Small business: Entering the NZ franchise market

David Newport, director of business brokers Switch Business. Photo / Supplied

David Newport, director of business brokers Switch Business, on the NZ franchise market.

The franchise market in NZ over recent years has been through tumultuous times, with the now infamous Greenacres scandal and more recently the Hell Pizza situation hitting the media.

It certainly hasn't scared off large Australian and US Franchise systems from looking to enter the NZ market. Kiwis are among the highest per capita owners of businesses throughout the world and franchising makes up a significant piece of that pie.

Franchising offers those wishing to become self-employed, statistically, the safest way to do so.

We at Switch Business, in conjunction with Australian-based Global Franchise Partners, have this week released four Australian based franchises and one US based system to the Kiwi market; Wingstop, a US chicken wings franchise, Intelligent Accounts, a book-keeping service, the gelato chain,Gelatissimo, Mexican restaurant business, Zambrero and hair salon chain, Blow Dry Bar.

The systems are all well proven internationally and according to Gidon Rosing at Global Franchise Partners, the NZ market is the logical step for Australian systems because we have similar cultures, spending habits and acceptance of brands.

Auckland is closer to Sydney than Perth which makes it easier to provide ongoing support especially with the time-zone being similar to Australia's east coast, he says.

Another important factor for consideration by NZ investors is that Australia has significantly more robust disclosure laws than we have here in NZ.

According to Rosing, recruiting franchisees with fair disclosure means franchise brands should have fewer disputes because franchisees join the brand with proper knowledge and awareness of all parties' obligations. This leads to more successful and responsible franchisees within a supportive franchise system.

We often hear that the international thinking of the Australasian market is perceived as heading towards being one market but Rosing believes that most franchise brands would rather find a local partner in each market and not one for both.

In these uncertain times in the global economy, New Zealanders who are known to be innovative and entrepreneurial, may choose to embrace successful overseas concepts that can create a niche in the local market seeing them as being less risky than starting a business from scratch.

We often hear comments from buyers that a lot of the opportunities are a rehash of existing franchise systems and bemoan the lack of new ideas. This is why we went looking offshore for new but proven ideas.

- by David Newport