by Wynn Williams
last updated 11/12/2020
Prepare For The Future
by Wynn Williams
last updated 11/12/2020
Katrina Hammon of Wynn Williams Lawyers on the changes facing franchisors
The way that franchisors need to manage their legal obligations is changing. Franchisors are being drawn into their franchisees’ employment issues; Covid-19 has revealed frictions in landlord and supply chain relationships; health and safety non-compliance is resulting in wider responsibilities.
At the same time, there is expansion by acquisition, private equity firms are looking to diversify by investing in well-known brands, and successful franchises are crossing the Tasman in both directions.
‘It all means that franchisors need help to look after their networks, protect their franchisees and ensure they are on a firm footing for the future,’ says Katrina Hammon. ‘And that means having access to legal advice from people who don’t just understand franchising but are part of a larger firm with expertise in other areas and can deal with investors, like private equity firms.’
Katrina is a partner with Wynn Williams, which has over 100 staff in its Auckland and Christchurch offices. Katrina spent eight years working in Australia, specialising in franchise law, helping Australian franchisors expand at home and internationally, and eventually becoming in-house lawyer for Sumo Salad before returning to New Zealand. It’s an experience that has given her a broad understanding of franchising working with global brands.
Learning the lessons
‘Kiwi franchisors can learn a lot from Australia about best practice to help them be aware of representations being made on their behalf and manage the risk of franchisee claims. Many disputes have their origins during the recruitment phase, and putting things in the disclosure document doesn’t really protect you if people don’t read them.
‘That’s why we’ve developed tools such as a pre-contractual questionnaire to help both franchisors and franchise buyers make sensible, informed decisions. If you get that right, it reduces the risk for both parties and protects against the damage and division caused by recruiting the wrong people.
‘And with all the regulation there, Australia is more litigious, more adversarial in some ways – New Zealand is less dispute-driven. If you don’t understand the differences, it’s easy to get things wrong going to the other country.’
Acquisition and investment is another of Katrina’s areas of expertise. ‘We’re increasingly seeing franchises expand through acquisition, either domestically or internationally, and some networks that are straddling the Tasman are seeing good growth as a result. Conversion franchising is hot, too – for example, with private equity backing, I have assisted clients in gaining instant traction through purchasing stores rather than opening new ones.
‘It can be a good route but it requires expert assistance across a number of legal disciplines, including corporate affairs. That’s where Wynn Williams’ wide-ranging expertise is so valuable in supporting our franchise clients, no matter what their plans.
‘So if you are looking at improving your recruitment processes, expanding your franchise internationally, growing locally or bringing in new investors, talk to Wynn Williams for a fresh approach.’
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