs. It is estimated that there are some 41,000 people
employed in the franchise industry. The growth rate for franchised
and company owned units is in the order of 25% per annum.
Franchising has been applied successfully in a wide range of retail
and service sectors to a population of just over 4 million people.
There is a strong culture in New Zealand of self employment and
franchising has adapted well to such a culture.
The economy has shown exceptional GDP growth in the last three
- 2002 4.4%
- 2003 3.5%
- 2004 4.2%
However, some economists consider that the economy will slow down
to about 2.4% in the year 2005. Unemployment is around 4% as at
August 2004 and there is a marked skill shortage in New Zealand.
There is a relatively high degree of deregulation in New Zealand.
From a legal perspective it is a straight forward procedure establishing
a master franchise in New Zealand and there is no legislation which
is specific to the franchise industry. There is legislation which
impacts on the conduct of franchising such as consumer and employment
law. Legal agreements used in New Zealand have a familiar pattern
to offshore agreements. There is a strong emphasis in New Zealand
on producing documents which are in plain English.
The Franchise Association, referred to above, does have a wide
level of support and is an active organization which has a voluntary
code of ethics as well as requiring its members to observe such
procedures as alternative dispute resolution.
The country has three main cities comprising Auckland in the North
Island, with a population of some 1.2 million; Wellington (the Capital),
also in the North Island, with a population of 420,000; and Christchurch,
in the South Island, with a population of 340,000. There are sizable
smaller provincial cities.
Examples of overseas franchises which have come into New Zealand
and have been successfully established here include of course the
ubiquitous McDonalds and KFC, Burger King, Pizza Hut and Wendy's.
More recent arrivals include Blockbuster, Starbucks, Esquires, Borders,
Dunkin' Donuts, and a number of well established Australian franchises
such as Muffin Break, Dymocks, Pizza Haven, Brumbies, Baker's Delight,
etc. Some of the locally developed franchises have gone offshore
and a good example is Fastway Couriers which is now found around
In the past there has been a difficulty in raising venture capital
for significant sized franchise operations but increasingly sources
of such capital are becoming available. Because New Zealand has
a small population, there is not the diversity of funding entities
that tend to be found elsewhere. Four banks in New Zealand have
specialist franchise divisions including the ANZ Bank, the National
Bank, Westpac Bank and the ASB Bank. Packages for prospective franchisees
are available for many franchise systems.
New Zealand has sophisticated communication systems, efficient
banking and postal systems, and there is a high level of use of
electronic communications. New Zealanders are perceived as having
a willingness to adopt new technologies and new know how.
The New Zealand Dollar has gained in strength over other currencies
in recent times and as at August 2004, the per capita income in
New Zealand is about US$17,500.00.
New Zealand has a democratic government operating under the Westminster
system. The country is regarded as virtually free of corruption
and New Zealanders have a reputation for openness and willingness
to work hard. With a mild climate, sport is a major feature in the
lives of many New Zealanders as is witnessed by New Zealand winning
and then retaining the America's Cup before losing it last year.
New Zealanders have a high level of home ownership (around 68%),
are high up in the use of motor vehicles and have a high level of
ownership of such things as personal computers, DVDs and cellphones.
A more recent trend has seen New Zealanders eat out more frequently,
particularly, because of longer working hours. There has been a
steady growth in fast-food outlets and consumption of coffee at
Many New Zealanders have travelled and lived abroad and are therefore
familiar with products and brand-names that are not yet established
in New Zealand. Younger New Zealanders have a familiarity with American
products that are seen on U.S. television programmes. New Zealand
traditionally operated on an agricultural-based economy and in a
tightly regulated environment. However, a substantial de-regulation
took place in the mid 1980s and the economy has steadily transformed
since then. Specialised manufacturing, a small but vibrant information
technology industry, tourism, timber, horticulture, wine-making,
boat-building, and film-making (eg Xena and Lord of the Rings) are
all examples of growth industries for New Zealand. The country operates
a highly efficient and subsidy-free farming sector.
So what do Kiwis like to do in their spare time? With so much coast
line, water-based activities mean that boating (particularly, yachting),
fishing, diving, surfing and kayaking are popular. Many kiwi families
have a garage full of boats and their cars are parked outside! Every
town of any size has a golf course and a rugby ground. Although
rugby is a passion for most New Zealanders, there are many other
sports and leisure pursuits including cricket, softball, hunting,
trout-fishing, horse-racing, skiing, etc. New Zealanders love being
outdoors, generally, and with a mild climate, gardening and general
house maintenance is popular.
Surprisingly, for a country of people who live outdoors, book-reading
is very popular. The country produces many artists and craftspeople;
as well as world-class orchestras and choirs. In other words, there
is a cultural side to Kiwis which is sometimes overlooked because
of the apparent obsession with sport and outdoor activities.
The further south one goes, the more conservative people become,
particularly in the lower part of the South Island. The indigenous
Maori people comprise 15% of the population. In the 19th century
much of their land was taken from them by the government and there
has been a long and painful reconciliation process with ensuing
land ownership restoration and compensation. Maori culture has undergone
a strong revival in recent times. There is also a significant number
of people who have migrated to New Zealand from the Pacific Islands
and from South East Asia. Overall, there is now a diverse social
and racial mix, with little racial intolerance.
Kiwis view their Australian neighbours in much the same way as
Americans view Canadians. There is much in common between the two
countries with close economic, sporting and cultural ties. (It is
a source of much national distress that New Zealand has been consistently
beaten by Australia in Rugby for the past few years.) Kiwis see
Australians as somewhat brash and uncouth and the Australians see
Kiwis as their poor cousins! There is a higher standard of living
in Australia (although not significantly) and, in fact, the two
countries are very close (apart from Rugby!)
Because the lifestyles in both Australia and New Zealand are so
similar, offshore companies often come to New Zealand first to set
up business and become acquainted with the local market before crossing
over to the Australian market, with a population some five times
larger. It is considered by many franchisors who operate in Australia
and New Zealand that competition in New Zealand is a little less
New Zealand is a country undergoing change. Mediocre economic management
has seen the standard of living slip from third highest in the 1950s
to about 20th in the OECD ratings. A contributing factor has been
the laid-back Kiwi lifestyle but changes are taking place which
are manifesting themselves in longer working hours, more innovation
and greater emphasis on developing industries which are focussed
on world markets. That trend has been encouraged by smart young
Kiwis who have worked abroad and are coming back here with a desire
to mix lifestyle with successful businesses. In short, Kiwis are
receptive to new ideas and products from overseas. The economy has
performed significantly better in the last three years and there
has been a steady influx of migrants, many of whom are keen to take