Franchise agreements usually contain detailed termination clauses. These termination clauses generally provide for a number of out-of-the-box outcomes for franchisees in the event of termination, which include: most franchise agreements provide that these (or other) consequences apply to any type of termination (or expiration), regardless of the expiration of the agreement. If the underlying offence is minor, these clauses may be heavily penalised in their effect and be disproportionate to the infringement itself. It is not common knowledge that a pensioner of a lease is liable under the lease until the date of termination or the next extension. This means that a franchisee who sells its business could remain liable for the lease agreement long after the sale has not been complied with. Any change in this position requires the negotiation of the lease at the beginning. You can also reduce this risk by contracting liability in the event of an assignment or by limiting liability in the event of assignment to a sum of money or a certain period of time. Any agreement should include clauses specifying the initial and ongoing obligations of the franchisee and the franchisee. This is a list of Do`s and Don`ts. The relevant clauses can often contain 30 or 40 sub-clauses – or even more – discouraging and can be disseminated directly by the agreement and even in the manual. There are no franchise-specific laws in New Zealand; However, there are existing laws that protect franchisees. The main laws are the Fair Trading Act 1986, the Commerce Act 1986 and the Contract and Commercial Law Act 2017.
These articles focus on misrepresentation and restrictive business practices, including anti-competitive behaviour. If a franchisor is part of FANZ, the franchise agreement must include a dispute resolution clause. The Code of Practice states that mediation is mandatory and has a high chance of success. There is also the Arbitration Act of 1996. A national franchisee who is not a member of FANZ may take legal action, but the courts usually require an attempt to resolve the dispute through mediation. A foreign franchisee could initiate proceedings in New Zealand and sue a particular franchisee, but again, the courts may request an attempt to resolve disputes through mediation. The legislation in force in any franchise agreement is important and most foreign franchisees require that the legislation in force be that of their country of origin. At the same time, it is recommended that foreign franchisees stipulate that the legislation in force should be the law of New Zealand, as it is much easier to act quickly with respect to a defaulting master franchisee or franchised by the New Zealand courts and to enforce New Zealand law. . . .