Franchising

When you buy a franchise, it can include the right to:

• a ready-to-go business based on a business model that has already succeeded
• use a recognised and proven brand
• use registered trademarks and other intellectual property
• training and development opportunities
• access the experience and expertise of the franchisor
• an exclusive territory within which to do business
• group buying power
• greater marketplace presence via coordinated advertising and marketing

Some of the advantages that maybe offered with franchises include:

• proven business model
• known financial input including initial costs and working capital
• brand power—a well-known name with a good reputation
• documented system to help you run your business franchise
• training, support or advice from an experienced person within your franchise
• recommended specialists for particular advice (such as banking, legal or accounting)
• group buying power and nationwide brand advertising

Why franchise?

Using a franchise business model can be a strategic and rapid way to help achieve growth for your own business.

Franchising your business enables you to:

• leverage your intellectual property
• have the opportunity for quick business expansion
• strategically fill any current gaps in the market
• make use of opportunities before the competition does
• acquire adequate capital and resource provisioning via franchisee involvement
• solve personnel problems by providing motivated owner/operators
• use franchisees’ vested interest to help motivate retail-based business sales

Setting up a franchise

If you’re going to adopt a franchise business model you’ll need to:

• carry out a viability study
• understand cash flow for a franchise set-up
• ensure royalty fees cover the services promised to franchisees
• have a business model that maximises the franchise system’s value
• implement a franchise agreement that allows you to sell (i.e. you have an exit strategy)

Banking for your franchise

If you want to set up a franchise we can provide special banking services. These can include:

• business finance to buy or expand your franchise, cover cash flow shortages
• money management via phone, internet or desktop banking
• bank processing of business EFTPOS and credit card payments
• retirement planning options including the Westpac KiwiSaver Scheme
• business insurance, life insurance, income protection and more

Joining a franchise

If you are joining an established franchise system and we have a relationship with that franchise we may be able to offer you:

• special pricing
• discounts for your banking
• extremely competitive lending or transactional packages

Setting up a franchise

To set up your franchise package with us, we’ll need the following business information:

• a completed customer needs’ review – this is a summary of your requirements and current financial position, which will help us to assess your request
• cash flow projections for the next 12 months of proposed business – to show us if your business will have enough cash to meet its financial commitments
• financial statements – this gives us a feel for the structure of your franchise. It also indicates your financial performance over a time period
• a short business plan – tells us more about you as a business owner and where and how you'll be operating.
• breakdown of what (and how) you're paying for the franchise – if you are applying for finance, we’ll need an outline of any other borrowings you have.

Research franchise opportunities

Find out all you can about franchising business opportunities in New Zealand using

Franchise Association of New Zealand
Franchise Business
Franchise New Zealand

Choose an industry

Choose an industry that interests you and that you'd enjoy working in. Ask yourself these questions about potential franchise opportunities

• is there a real need for this product or service?
• how stable is that need?
• how big is the market and is it growing?
• how much competition is there?
• how good is that competition and how long have they been in business?
• is the franchise part of an international operation?
• are there several franchises in the industry to choose from?
• what are the points of difference between each competitive franchise?

Contact the franchisors

Take a look at each franchisor’s website. Contact each franchisor for

• a franchise information pack
• the company's history
• details on franchise products, services—and the market for these
• the role of the franchisor—what will they do to help?
• franchise costs—both initial and ongoing

email our Franchise Team for a franchise research checklist

Meet a few franchisors

Get as much information as you can to make an informed decision about the franchise business. Think about whether

• you like the franchisors
• you'd fit with the company

Arrange several meetings with the franchisor. Look to gather more detail than you did at the previous meeting.

Buying a franchise is a complex and multi-leveled decision. So don't be afraid to keep asking questions.

> email our Franchise Team for a list of questions to ask the franchisor

Double check the franchise info you've been given

Contact the Companies Office to confirm the company's details, shareholders and directors

• get a list of credit references and check carefully
• run a credit search through a credit agency

visit the Companies Office website

Obtain references from existing franchisees.

Ask questions such as

• is the franchise business what they expected?
• what do they think of the business?
• what do their customers think of the franchise business?

Bring in the franchise professionals

Involve a good franchise accountant, lawyer and bank for independent and professional franchise advice.

Meet with your franchise lawyer to

• check if there are any legal actions pending against the company
• review your franchise agreement prior to signing

Contact a franchise accountant for help with

• preparing a business plan
• financial projections