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MINISTRY RECEIVES SUBMISSIONS ON REGULATION

by Simon Lord,
last updated 29/07/2009

January 2009 - The Ministry of Economic Development has received around 30 submissions on its Discussion Document on the Review of Franchising Regulation in New Zealand

Submissions closed on 21 November 2008 and have been posted on the MED website . Among these is a comprehensive submission made by the Franchise Association following consultation with its members via email and face-to-face meetings around the country. ‘The Association's Board is resolved to provide leadership on this issue, and has done so since it was first raised at the beginning of the year,' says Graham Billing, the Association's General Manager. ‘There is a clear need to make a definitive stand on behalf of all the members.'

The FANZ submission to MED can be summarised as follows:

1. FANZ believes that self-regulation is the best option for the franchise sector. It is cost-effective and the best means of ensuring a sound and progressive franchise sector.

2. The FANZ Code of Practice is strongly supported by the Board of FANZ and its members. It is regarded as a good model for pre-contract protection of potential franchisees and during the currency of a franchise term.

3. If franchise-specific legislation were to be preferred, FANZ could support proposals based on and limited to the FANZ Code of Practice requirements of:
a) Mandatory pre-contract disclosure
b) Post-contract ‘cooling-off' periods
c) Compulsory mediation
d) A requirement for potential franchisees to seek or be given the opportunity to seek professional advice pre-contract.

4. Any franchise-specific legislation needs to provide an effective means of setting minimum standards of practice without creating costly and complex documentation requirements. The Australian Code is not a good model for New Zealand.

5. FANZ strongly endorses any proposals for education in the area of franchising. Education is seen as providing potential franchises with the best means of understanding both franchising and the investment opportunities made available to them by the sector.

It remains to be seen whether the new government will wish to proceed with regulation given the desire to reduce compliance costs on business, particularly in the current economic situation. While there is a move to align many forms of legislation with Australia in the interests of CER, the turmoil which has existed over franchise legislation across the Tasman continues to concern the franchise sector there.

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