Prepare a Franchise Agreement Brief in New Zealand

Before asking a lawyer to draft your first franchise agreement, explain exactly how your proposed franchise will work. A good drafting brief translates a tested business model into clear commercial instructions. For a New Zealand business entering the franchising community, this helps prevent a polished contract from promising something the business cannot deliver.

Understand what the agreement must do

New Zealand has no franchise-specific legislation regulating the ongoing franchisor–franchisee relationship, and no government franchise registration requirement. That does not mean franchise agreements operate outside the law.

The Fair Trading Act 1986 prohibits misleading or deceptive conduct, unsubstantiated representations and unconscionable conduct in trade. Its unfair contract terms provisions can also apply to qualifying standard-form small trade contracts. The Commerce Act 1986 governs competition matters, while the Contract and Commercial Law Act 2017 addresses important aspects of commercial contracts, including remedies for misrepresentation. Other general laws apply according to the business and its activities.

Membership of the Franchise Association of New Zealand (FANZ) is voluntary, but members must comply with its Code of Practice and Ethics. Its disclosure requirements are membership obligations, not a statutory disclosure regime applying to every franchisor.

Tell your lawyer whether you are a FANZ member or intend to join. Ask them to identify the legal and code requirements relevant to your proposed arrangement, rather than treating an overseas template as a suitable starting point.

The agreement should record the commercial relationship accurately. It cannot make an untested operating model reliable or erase misleading recruitment statements.

Give your lawyer decisions, not just documents

Start with a plain-English description of the transaction: who grants the franchise, who operates it, what rights are granted and what each party must contribute. Identify unresolved decisions openly instead of allowing assumptions to become contractual terms.

Prepare a short instruction table with these headings:

• Commercial decision: what you want the arrangement to achieve.
• Operational evidence: how this works in your existing business or pilot.
• Responsible party: who performs the task, pays the cost or approves the decision.
• Open question: what requires legal advice or further testing.

For example, “franchisees must use our booking system” is incomplete. Explain who contracts with the software provider, who pays subscription charges, what access the franchisor needs and what happens if the service becomes unavailable. Your lawyer can then advise on the contractual allocation of responsibility.

Supply supporting documents, including your business plan, relevant pilot findings, draft manual, proposed charges, supplier arrangements and recruitment materials. Mark each document with its date and status. Distinguish tested practices from plans that have not yet been implemented.

Also identify third-party dependencies. If your model relies on licensed software, equipment or intellectual property, provide the relevant contracts so your lawyer can check whether the proposed franchise use is permitted.

Check consistency across the whole proposition

The franchise agreement is only one part of what a prospective franchisee sees. Your brief should help the lawyer compare it with the disclosure document, manual, financial explanations and sales presentation.

Create a simple consistency checklist. For each important promise, record where it appears and whether the wording describes the same obligation everywhere.

Consider a recruitment presentation that promises a complete opening package. Does the agreement specify what is included? Does the cost schedule identify exclusions? Does the opening checklist assume the franchisee buys items that the presentation appears to include?

These are not merely drafting details. Conflicting descriptions can create misunderstandings and potentially raise Fair Trading Act concerns.

Ask your lawyer to distinguish between obligations that belong in the agreement and practical instructions that belong in the manual. Essential commercial commitments should not be left vague simply because an operational document mentions them. Equally, a contract need not reproduce every daily procedure.

Where documents conflict, correct the underlying inconsistency rather than relying solely on a clause stating which document takes precedence.

Test the draft against real situations

Once the first draft arrives, read it alongside a walkthrough of an ordinary working week and a difficult opening week. Include the people who will actually administer the arrangement, not just the founder.

Test questions such as:

• Can the team calculate each payment using the definitions provided?
• Is it clear who approves an opening and what evidence they need?
• If essential equipment arrives late, can both parties identify their responsibilities?
• Can notices reach the correct person through the specified process?

Record each ambiguity and send consolidated feedback to your lawyer. Ask them to explain provisions you cannot confidently describe in everyday language. Encourage prospective franchisees to obtain their own independent legal and accounting advice; your lawyer does not advise both sides.

Practical takeaway: Before commissioning the agreement, assemble one dated drafting brief containing your commercial decisions, supporting evidence and unanswered questions. The aim is a contract that reflects a workable business relationship—not one that quietly invents it.