Plan Franchise Pricing Rules in New Zealand

When you own every outlet, setting one price across the business feels straightforward. Franchising changes that: independently owned businesses will operate under your brand, and price controls can create competition-law risks. Before recruiting franchisees, design and test a pricing framework that protects customer confidence without assuming you can dictate what every operator charges.

1. Separate brand consistency from price control

Start by listing the pricing decisions you currently make. Include everyday prices, introductory offers, discount vouchers, delivery charges, loyalty rewards and national promotions. For each, ask whether consistency is essential to the customer experience or simply convenient for head office.

You can maintain consistent product descriptions, service standards and brand presentation without necessarily requiring identical selling prices. Franchisees may face different rents, staffing costs and local demand, so your model should accommodate lawful differences rather than treat them as operational failures.

Create a decision table covering:

• Head-office activity: developing recommended prices, preparing campaign materials and negotiating supplier offers.
• Franchisee decisions: choosing selling prices where appropriate and deciding whether to join optional promotions.
• Matters requiring legal review: compulsory promotions, restrictions on discounting, shared online prices and consequences for departing from recommendations.

This is not just a drafting exercise. Your software, field visits and incentive schemes must reflect the same boundaries. A price described as “recommended” is not genuinely optional if refusing it triggers pressure or disadvantages.

2. Understand the New Zealand legal boundaries

New Zealand has no franchise-specific legislation and no government franchise registration requirement. General laws nevertheless apply to the franchising community. For pricing design, the Commerce Act 1986 and Fair Trading Act 1986 are particularly important.

The Commerce Act prohibits resale price maintenance. Broadly, this includes a supplier specifying or enforcing a minimum price at which another business resells supplied goods. Pressure not to discount, threats to withhold supply and incentives tied to minimum resale prices can create problems. Recommended resale prices must remain genuine recommendations, not disguised requirements.

The Act also prohibits cartel conduct, including certain price-fixing arrangements between competitors. This matters where franchisees compete with one another or where company-owned outlets compete with franchisees. Do not assume that operating under one brand makes collective agreement on prices lawful. Whether an exception applies depends on the actual arrangement; specialist competition advice is essential before relying on one.

The Fair Trading Act prohibits misleading or deceptive conduct and unsubstantiated representations. Advertising a discount against a price that was not genuinely charged, or promoting an offer unavailable at participating outlets, may breach the Act.

Membership of the Franchise Association of New Zealand is voluntary, but members must comply with its Code of Practice and Ethics. That is an association framework, not a statutory franchise code, and it does not replace competition-law compliance.

3. Pilot promotions and checkout controls

Use your existing operation to test the commercial and technical mechanics before offering franchises. You cannot prove legal compliance through a pilot alone, but you can expose assumptions that would make lawful pricing difficult.

For example, test an optional promotional bundle. Calculate its contribution after product costs, labour, payment charges, delivery commissions and applicable royalties. Then model different outlet costs. A promotion that works at your flagship premises may be unattractive elsewhere.

Test whether your point-of-sale and online ordering systems can support:

• Outlet-specific prices where needed.
• Clear identification of participating outlets.
• Correct prices before a customer commits to an order.
• Voucher and loyalty rules that match the advertised offer.
• A reliable record of price changes and promotion participation.

If your website accepts orders centrally, establish who contracts with the customer, who receives payment and who funds discounts or refunds. Have a lawyer review that structure rather than assuming central payment collection gives you unrestricted pricing control.

Record practical failures: a checkout that overwrites local prices, a voucher redeemable at unwilling outlets, or an advertisement that cannot display exclusions clearly. Resolve these before launch.

4. Align agreements, communications and staff behaviour

Give your franchise lawyer the tested pricing framework, campaign workflow and software settings. Ask for the franchise agreement, operating procedures and recruitment statements to describe the same arrangement. Avoid promising compulsory nationwide pricing in sales conversations while the agreement describes recommendations as optional.

For each campaign, prepare a short written brief stating participation arrangements, promotional dates, funding, customer terms and the process for resolving errors. Where participation is optional, obtain a clear response rather than assuming silence means agreement.

Train support staff not to pressure franchisees into maintaining minimum prices or use franchisee meetings to coordinate future prices between competing operators. Establish a review route for pricing complaints instead of allowing informal enforcement through group messages.

Practical takeaway: Before franchising, have one complete pricing journey reviewed: recommendation, franchisee decision, advertisement, checkout and settlement. A workable framework needs lawful documents, suitable technology and consistent behaviour—not merely a clause saying prices are optional.