Franchise Agreement (New Zealand)
This Franchise Agreement (the “Agreement”) is entered into on [Agreement Date] between:
FRANCHISOR:
[Franchisor Name] (NZBN [Franchisor NZBN]), of [Franchisor Address], [Franchisor City] [Franchisor Postcode] (the “Franchisor”); and
FRANCHISEE:
[Franchisee Name] (NZBN [Franchisee NZBN]), of [Franchisee Address], [Franchisee City] [Franchisee Postcode] (the “Franchisee”).
The Franchisor and Franchisee are referred to collectively as the “Parties” and individually as a “Party”.
BACKGROUND
The Franchisor operates and licenses the [Franchise Name] franchise system (the “System”), being a system for the [Franchise Description].
The Franchisee wishes to operate a franchise outlet under the System in accordance with the terms and conditions of this Agreement.
The Franchisor provided the Franchisee with information about the franchise system on [Disclosure Date], prior to the date of this Agreement, in accordance with the requirements of the Fair Trading Act 1986 (FTA) and good franchising practice.
The Parties acknowledge that New Zealand has no mandatory Franchising Code of Conduct. This Agreement is governed by the Contract and Commercial Law Act 2017 (CCLA), the Fair Trading Act 1986 (FTA), the Consumer Guarantees Act 1993 (CGA), and the Commerce Act 1986.
NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the Parties agree as follows:
1. GRANT OF FRANCHISE
1.1 The Franchisor grants to the Franchisee, and the Franchisee accepts from the Franchisor, a non-transferable licence to operate the [Franchise Name] franchise business (the “Franchised Business”) within the territory described in clause 2 below, in accordance with the System and this Agreement.
1.2 This licence entitles the Franchisee to use the Franchisor’s trade marks, trade names, logos, systems, methods, and operational know-how solely for the purpose of operating the Franchised Business.
1.3 The Franchisee acknowledges that this Agreement does not create a partnership, joint venture, employment, agency, or fiduciary relationship between the Parties.
2. TERRITORY
2.1 The Franchisee is licensed to operate the Franchised Business at or within the following territory (the “Territory”): [Franchise Territory].
2.2 The Franchisee must not operate or solicit business outside the Territory without the Franchisor’s prior written consent.
3. TERM
3.1 This Agreement commences on [Commencement Date] (the “Commencement Date”) and continues for [Franchise Term] (the “Initial Term”), unless terminated earlier in accordance with this Agreement.
4. PRE-CONTRACT DISCLOSURE AND FAIR TRADING ACT 1986
4.1 The Franchisor warrants that all information provided to the Franchisee in connection with this Agreement, including in the information document dated [Disclosure Date], is accurate and not misleading, in compliance with the Fair Trading Act 1986 (FTA).
4.2 The Franchisee acknowledges that it has had the opportunity to review the information provided, seek independent legal, financial, and business advice, and independently assess the commercial merits of entering into this Agreement before signing.
4.3 Neither Party has engaged in, and warrants that it will not engage in, any misleading or deceptive conduct in trade in connection with this Agreement, in compliance with the FTA.
4.4 The Franchisee acknowledges that New Zealand does not have a mandatory Franchising Code of Conduct and that the protections available under the Australian Franchising Code of Conduct do not apply to this Agreement.
5. FRANCHISE FEES
5.1 Initial Franchise Fee: The Franchisee shall pay the Franchisor an initial franchise fee of NZD $[Initial Franchise Fee] plus GST upon execution of this Agreement.
5.2 Ongoing Royalty Fee: The Franchisee shall pay the Franchisor an ongoing royalty fee of [Royalty Rate] of the Franchisee’s gross sales (excluding GST) payable [Royalty Frequency].
5.3 Marketing Fund Contribution: The Franchisee shall contribute [Marketing Fund Rate] of the Franchisee’s gross sales (excluding GST) to the marketing fund maintained by the Franchisor, payable [Royalty Frequency] together with the royalty fee.
5.4 All fees under this Agreement are exclusive of GST unless otherwise stated. Where GST at 15% applies under the Goods and Services Tax Act 1985, the Franchisee shall pay the GST in addition to the fee, and the Franchisor shall issue a valid tax invoice.
5.5 The Franchisee shall maintain accurate books of account and financial records and provide the Franchisor with monthly sales reports and annual financial statements.
6. MARKETING FUND
6.1 The Franchisor maintains a marketing fund to which all franchisees in the System contribute (the “Marketing Fund”).
6.2 The Marketing Fund shall be used exclusively for promoting and marketing the System, the brand, and the products and services offered under the System.
6.3 The Franchisor shall prepare and provide the Franchisee with a statement of marketing fund receipts and expenditure within 4 months after the end of each financial year.
6.4 The Franchisor is not required to spend the Marketing Fund contributions in the Territory or in the period in which they are collected.
7. TRAINING
7.1 The Franchisor shall provide the Franchisee with [Training Details] prior to the commencement of operations. The cost of the initial training is included in the initial franchise fee. The Franchisee is responsible for its own travel, accommodation, and incidental costs during training.
7.2 The Franchisee must complete the initial training program to the Franchisor’s satisfaction before commencing operations.
7.3 The Franchisor may require the Franchisee to attend further training from time to time. The cost of further training will be notified to the Franchisee in advance and is payable by the Franchisee.
7.4 The Franchisee must ensure that its employees are trained in the operation of the Franchised Business in accordance with the System.
8. OBLIGATIONS OF THE FRANCHISEE
8.1 The Franchisee agrees to:
- Operate the Franchised Business strictly in accordance with the System, the Operations Manual, and this Agreement;
- Maintain the standards of quality, service, and presentation specified by the Franchisor;
- Use only the products, equipment, and suppliers approved by the Franchisor;
- Obtain and maintain all licences, permits, and registrations required by New Zealand law to operate the Franchised Business;
- Comply with all applicable laws, including the Consumer Guarantees Act 1993, the Fair Trading Act 1986, the Employment Relations Act 2000, the Health and Safety at Work Act 2015, and applicable food safety standards;
- Maintain adequate insurance as required by the Franchisor, including public liability insurance of not less than NZD $2,000,000;
- Not transfer, assign, or sublicense this Agreement or any interest in the Franchised Business without the Franchisor's prior written consent; and
- Participate in audits and inspections conducted by the Franchisor at any reasonable time on reasonable notice.
9. INTELLECTUAL PROPERTY
9.1 All intellectual property associated with the System, including trade marks, trade names, logos, designs, know-how, and the Operations Manual, remains the property of the Franchisor. Trade marks are protected under the Trade Marks Act 2002.
9.2 The Franchisee is granted a non-exclusive, non-transferable licence to use the Franchisor’s intellectual property solely for the purpose of operating the Franchised Business during the term of this Agreement.
9.3 The Franchisee must not use the Franchisor’s intellectual property for any purpose other than operating the Franchised Business and must cease all use immediately upon termination or expiry of this Agreement.
9.4 The Franchisee shall promptly notify the Franchisor of any actual or threatened infringement of the Franchisor’s intellectual property and shall provide all reasonable assistance to the Franchisor in protecting those rights.
10. CONSUMER GUARANTEES ACT 1993
10.1 The Franchisee, in operating the Franchised Business, will supply goods and/or services to consumers. The Franchisee must comply with all obligations under the Consumer Guarantees Act 1993 (CGA) in connection with supplies made to consumers.
10.2 Nothing in this Agreement limits the rights of consumers under the CGA. Where a consumer has a valid CGA claim against the Franchisee arising from the Franchisor’s acts or defaults, the Franchisee may have a right of redress against the Franchisor under section 26 of the CGA.
10.3 The Franchisee must not make any false, misleading, or deceptive representations to consumers about the goods or services offered under the System, in compliance with the Fair Trading Act 1986.
11. DISPUTE RESOLUTION
11.1 The Parties agree that prompt and effective resolution of any dispute is in both parties’ interests. A Party wishing to raise a dispute must notify the other Party in writing, setting out the nature of the dispute.
11.2 Within 21 days of the dispute notice, the Parties must attempt to resolve the dispute by good-faith negotiation between senior representatives.
11.3 If the dispute is not resolved within 21 days of the dispute notice (or such longer period as agreed in writing), either Party may refer the dispute to mediation before a mediator appointed by the Arbitrators’ and Mediators’ Institute of New Zealand (AMINZ). The costs of mediation shall be shared equally between the Parties unless the mediator otherwise orders.
11.4 Nothing in this clause prevents a Party from seeking urgent injunctive or other equitable relief from a court to prevent irreparable harm.
12. TERMINATION
12.1 The Franchisor may terminate this Agreement immediately by written notice if the Franchisee: (a) becomes insolvent, is placed into liquidation or receivership, or is unable to pay its debts; (b) ceases to operate the Franchised Business; (c) is convicted of a serious criminal offence; (d) engages in conduct that brings the System into serious disrepute; or (e) commits a material breach that is incapable of remedy.
12.2 In all other cases where the Franchisee is in breach of this Agreement, the Franchisor must give the Franchisee written notice specifying the breach and requiring it to be remedied within [Breach Notice Period] days. If the Franchisee fails to remedy the breach within that period, the Franchisor may terminate this Agreement by written notice.
12.3 Either Party may terminate this Agreement upon 60 days’ written notice to the other Party where the Agreement is for an indefinite term or has continued past its initial term.
12.4 Upon termination or expiry of this Agreement, the Franchisee must immediately: (a) cease using the Franchisor’s intellectual property; (b) return all materials and property of the Franchisor; (c) de-identify the franchise outlet; and (d) comply with any post-term restraint obligations.
13. GENERAL PROVISIONS
13.1 Governing Law: This Agreement is governed by the laws of New Zealand, including the Contract and Commercial Law Act 2017, the Fair Trading Act 1986, the Consumer Guarantees Act 1993, and the Commerce Act 1986. Each Party submits to the non-exclusive jurisdiction of the courts of New Zealand.
13.2 No Mandatory Code: The Parties acknowledge that New Zealand has no mandatory Franchising Code of Conduct. This Agreement is not governed by any industry code and the Parties' rights and obligations are as set out in this Agreement and applicable New Zealand law.
13.3 Entire Agreement: This Agreement and the information document together constitute the entire agreement between the Parties and supersede all prior negotiations, representations, and understandings.
13.4 Amendments: No amendment to this Agreement shall be effective unless made in writing and signed by both Parties, subject to the Franchisor’s right to update the Operations Manual.
13.5 Severability: If any provision of this Agreement is invalid or unenforceable, the remaining provisions shall continue in force.
13.6 Independent Advice: The Franchisee acknowledges that it has been advised to obtain independent legal, financial, and business advice before entering into this Agreement.
13.7 Privacy Act 2020: Each Party must handle all personal information collected or held in connection with this Agreement in accordance with the Privacy Act 2020 and the Information Privacy Principles (IPPs).
EXECUTED as an agreement on [Agreement Date].
FRANCHISOR: [Franchisor Name]
NZBN: [Franchisor NZBN]
Address: [Franchisor Address], [Franchisor City] [Franchisor Postcode]
FRANCHISEE: [Franchisee Name]
NZBN: [Franchisee NZBN]
Address: [Franchisee Address], [Franchisee City] [Franchisee Postcode]
Franchisor
________________
Signature
Franchisee
________________
Signature
What Is a Franchise Agreement (New Zealand)?
A Franchise Agreement in New Zealand grants a franchisee the right to operate under the franchisor's system and brand and sets the fees and obligations of each party under the Fair Trading Act 1986.
The Fair Trading Act 1986 (FTA), administered by the Commerce Commission, is the statute that most actively shapes New Zealand franchise practice in the absence of a franchising code. Section 9 of the FTA prohibits misleading or deceptive conduct in trade. Section 14 prohibits false or misleading representations about goods or services. Section 12A (introduced in 2014) prohibits unsubstantiated representations. A franchisor who makes representations about projected earnings, network size, territory protection, or marketing support in a franchise information document or disclosure document must confirm those representations satisfy the FTA's accuracy requirements — or face damages liability under section 43 of the FTA and Commerce Commission investigation. The Franchising Association of New Zealand (FANZ), a voluntary industry body, recommends that its members follow disclosure established standards modelled on the Australian standard, but FANZ membership is not mandatory.
The Commerce Act 1986, administered by the Commerce Commission, applies to franchise agreements that may substantially lessen competition in a New Zealand market under section 27, including territory restriction clauses and exclusive dealing arrangements. Section 30A of the Commerce Act 1986 prohibits resale price maintenance — a franchisor cannot require a franchisee to sell goods or services at a minimum price. The franchisor may issue recommended retail prices (RRP) but must not enforce those prices contractually.
The Consumer Guarantees Act 1993 (CGA) applies at the point where the franchisee supplies goods or services to its customers. The franchisee, as the party in direct contact with consumers, must comply with the CGA's non-excludable consumer guarantees — acceptable quality under section 6, fitness for purpose under section 8, and services performed with reasonable care and skill under section 28. The franchise agreement should allocate CGA liability and indemnity obligations between franchisor and franchisee, including the franchisor's obligation to supply products that meet CGA quality standards. GST at 15% under the Goods and Services Tax Act 1985 applies to the initial franchise fee, ongoing royalties, and marketing fund contributions — all of which must be stated in NZD exclusive of GST in the franchise agreement.
New Zealand's Privacy Act 2020 creates specific obligations in franchise networks where the franchisor collects personal information from franchisees' customers — for example, through loyalty programmes, centralised booking systems, or CRM platforms operated by the franchisor on behalf of the network. Both the franchisor and each franchisee may be agencies under the Privacy Act 2020, each responsible for complying with the 13 Information Privacy Principles. The franchise agreement should allocate Privacy Act 2020 compliance responsibilities clearly, specify the mandatory breach notification obligations to the Privacy Commissioner, and address how customer personal information is shared within the franchise network under Information Privacy Principle 11.
When Do You Need a Franchise Agreement (New Zealand)?
A New Zealand Franchise Agreement is required whenever a franchisor grants a franchisee the right to operate under the franchisor's system and brand in New Zealand — whether the franchisee is a new entrant to the network, an existing franchisee renewing at the end of their term, or an existing business owner converting to a franchise model.
New franchise network establishment: New Zealand businesses establishing a franchise system for the first time need a carefully drafted Franchise Agreement that complies with the Fair Trading Act 1986's prohibition on misleading representations, the Commerce Act 1986's competition law requirements, and the Consumer Guarantees Act 1993's consumer protection obligations — since there is no mandatory franchising code to provide a compliance safe harbour. The Franchising Association of New Zealand (FANZ) recommends that new franchise systems consult franchise lawyers and engage a business adviser accredited by FANZ before executing their first franchise agreement.
International franchisors entering New Zealand: Overseas franchise networks — from Australia, the United States, the United Kingdom, and other jurisdictions — establishing their first New Zealand franchise must understand that New Zealand law provides franchisees with significantly fewer statutory protections than Australian or US state franchise law. The absence of mandatory disclosure, cooling-off periods, and code-prescribed termination restrictions means the franchise agreement bears the full weight of defining the parties' rights and obligations.
Franchise renewals and agreement updates: Existing New Zealand franchise networks updating their franchise agreements at renewal — to reflect legislative changes under the Fair Trading Act 1986 (including the 2014 unsubstantiated representations amendment), new Privacy Act 2020 data handling obligations, updated Trade Marks Act 2002 IP provisions, or new CGA compliance requirements — need a redrafted agreement that reflects current New Zealand law.
Master franchise arrangements: New Zealand master franchise agreements — appointing a New Zealand master franchisee with the right to sub-franchise within a defined territory — require particularly careful drafting to address the sub-franchising rights, IP sub-licensing obligations, and the master franchisee's responsibilities for CGA compliance across the sub-network. The Commerce Commission may scrutinise master franchise territorial restrictions under the Commerce Act 1986.
Franchise resales and transfers: When a departing franchisee transfers their franchise to an incoming franchisee, a new Franchise Agreement must be executed by the franchisor and the incoming franchisee. The transfer process should include the franchisor's approval right, the incoming franchisee's obligations to complete initial training, and updated GST and NZBN details under the Goods and Services Tax Act 1985.
What to Include in Your Franchise Agreement (New Zealand)
A New Zealand Franchise Agreement must include the following key provisions to be legally effective under the Fair Trading Act 1986, the Commerce Act 1986, the Consumer Guarantees Act 1993, and the Contract and Commercial Law Act 2017.
Fair Trading Act 1986 pre-contractual disclosure acknowledgment: Because New Zealand has no mandatory franchising code requiring pre-contractual disclosure, the franchise agreement must contain an express acknowledgment that the franchisor has provided accurate and complete information about the franchise opportunity and has not engaged in misleading or deceptive conduct under section 9 of the FTA, false or misleading representations under section 14 of the FTA, or unsubstantiated representations under section 12A of the FTA. This acknowledgment provides contractual and evidentiary protection for both parties against subsequent misrepresentation claims.
Franchise grant and territory: The grant clause must specify whether the franchisee's appointment is exclusive or non-exclusive and define the territory with precision. Exclusive territory arrangements must be structured to comply with section 27 of the Commerce Act 1986 — the exclusivity must not substantially lessen competition in the relevant New Zealand market. Online and e-commerce sales within or outside the territory should be addressed expressly.
Fees, royalties, and GST: All financial obligations — initial franchise fee, ongoing royalties (typically expressed as a percentage of gross sales), and marketing fund contributions — must be stated in NZD exclusive of GST at 15% under the Goods and Services Tax Act 1985. The agreement should specify the invoicing and payment process, the frequency of royalty calculations, and the consequences of late payment including interest.
Commerce Act 1986 pricing compliance: The franchise agreement must not require the franchisee to sell goods or services at a minimum or fixed price — resale price maintenance is prohibited under section 30A of the Commerce Act 1986. The franchisor may issue recommended retail prices, but the agreement must make clear that the RRP is a recommendation only and that the franchisee retains pricing discretion.
Consumer Guarantees Act 1993 allocation: The CGA clause must acknowledge that the franchisee's supply of goods and services to consumers is subject to the mandatory consumer guarantees under the CGA and must allocate liability and indemnity obligations between franchisor and franchisee where a CGA claim arises. The franchisor should indemnify the franchisee for CGA claims caused by the franchisor's own product defects or system failures.
Intellectual property licence under the Trade Marks Act 2002: The IP licence clause must grant the franchisee a non-exclusive, territory-limited, term-limited licence to use the franchisor's trade marks registered under the Trade Marks Act 2002, brand assets, and operational manuals. Post-termination obligations — requiring immediate cessation of all use of the franchisor's IP — must be clearly stated and survive termination.
Dispute resolution through AMINZ: The dispute resolution clause should require good-faith negotiation followed by mediation through the Arbitrators' and Mediators' Institute of New Zealand (AMINZ) before either party commences litigation. The forms-legal.com New Zealand Franchise Agreement template covers all seven essential elements above, including the FTA pre-contractual acknowledgment mechanism and the AMINZ mediation pathway — both specific to New Zealand commercial practice and absent from comparable Australian franchise agreement templates.
KiwiSaver and employment obligations within the franchise: Where a franchisee employs staff, the franchisee as employer must meet KiwiSaver Act 2006 employer contribution obligations of 3%, deduct PAYE under the Income Tax Act 2007, and pay ACC employer levies under the Accident Compensation Act 2001. The franchise agreement should specify the franchisee's sole responsibility for all employment obligations — confirming that the franchisor is not a co-employer — to protect the franchisor from vicarious employment liability under the Employment Relations Act 2000. New Zealand courts have considered franchisor liability for franchisee employment obligations in cases where the franchisor exercised significant control over the franchisee's workforce.
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Franchise Agreement (New Zealand) (New Zealand) [Legal document template]. Forms Legal. https://forms-legal.com/new-zealand/business/contracts/franchise-agreement-new-zealand
"Franchise Agreement (New Zealand) (New Zealand)." Forms Legal, 2026, https://forms-legal.com/new-zealand/business/contracts/franchise-agreement-new-zealand.
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author = {{Forms Legal}},
title = {Franchise Agreement (New Zealand) (New Zealand)},
year = {2026},
howpublished = {\url{https://forms-legal.com/new-zealand/business/contracts/franchise-agreement-new-zealand}},
note = {Free legal document template. Based on Fair Trading Act 1986}
}
Frequently Asked Questions
No. New Zealand does not have a mandatory Franchising Code of Conduct equivalent to Australia's Franchising Code of Conduct (prescribed under the Competition and Consumer Act 2010 (Cth)). In New Zealand, franchise agreements are governed by general contract law, the Contract and Commercial Law Act 2017 (CCLA), the Fair Trading Act 1986 (FTA), the Consumer Guarantees Act 1993 (CGA), and the Commerce Act 1986. The Franchising Association of New Zealand (FANZ) has developed a voluntary code of practice, but membership and compliance are not mandatory. This means that franchisors in New Zealand have significant contractual freedom but also bear the responsibility of ensuring that their pre-contractual representations and franchise agreements comply with the Fair Trading Act 1986 — particularly the prohibition on misleading and deceptive conduct.
Several consumer protection laws apply to franchise relationships in New Zealand. The Fair Trading Act 1986 (FTA) prohibits misleading and deceptive conduct in trade and false or misleading representations. A franchisor who makes false or misleading representations about the franchise opportunity — including about earnings, territory exclusivity, or support — may be liable under the FTA. The Consumer Guarantees Act 1993 (CGA) applies to the goods and services the franchisee supplies to its customers and implies mandatory consumer guarantees that cannot be excluded. The Commerce Act 1986 applies to any arrangements between the franchisor and franchisee that may substantially lessen competition in a market in New Zealand, including resale price maintenance. The Contract and Commercial Law Act 2017 governs the formation, interpretation, and enforcement of the franchise agreement.
Unlike Australia, New Zealand does not impose mandatory pre-contract disclosure obligations on franchisors under a franchising code. However, the Fair Trading Act 1986 (FTA) requires franchisors to require that all representations made about the franchise — including in information memoranda, information documents, and oral representations — are accurate and not misleading or deceptive. A franchisor who provides inaccurate financial projections, overstates the earning potential of the franchise, or misrepresents the level of support available may face liability under the FTA. Good franchising practice (as recommended by the Franchising Association of New Zealand) is to provide a thorough disclosure document — similar to the Australian disclosure document — to prospective franchisees before they sign the franchise agreement, giving them sufficient time to seek independent legal, financial, and business advice.
Unlike in Australia, there is no mandatory franchising code in New Zealand that restricts the franchisor's right to terminate. The franchisor's termination rights are governed by the terms of the franchise agreement and general contract law principles under the Contract and Commercial Law Act 2017. A franchisor may generally terminate immediately for serious breaches such as insolvency, fraud, or serious criminal offences, and must typically give notice and an opportunity to remedy less serious breaches. Where the franchise agreement contains a termination clause, a court will assess whether the termination is a genuine exercise of the right provided by the contract or an attempt to terminate for an improper purpose. Franchisees who believe they have been unlawfully terminated may seek relief under the Contract and Commercial Law Act 2017, including damages for breach of contract.
Under the Goods and Services Tax Act 1985, GST at 15% applies to most taxable supplies made by GST-registered businesses in New Zealand, including the supply of franchise rights (the initial franchise fee and ongoing royalties). The GST registration threshold in New Zealand is NZD $60,000 in taxable supplies over any 12-month period. Both the franchisor and the franchisee are typically GST-registered. The franchisor must charge GST on the initial franchise fee and ongoing royalties and issue valid tax invoices showing the GST number and the amount of GST charged. The franchisee may claim input tax credits for the GST paid on franchise fees, subject to the normal input tax credit rules. The franchise agreement should clearly state whether fees are quoted exclusive of GST, with GST payable in addition at 15%.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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