{"id":219447,"date":"2022-12-15T22:51:12","date_gmt":"2022-12-15T09:51:12","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=219447"},"modified":"2026-02-03T14:33:46","modified_gmt":"2026-02-03T01:33:46","slug":"differences-between-a-franchise-and-a-dealership","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/franchising\/differences-between-a-franchise-and-a-dealership\/","title":{"rendered":"Differences Between a Franchise and Dealership in NZ"},"content":{"rendered":"\n<p>Before&nbsp;<a href=\"https:\/\/legalvision.co.nz\/franchising\/how-do-i-turn-my-business-into-a-franchise\/\">expanding your business into a franchise<\/a>&nbsp;or dealership, consider their differences. Both models consist of conducting business using your already established brand\u2019s intellectual property and systems in the market. As a business and brand owner, you must identify which differences affect your business needs to make an informed decision. This article will detail the main differences between a franchise and a dealership in New Zealand.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a Franchise?<\/h2>\n\n\n\n<p>Under the <a href=\"https:\/\/legalvision.co.nz\/franchising\/franchise-agreement\/\">franchise agreement<\/a>, you allow your franchisee to use your intellectual property in their business. As a result, your franchisee will use your:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>logo;<\/li>\n\n\n\n<li>brand name;<\/li>\n\n\n\n<li>systems;<\/li>\n\n\n\n<li>products and services;&nbsp;and<\/li>\n\n\n\n<li>business model.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>Your franchisee will essentially purchase a turnkey business. Moreover, you can join\u00a0<a href=\"https:\/\/franchiseassociation.org.nz\/\">FANZ<\/a>\u00a0to ensure your franchisees comply with the association\u2019s codes and ethics. However, if you join FANZ, you will have obligations, including providing a franchise disclosure document to your franchisee.<\/p>\n<\/div>\n\n\n\n<p>Often you will need to look for and recruit franchisees. Moreover, many franchisors provide financial, marketing, and sales support to their franchisees. This ensures consistency across your franchise brand.<\/p>\n\n\n\n<p>Examples of franchises include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>McDonald\u2019s;<\/li>\n\n\n\n<li>Subway; and<\/li>\n\n\n\n<li>Zara.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What is a Dealership?<\/h2>\n\n\n\n<p>A dealership is essentially a retail distributor. Your dealers will sell your products and services under the name and logo of your company. A dealership aims to help with sales and distribution rather than making products.<\/p>\n\n\n\n<div  class=\"box box--icon box--info\">\n    <p>The dealership agreement may be exclusive to a territory and include the right to a service centre. For example, a car dealership may need access to a warrant of fitness and after-sales services for their customers. A dealership is often more independent than a franchise because it can modify its business model.<\/p>\n<\/div>\n\n\n\n<p>Examples of dealerships can include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Toyota;<\/li>\n\n\n\n<li>Mazda; and<\/li>\n\n\n\n<li>Triumph Motorcycles<\/li>\n<\/ul>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+64800005570\" class=\"not-prose\">0800 005 570<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact 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Often, an independent business runs a dealership while a franchisee runs a franchise.<\/p>\n\n\n\n<p>In operating a dealership model, you can advise your dealers on how to conduct business activities. However, the dealer does not&nbsp;have&nbsp;to follow your advice. They have freedom when designing the store and dealing with product availability. Moreover, your dealer gets to decide on pricing strategies.<\/p>\n\n\n\n<p>Alternatively, your franchisee is bound by their <a href=\"https:\/\/legalvision.co.nz\/franchising\/what-is-the-difference-between-a-licence-and-franchise-agreement\/\">franchise agreement in a franchise.<\/a>&nbsp;They must fulfil their responsibilities under the agreement and use your franchise systems. Often, you will decide the:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>design of the store;<\/li>\n\n\n\n<li>branding guidelines;<\/li>\n\n\n\n<li>promotional strategies; and <\/li>\n\n\n\n<li>when products are released to ensure consistency across franchises. <\/li>\n<\/ul>\n\n\n\n<p>If you aim to have strong control over your business, then a franchise may be the right move.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Fees<\/h3>\n\n\n\n<p>Unlike a franchisee, your dealer is not required to pay your fees. Instead, they typically buy products from you at wholesale prices and then sell them at a markup to make a profit. This model focuses on the buying and selling of goods rather than paying for the use of a branded business system. There may be some upfront costs for initial training on the products themselves being sold, but this is something you should consider about how you want to expand and is more limited than typical franchise training relating to running a business.&nbsp;<\/p>\n\n\n\n<p>Any fees expected from the franchisee must be outlined in the franchise agreement.&nbsp;<a href=\"https:\/\/legalvision.co.nz\/franchising\/what-franchise-fees-do-i-need-to-pay-in-nz\/\">Franchisee fees<\/a>&nbsp;can include initial and ongoing fees.&nbsp; An initial franchise fee is the one-off upfront fee the franchisee will pay when entering the franchise. This fee helps you cover the start-up costs for the business and gives the franchisee the right to use the:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>brand name;<\/li>\n\n\n\n<li>training;<\/li>\n\n\n\n<li>trade mark; and<\/li>\n\n\n\n<li>franchise systems.<\/li>\n<\/ul>\n\n\n\n<div  class=\"box box--icon box--star\">\n    <p>Ongoing franchise fees act as your income and compensation for the support and training you provide to your franchisees. Depending on the franchise agreement, your franchisee may pay this weekly or monthly.\u00a0 Moreover, you can ask your franchisee to pay you a percentage of their sales monthly or quarterly. Your franchisee can also pay a fee for marketing costs in return for an established marketing strategy.<\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Initial Startup Costs<\/h3>\n\n\n\n<p>Setting up a dealership is cost-friendly. Often, your dealer only bears the costs of licencing and purchasing your products. However, you may ask the dealer to pay for the location, business registration, and insurance fees. Any agreements should be made in writing.&nbsp;<\/p>\n\n\n\n<p>Meanwhile, your franchisee needs significant capital to buy a franchise from you. Costs include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>paying initial franchise fees;<\/li>\n\n\n\n<li>buying equipment;<\/li>\n\n\n\n<li>purchasing a licence to use your IP; and<\/li>\n\n\n\n<li>finding and training employees.<\/li>\n<\/ul>\n\n\n\n<p>Your franchisee\u2019s costs should be detailed in the franchise agreement. This will reduce future disputes and ensure the franchisee makes an informed decision. Moreover, you should inform your franchisee of any support you plan to give them to help them adjust to the business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Disclosure Requirements<\/h3>\n\n\n\n<p>In New Zealand, a franchise can be required to disclose specific items of information to a franchisee, found under the FANZ <a href=\"https:\/\/franchiseassociation.org.nz\/wp-content\/uploads\/2024\/11\/Code-of-Practice-and-Ethics-Revised-01-Dec-2024.pdf\">Code of Practice<\/a>, if the franchisor chooses to opt-in to comply with the FANZ requirements. For example, depending on your circumstances, you may be required to provide a <a href=\"https:\/\/legalvision.co.nz\/franchising\/franchise-disclosure-document\/\">franchise disclosure document<\/a> to your franchisees. This document can contain important information about the onboarding process, purchase details, a summary of obligations, and several other items. However, there is no general requirement for franchisors to make these disclosures outside of FANZ.<\/p>\n\n\n\n<p>For dealerships, the disclosure requirements are generally less strict and tend to vary more based on the terms of the contract you sign with the other party. These agreements are subject to more general commercial and contract law principles. Examples of these broader principles are requirements of honest representation and avoiding misleading or deceptive conduct. This means that disclosure can often be more limited, mainly focusing on the terms a dealer can impose on selling your goods or services.<\/p>\n\n\n    <div class=\"my-7 lg:my-10 border-y-2 border-gray-100 py-7 lg:py-10 flex flex-col sm:flex-row items-start gap-10\">\n                    <img decoding=\"async\" class=\"w-52 mx-auto my-0! rounded\" src=\"https:\/\/img.legalvision.com.au\/wp-content\/uploads\/sites\/2\/2021\/11\/30121230\/franchisor-toolkit-nz-small.jpg\" alt=\"Front page of publication\"\n                 loading=\"lazy\" width=\"208\" height=\"298\">\n                <section>\n            <div class=\"text-2xl font-bold\">Franchisor Toolkit New Zealand<\/div>\n            <div class=\"body-text\">\n                <p>This publication provides you with the fundamentals for franchising your New Zealand business, including set up, branding and management.<\/p>\n            <\/div>\n            \n\n<a href=\"https:\/\/go.legalvision.co.nz\/franchisor-toolkit-nz.html\" class=\" block px-5 py-3.5 max-w-fit bg-orange button__hover transition rounded text-white font-bold text-lg no-underline uppercase leading-tight text-center\" target=\"\" rel=\"\">Download Now<\/a>        <\/section>\n    <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\">Key Takeaways<\/h2>\n\n\n\n<p>Before expanding your business into one or the other, you must understand the differences between a franchise and a dealership. Firstly, you will have more control over your franchises than a dealership. Moreover,&nbsp; your franchisees must pay several costs, including franchise fees, while a dealership does not. Initial startup costs are also higher for a franchise, while a dealership only needs to purchase a licence from you to sell products.<\/p>\n\n\n\n<p>If you need help setting up a franchise or dealership,&nbsp;our experienced&nbsp;<a href=\"https:\/\/legalvision.co.nz\/franchise-lawyers-lp\">franchise lawyers<\/a>&nbsp;can assist as part of our LegalVision membership. You will have unlimited access to lawyers who can answer your questions and draft and review your documents for a low monthly fee. Call us today at&nbsp;<a href=\"tel:+64800005570\" class=\"AVANSERnumber dynamic-number\">0800 005 570<\/a>&nbsp;or visit our&nbsp;<a href=\"https:\/\/legalvision.co.nz\/membership\/\">membership page<\/a>.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Frequently Asked Questions<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1736220099584\"><strong class=\"schema-faq-question\"><strong>How much control do I have over my dealerships?<\/strong><\/strong> <p class=\"schema-faq-answer\">You can advise your dealerships on running their business, but they do not have to follow your advice. Hence, you will have less control over a dealership than a franchise.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1736220108898\"><strong class=\"schema-faq-question\"><strong>Can I convert my existing business into a franchise or dealership?<\/strong><\/strong> <p class=\"schema-faq-answer\">Converting an existing business into a franchise or dealership depends on the compatibility of your business model with franchising or dealership structures. For a franchise, your business should be replicable, with standardised processes that can be easily taught to others. You will need to establish a detailed business model and operational guidelines. Your product must be in demand for a dealership, and you should be able to secure a supply agreement with the manufacturer or principal company. Consulting with a LegalVision franchising team member can provide you with more specific guidance suited to your situation.<\/p> <\/div> <\/div>\n\n\n\n\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"cd8e0821d8\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/219447\" \/>            <input value=\"https:\/\/legalvision.co.nz\/franchising\/differences-between-a-franchise-and-a-dealership\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"Differences Between a Franchise and Dealership in NZ\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Before&nbsp;expanding your business into a franchise&nbsp;or dealership, consider their differences. Both models consist of conducting business using your already established brand\u2019s intellectual property and systems in the market. As a business and brand owner, you must identify which differences affect your business needs to make an informed decision. This article will detail the main differences<a href=\"https:\/\/legalvision.co.nz\/franchising\/differences-between-a-franchise-and-a-dealership\/\">Continue reading <span class=\"sr-only\">&#8220;Differences Between a Franchise and Dealership in NZ&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13513,"featured_media":228313,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"219027,210933,207801,207829,206253,213028","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[7],"tags":[25,54,542,1325,1675],"class_list":["post-219447","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-franchising","tag-small-business","tag-medium-business","tag-franchise","tag-franchise-disclosure-document","tag-dealership"],"acf":[],"yoast_head":"<!-- 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Zealand"},"image":{"@id":"https:\/\/legalvision.co.nz\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/LegalVision","https:\/\/x.com\/LegalVision_law","https:\/\/www.linkedin.com\/company\/legalvision-group"]},{"@type":"Person","@id":"https:\/\/legalvision.co.nz\/#\/schema\/person\/66731858cf6afb48b2a440e3358f4917","name":"Panayiotis Xenos","image":{"@type":"ImageObject","inLanguage":"en-NZ","@id":"https:\/\/legalvision.co.nz\/#\/schema\/person\/image\/","url":"https:\/\/legalvision.com.au\/wp-content\/uploads\/2024\/07\/Panayiotis-Xenos-96x96.png","contentUrl":"https:\/\/legalvision.com.au\/wp-content\/uploads\/2024\/07\/Panayiotis-Xenos-96x96.png","caption":"Panayiotis Xenos"},"url":"https:\/\/legalvision.co.nz\/author\/panayiotisxenos\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/franchising\/differences-between-a-franchise-and-a-dealership\/#faq-question-1736220099584","name":"How much control do I have over my dealerships?","acceptedAnswer":{"@type":"Answer","text":"You can advise your dealerships on running their business, but they do not have to follow your advice. Hence, you will have less control over a dealership than a franchise.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"},{"@type":"Question","@id":"https:\/\/legalvision.co.nz\/franchising\/differences-between-a-franchise-and-a-dealership\/#faq-question-1736220108898","name":"Can I convert my existing business into a franchise or dealership?","acceptedAnswer":{"@type":"Answer","text":"Converting an existing business into a franchise or dealership depends on the compatibility of your business model with franchising or dealership structures. For a franchise, your business should be replicable, with standardised processes that can be easily taught to others. You will need to establish a detailed business model and operational guidelines. Your product must be in demand for a dealership, and you should be able to secure a supply agreement with the manufacturer or principal company. Consulting with a LegalVision franchising team member can provide you with more specific guidance suited to your situation.","inLanguage":"en-NZ"},"inLanguage":"en-NZ"}]}},"_links":{"self":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/219447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/users\/13513"}],"replies":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/comments?post=219447"}],"version-history":[{"count":7,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/219447\/revisions"}],"predecessor-version":[{"id":229939,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/posts\/219447\/revisions\/229939"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media\/228313"}],"wp:attachment":[{"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/media?parent=219447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/categories?post=219447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalvision.co.nz\/api\/wp\/v2\/tags?post=219447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}