Buying a NZ Franchise: Put Negotiated Promises in Writing

A promise made during franchise negotiations can materially change whether a purchase works for you. Perhaps the franchisor offers a temporary fee concession or agrees to a different opening timetable. Before buying a franchise in New Zealand, make sure those negotiated arrangements become clear, binding commitments rather than reassuring conversations. A carefully drafted side letter or agreement amendment can help.

Identify promises that change your decision

Start a written record of every concession or assurance that affects your decision to buy. Keep the relevant emails, proposal documents and meeting notes, including who said what and when. Distinguish an agreed commitment from an aspiration, estimate or suggestion still awaiting approval.

Examples worth recording include:

• A temporary reduction in a particular franchise fee.
• Permission to launch on a different date from the standard timetable.
• An agreed exception to a normal operating requirement.
• Reimbursement of a specified opening expense.
• A commitment to provide particular launch assistance.

For each item, ask: would you still buy on the same terms if this did not happen? If the answer is no, flag it to your franchise lawyer before signing.

Do not assume that an email saying “we can accommodate that” settles the issue. It may leave unanswered what is being offered, how long it lasts and whether the person writing has authority to approve it.

Understand the New Zealand legal position

New Zealand has no franchise-specific statute, compulsory franchise registration system or generally applicable statutory pre-sale franchise disclosure regime. The franchise community operates under general laws, including contract law and the Fair Trading Act 1986, which prohibits misleading or deceptive conduct and unsubstantiated representations in trade.

The Contract and Commercial Law Act 2017 also contains rules relevant to contractual misrepresentation and remedies. Whether a particular statement creates an enforceable obligation or supports a legal claim depends on the facts, the documents and the applicable law. An oral promise is not automatically worthless, but proving its wording and legal effect can be difficult.

The Franchise Association of New Zealand (FANZ) is a voluntary membership organisation. Its Code applies to member franchisors and includes pre-contract disclosure requirements. It is not a statutory code applying to every franchise in New Zealand. Receiving a disclosure document does not, by itself, make every sales conversation part of your agreement.

Ask your lawyer to check how the proposed contract treats earlier statements, separate documents and later amendments. Recording a negotiated promise properly is usually much more practical than relying on a dispute after purchase.

Turn each promise into a precise commitment

A side letter is a separate document recording agreed terms alongside the main agreement. Alternatively, the parties can amend the agreement itself or include a negotiated schedule. Your lawyer should recommend the appropriate approach; the document’s title alone does not make it effective.

Replace broad reassurance with terms that answer specific questions:

• Who must act? Identify the legal entity responsible, not just the brand or salesperson.
• What must happen? Describe the concession, payment or action precisely.
• When is it due? State the date, duration or clearly defined trigger.
• What conditions apply? Record any approvals, evidence or obligations required from you.
• What happens if it is not delivered? Agree an appropriate response rather than leaving the consequences uncertain.

For example, “reduced fees while you establish the business” leaves substantial room for disagreement. A properly drafted concession would identify the fee, the reduction, the start and end points, any conditions and the rate that applies afterwards. It should also clarify whether other charges remain unchanged.

Where a promised payment matters to your purchasing budget, have your accountant check its timing and tax treatment as well as its amount.

Check the promise survives the final paperwork

Before signing, have your lawyer read the negotiated document together with the final franchise agreement. Check which document takes priority if their terms conflict and whether the agreement’s amendment formalities have been satisfied.

Confirm that the correct parties sign and that their signatories have authority. A seller of an existing franchise cannot simply promise that the franchisor will grant you an exception. Obtain the commitment from the party that actually controls it.

Check whether the arrangement applies only to you, expires after a stated period or continues on renewal or transfer. These points should be explicit, not assumed. Keep the signed documents together and diarise any deadlines or evidence requirements.

Practical takeaway: List the promises that influenced your purchase, then ask an independent franchise lawyer to turn each important one into a clear, authorised and properly executed commitment before you sign.