Making a Formal Complaint

Franchising is very much about relationships but, as in all relationships, sometimes things do go wrong. When that happens, the first and most important thing to do is for both parties to get together and talk. But what if one party won't talk or won't agree to change their ways? What happens next and who can you complain to?

Making a complaint

If the franchisor is a member of the Franchise Association of New Zealand, you may be able to make a formal complaint. The Association publishes a Code of Practice and a Code of Ethics by which all its members must abide. The Code of Practice sets out minimum standards for members and the Code of Ethics defines the spirit in which those standards will be applied. View the Franchise Codes online

Where a franchisee or franchisor believes that another party in the system has acted in a manner inconsistent with their obligations under these Codes, and the other party is a FANZ member, they may make a formal complaint to the Association. Any such complaints are taken very seriously.
In order to make a complaint, there are three steps that you need to follow.

1. Check that the other party is a current member of the Franchise Association of New Zealand (the Directory of Franchising on this website is constantly updated but we are reliant upon information sent to us). If they are not members, then the Association is not in a position to assist you and your only recourse is that afforded by normal commercial law. That is why, if you are buying a franchise, it is important to check whether a franchisor is a member before you sign the agreement. Be particularly careful if a franchisor claims to be compliant with the Code without actually being a FANZ member. Their documentation will not have been checked and essential rights or provisions may have been omitted or altered. If your franchisor is not a member, you will also have no ability to make a complaint to the Association in the event of a problem (see below).
2. Download the Complaints Procedure document and the Complaints Form from the Franchise Association website. Complaints must be put in writing and identify the name of the franchise system and the name of the complainant. Anonymous complaints cannot be addressed.
3. You must identify that section of the Code of Practice or the Code of Ethics which you believe has been breached and give the factual background of the breaches.

The same procedure applies whether the complaint is laid against a franchisor, franchisees, lawyer, accountant, broker or other service provider.

How a complaint is handled

When a complaint is correctly lodged with the Franchise Association it will be referred to a specially-convened Complaints Panel with a deep knowledge of franchising and, vitally, no connection with either party or any of their competitors. The Panel will investigate the complaint on a totally confidential basis with no details being made available to any other party (including other board members) at this stage. If necessary, suitable independent people will be co-opted to ensure impartiality and independence.

The Panel will make sure each party has a proper and fair opportunity to put their side of the story. It will also want to see documentary evidence such as a copy of the disclosure document provided to the franchisee or the franchise agreement between the parties.

If a breach of the requirements of the Code is established, and if the process itself has not rectified the complaint to the satisfaction of the complainant, then the matter will be put before the Association's Board with a recommendation for it to impose appropriate sanctions. The ultimate sanction against a defaulting member is to expel them from the Association with due publicity.

It is important to remember that, while the complaints process can be and is a very practical and low cost way of resolving appropriate issues, the Association is neither a court of law or arbitrator, nor does it have the same power to look at many of the issues. Parties with issues must still take proper and independent legal advice. However, taking a complaint to the Association can be an effective way of pressuring the other party to sit down and discuss issues or to remedy faults.

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