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Katrina King: Franchise Association CEO on franchising in New Zealand · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk SEDB. Follow
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  Speaker 2: Following on from our discussion yesterday about being your own
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  Speaker 2: boss and making the leap to own your own business,
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  Speaker 2: today is World Franchise Day. Data suggests the business of
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  Speaker 2: franchising and owning established brands as booming. The industry has
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  Speaker 2: a net worth of forty seven billion dollars, representing almost
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  Speaker 2: eleven percent of New Zealand's GDP. There are currently around
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  Speaker 2: thirty thousand franchise units nationwide, with research showing their still
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  Speaker 2: room for growth. CEO of the Franchise Association New Zealand,
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  Speaker 2: Katrina King joins me. Now, good morning, Good.
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  Speaker 3: Morning Carrie, and happy World Franchise Day.
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  Speaker 2: I was just about to say that you beat me talking. Hey,
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  Speaker 2: we were talking about small business yesterday and about making
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  Speaker 2: the move from being a paid employee to owning your
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  Speaker 2: own business, and somebody was talking about franchises then, so
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  Speaker 2: another person said, well, a franchise e isn't really owning
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  Speaker 2: your own business. You're working still for somebody else because
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  Speaker 2: they get to clip the ticket no matter how successful
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  Speaker 2: you are. Is that a fair comment?
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  Speaker 3: No? I don't agree with that. I mean, we see
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  Speaker 3: franchising as being in business for yourself, but not by yourself.
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  Speaker 3: So essentially, as a franchisee, you are part of a system, absolutely,
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  Speaker 3: but you are very much a small business in your
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  Speaker 3: local community and ye are just supported by a franchise system.
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  Speaker 2: So is there a does it depend on which franchise
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  Speaker 2: you buy into, depending on how much of your income
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  Speaker 2: goes to the to the main franchise owner, or is there.
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  Speaker 3: A standard race relatively relatively consistent. Each franchise system will
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  Speaker 3: have their own way of working in their own fees
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  Speaker 3: and have they work with their franchisees, but across the
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  Speaker 3: board it's fairly consistent.
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  Speaker 2: Okay, and who mainly buys the franchises.
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  Speaker 3: The franchisees. So we see as people coming out of
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  Speaker 3: perhaps corporate employments, people looking for a career change. Sometimes
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  Speaker 3: couples want to go into business together and they think, well,
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  Speaker 3: if we were to start something completely from scratch, you know,
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  Speaker 3: there's a lot to do, there's a lot to know.
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  Speaker 3: But if you're buying into an established franchise brand, then
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  Speaker 3: it comes with a lot of systems, a lot of
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  Speaker 3: support obviously the brand and you know which is all
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  Speaker 3: good for starting your own business.
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  Speaker 2: Are there any protections for people who come in and
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  Speaker 2: buy into a franchise and sort of use family to
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  Speaker 2: undercut labor rates things like that.
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  Speaker 3: Well, as an association, we have a code of practice
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  Speaker 3: and ethics that all of our members are scrutinate against.
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  Speaker 3: So there's some really good things in there around dispute resolution,
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  Speaker 3: calling off periods, and a complaints process for franchisees. I
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  Speaker 3: know our big systems are really good at keeping a
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  Speaker 3: tab on their franchisees and making sure that things are
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  Speaker 3: running well, that they're operating to best practice. So yeah,
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  Speaker 3: I think we're doing everything we can to look out
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  Speaker 3: for that.
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  Speaker 2: When it comes to the amount of work you have
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  Speaker 2: to put in, is it true? Is it true of
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  Speaker 2: any small business that the harder you work, the better
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  Speaker 2: your returns, And the better you work, the better your returns.
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  Speaker 3: Yeah? I think so. I think that applies to any
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  Speaker 3: small business, regardless of whether you're franchised or not, you know,
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  Speaker 3: and most small business owners really do put their heart
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  Speaker 3: and soul into it, and I think that's where the
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  Speaker 3: success comes from. So I think sometimes people come into
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  Speaker 3: two franchising thinking it's a lifestyle choice, and it is absolutely,
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  Speaker 3: but it doesn't mean that you can just sit back
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  Speaker 3: and let it happen.
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  Speaker 2: Do you have obligations to the main you know, the
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  Speaker 2: franchise owner.
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  Speaker 3: Yeah, as a franchise e, there will be things laid
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  Speaker 3: out in your franchise agreement, and again that depends on
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  Speaker 3: the system and how they report and what they're looking
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  Speaker 3: for within that particular franchise system.
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  Speaker 2: What's the difference between a franchise e and member of
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  Speaker 2: a cooperative?
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  Speaker 3: That's probably not something I think comment on specifically. It's yeah,
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  Speaker 3: there's a number of different ways that things can be
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  Speaker 3: structured to Franchising is one, co option is another, licensing
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  Speaker 3: is another, and then obviously corporate owned is another. So yeah,
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  Speaker 3: there's subtle nuances between all of those.
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  Speaker 2: Okay, okay, And when it comes to the growth of
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  Speaker 2: the franchise it how do you know that your business
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  Speaker 2: is one that would benefit from having franchises rather than
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  Speaker 2: just selling it.
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  Speaker 3: On Yeah, so I think if you're in business, and
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  Speaker 3: whether that's a cafe, whether that's a pilate studio or anything.
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  Speaker 3: I mean, obviously seventy percent of New Zealand's franchise brands
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  Speaker 3: are homegrown. So that's a lot of Kiwis that have
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  Speaker 3: started something from scratch and then gone, I think we
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  Speaker 3: can grow this. So it's whether you want to fully handover, sorry,
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  Speaker 3: grow the business and have your own stores and your
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  Speaker 3: own employees, or whether you want to actually start creating
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  Speaker 3: little small businesses within that to spread your network. So
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  Speaker 3: again that comes down to what industry you're in, I think,
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  Speaker 3: and really how you want to run that business.
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  Speaker 2: Yeah, it would be. Really, it would be like a
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  Speaker 2: whole other set of skills, wouldn't it to take your
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  Speaker 2: business and turn it into something that could be franchised nationally?
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  Speaker 3: Yeah, it is. And again on the flip side, you know,
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  Speaker 3: not everyone is going to sit franchising. In terms of
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  Speaker 3: someone you're wanting to have a small business, you know,
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  Speaker 3: you have to look at it. We have a great
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  Speaker 3: pre entry franchise e training that someone can do. Okay,
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  Speaker 3: so yeah, that's available in our website, and it's to say,
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  Speaker 3: you know, is franchising for me? Is this something that
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  Speaker 3: I think I could do? Because it is a different
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  Speaker 3: skill set absolutely, whether you're a franchise or a franchise
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  Speaker 3: e in terms of moving into that with your business.
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  Speaker 2: And what kind of obligations are put on you by
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  Speaker 2: the franchise, by the by the licensee, by the licensing agent.
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  Speaker 3: So this is if you're a franchising Yeah, yeah, Again
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  Speaker 3: that varies completely by by agreements. As an association, we
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  Speaker 3: don't specifically you know, monitor franchise agreements as we have
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  Speaker 3: them uphold code of practice and ethics. So there's certain
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  Speaker 3: things that need to be in there from our association's
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  Speaker 3: point of view to make sure that's franchising best practice.
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  Speaker 3: But how a system runs there supply chain or marketing
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  Speaker 3: or the likes is often very specific to that system.
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  Speaker 2: Right and along with growth, does it mean that not
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  Speaker 2: only there could be Kiwi businesses that could become franchise operations,
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  Speaker 2: but does it mean that there are franchises going begging
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  Speaker 2: that that there are you know, franchises that need people
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  Speaker 2: to step into them across that membership.
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  Speaker 3: I think there's Again it depends on the end of
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  Speaker 3: Some industries are having no issue finding franchises who want
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  Speaker 3: to step into that business. Others are finding it a
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  Speaker 3: little bit harder. Sometimes that can be the upfront capital
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  Speaker 3: investment that's required. You know, if you're moving into cleaning
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  Speaker 3: services where it's really the man in the van. That's
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  Speaker 3: obviously low investment. But if you're wanted to start a
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  Speaker 3: gym or a cafe, there's got to be a lot
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  Speaker 3: more upfront investment and there's definitely people who want to
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  Speaker 3: do that, but it just depends on the industry as
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  Speaker 3: to what demand is there at the moment.
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  Speaker 2: And there's a website people can go to to see
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  Speaker 2: what's out there if they're sitting at their desk at
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  Speaker 2: their corporate job thinking no, this isn't for me. I
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  Speaker 2: need something, I need something more, and where can they
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  Speaker 2: go to start browsing.
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  Speaker 3: So we have our website Franchise Association dot org dot
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  Speaker 3: zed and a directory there and then that takes you
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  Speaker 3: through also to the Franchise New Zealand Media website which
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  Speaker 3: has a full directory of available franchise systems and that's
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  Speaker 3: franchised to CO dot zed.
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  Speaker 2: Magnificent, Happy World Franchise Day, Katrina. Thank you for your time.
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  Speaker 3: Thank you so much, Thank you so much, Krie I
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  Speaker 3: got good day.
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  Speaker 1: Bye for more from News Talk sed B. Listen live
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