I have just returned from the Franchise Association of New Zealand Franchise Conference in Queenstown, where there was an obvious relief from the franchising sector that no legislation will be introduced following the recent government inquiry.

The New Zealand Minister of Commerce, the Honourable Simon Power, released a paper last month, announcing no franchise specific legislation would be introduced, and so the sector continues to operate under a voluntary code of conduct.

Although there were some concerns raised around this decision at a law symposium hosted at the University of Auckland a few days after the announcement, the general feeling at the conference was one of relief.

Interest in franchising in New Zealand

It was also interesting to see quite a few Australian franchisors in attendance at the conference, as New Zealand is often the first country in which Australian franchisors export their franchise business opportunities.

As I was discussing with Wet-Seal franchisor Jim Child, we have much to learn about franchising in New Zealand because although it’s close and we speak the same language there are many cultural differences which must be considered.

New Zealand cultural differences

The main issues for franchisors to consider before launching in New Zealand (some of which are given from an Australian franchisor perspective, but still relevant to other international franchisors looking to New Zealand) are:

1. The potential market in New Zealand is very small so it is difficult to obtain a return on the set-up investment.
2. New Zealand is geographically dispersed and each region is characteristically different, so a ‘one-size-fits-all’ approach is unlikely to work in New Zealand.
3. Despite its close proximity, New Zealand is not another state of Australia so it’s difficult to operate without a Master Franchisee with local knowledge.
4. New Zealand’s economy is in recession and businesses are finding it tough.
5. Products usually need to be modified to suit local New Zealand preferences – it’s wrong to assume New Zealanders are identical to Australians in their tastes.

Successful franchising in New Zealand

Despite these considerations, New Zealand can still be a successful destination for franchise expansion, if franchisors do their research and planning, and adapt their offering accordingly.

One great success story Franchise Association of New Zealand Chairman Estelle Logan refers to is The Coffee Club.

The guys who brought the Coffee Club to New Zealand lived there first, gained local knowledge and became engrained in the culture before setting-up, which is what Estelle puts their success down to – they learnt the market first.

New Zealand Franchise Conference connection

Also at the conference it was wonderful to meet Dr Callum Floyd from Franchize Consultants, as I examined his PhD thesis several years ago.

He is now a well respected consultant in New Zealand and his website ‘Franchise Chat’ is a great resource to the sector, not just for New Zealanders, but for anyone with an interest in franchising.

Your experience of cultural differences

I’d love to know your thoughts, tips, experiences and lessons learnt on New Zealand cultural differences? And if you’re a New Zealander, what are the common mistakes franchise systems make which really turn you off?