Buying a NZ Franchise: Check Local Demand and Access

A recognised brand may attract attention, but a particular outlet still needs customers who can reach it and have a reason to buy. Before purchasing a premises-based franchise in New Zealand, investigate how its location actually works. This is different from reviewing the lease: you are testing whether the surrounding area supports the business, and whether changes nearby could undermine that advantage.

1. Define what makes this location work

Start with the customer behaviour the franchise needs, rather than a general impression that the area is busy. A takeaway outlet might depend on convenient evening collection; a café might rely on weekday workers; a specialist retailer might need customers willing to make a deliberate journey.

Ask the franchisor and, for an existing outlet, the seller to explain:

• Who the main customers are and when they visit.
• Whether purchases are planned, spontaneous or driven by convenience.
• Which nearby workplaces, schools, shops or other destinations generate visits.
• How customers usually travel to the outlet.
• Whether demand changes during holidays, weekends or different seasons.

Request evidence appropriate to those claims, such as anonymised transaction patterns, customer research or delivery-area information. Treat statements such as “a growing neighbourhood” or “excellent foot traffic” as starting points for investigation, not proof of demand.

For a new outlet, ask why this particular site was selected. Experience elsewhere in the franchise community can inform that decision, but it does not establish that local customers will behave in the same way.

2. Observe customers and access for yourself

Visit at several times that matter to the proposed business. A Saturday inspection tells you little about a location dependent on weekday lunches. Equally, lunchtime activity may disguise a quiet evening trading environment.

Record the date, time, weather and anything unusual affecting each visit. Observe how many people pass, which direction they travel and whether they stop at nearby businesses. Distinguish people passing through from potential customers: a busy road can create visibility while making access difficult.

Walk the likely customer routes and, where appropriate, drive them. Check:

• Whether entrances are easy to find from both directions.
• Whether road layouts make turning or stopping difficult.
• The availability and restrictions of nearby parking.
• Public transport stops, pedestrian crossings and accessible approaches.
• Practical collection points for customers and delivery drivers.
• Whether loading activity could conflict with peak customer periods.

Do not assume that apparently available parking belongs to the premises or can be used by customers. Verify any access rights separately with your lawyer.

Map competing businesses too. Consider what they offer, their opening hours and their convenience. Nearby competitors may attract customers to an area, but they may also leave little unmet demand. Look at complementary businesses as well: losing a major neighbouring destination could matter as much as gaining a competitor.

3. Investigate changes beyond the shopfront

Ask the relevant council about proposals affecting the premises and surrounding streets. Depending on the location, useful enquiries may cover roadworks, parking changes, pedestrian improvements, public transport projects and nearby development applications.

Your lawyer can advise whether a Land Information Memorandum, commonly called a LIM, would help identify property-related issues. A LIM is not a complete assessment of local commercial prospects or every future project. Supplement it with council enquiries and checks with the relevant transport authority where appropriate.

For each identified proposal, establish its status. An early consultation document is not the same as an approved, funded project. Record the expected timing, the source of the information and what remains uncertain.

Ask practical questions: could construction block visibility, remove convenient parking or interrupt pedestrian routes? Could a nearby development bring customers eventually but disrupt access first? For an existing outlet, ask how previous access disruptions affected trading and what evidence supports the answer.

4. Resolve location assumptions before committing

New Zealand has no franchise-specific legislation or compulsory franchise registration regime. General commercial and contract law applies, including the Fair Trading Act 1986, which prohibits misleading or deceptive conduct and unsubstantiated representations. The Franchise Association of New Zealand’s Code of Practice applies to its franchisor members; it is not legislation applying to every franchise.

These protections do not replace your own location checks. Keep copies of material claims about foot traffic, access and planned development, and ask for their basis. Have your lawyer assess significant unresolved claims before you commit.

Prepare a short location assessment separating verified facts, assumptions and unanswered questions. Ask your accountant how reduced visits or temporary disruption would affect the proposed business. Where an unresolved issue is fundamental, discuss whether further investigation or a specific contractual condition is needed.

Practical takeaway: Buy on the strength of verified local conditions, not simply brand recognition or a busy-looking street. Check who will visit, how they will reach you and what could change around the outlet.