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New Zealanders love their coffee, so cafes can find great success here with the right business model. In fact, if you are considering growing your cafe nationwide, franchising may be the right option for you. However, this is not a decision to make lightly, so you need to duly consider your options and seek advice where required. Therefore, this article will explain how to start a cafe franchise in New Zealand.

What is a Franchise?

Franchising is one option for business owners wishing to grow their commercial operations. Essentially, you, as the franchisor, allow others, your franchisees, to replicate your business in other locations across New Zealand and even internationally. This process involves you providing support for your franchisees, such as:

  • educational resources;
  • coordinated supply and buying;
  • staff training programmes;
  • location scouting;
  • marketing strategies;
  • branding intellectual property; and
  • network connections.

Your franchisees manage the day to day operations for their own business, while you manage the overall handling of the entire franchise.

For example, as the franchisor, you may develop new promotional and marketing material for your franchisees to use nationwide. They can then be responsible for displaying those marketing campaigns and advertising your brand.

Therefore, many businesses in different industries may find franchising advantageous for growth, including cafe franchises.

How Can I Start a Cafe Franchise?

Both coffee and cafe franchises are very popular in New Zealand. These can range from small stalls or mobile cart franchises to established physical locations across the country. Every good franchise needs a good plan, and cafe franchises are no different.

Before starting your cafe franchise, you should already have a successful pilot operation. This is an installation of your business that is already running and gaining success. Additionally, you also need something that your franchisees can clearly replicate. This fact will play into your branding and how your customers recognise you. Keeping a consistent service across your franchise and its franchisees is critical. 

For instance, if your pilot operation is a hole in the wall coffee kiosk, do you want your franchisees’ coffee businesses to be the same? Or do you want to allow expansion into other types of cafe businesses, like mobile espresso carts or office catering? No matter what you decide, maintain conspicuous branding and marketing to draw customers.

Accordingly, cafe franchises can require a significant investment, but this can vary according to the decisions you make about your franchise’s style and structure.

Running a Food Business

One added element to running a cafe franchise is that you will be serving customers food and drink. New Zealand has strict food safety laws, so you need to ensure you have strict in-house policies in place to abide by these. Not only would a health and safety issue severely damage your franchise’s reputation, but you may also face legal consequences for not maintaining proper food safety standards.

Therefore, ensure that you conduct appropriate research regarding the various aspects of running a food-based franchise. All of your franchisees will likely need a food control plan and the correct certification to provide their services. Additionally, depending on the franchisees’ local council and the nature of how you provide food, you may need extra licenses based on local regulation.

For example, regulations regarding mobile food trucks and where you can serve your food can vary according to the local council. There may also be laws surrounding whether you can serve people outside and on the footpath.

As a franchisor, one of your responsibilities will likely be providing proper food safety training for both your franchisees and their staff. On top of that, all franchisees will need to keep robust records surrounding their food preparation and safety measures. So, you need to ensure you know all of the ins and outs of running a food franchise with multiple operations.

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Legal Considerations

On top of the laws specific to food businesses, there are also general trading laws that will apply to your franchise. These include the:

  • Fair Trading Act;
  • Privacy Act;
  • Contract and Commercial Law Act; and
  • Consumer Guarantees Act.

Some of these regulate how you provide services to your customers. Others regulate your contractual relationship with your franchisees. Accordingly, one key document that is essential for this relationship is your franchise agreement. This sets out the terms of your contract with your franchisees and the go-to document should anything go wrong. Therefore, you must ensure you draft a fair and robust document that protects your interests and offers a good deal for your franchisees.

Key Takeaways

Cafe franchises are quite popular in New Zealand and a potential growth method for your coffee business. However, like any food business, there can be high barriers to entry and strict safety regulations to deal with. Therefore, you should plan your cafe franchise carefully and ensure you have a successful pilot operation before beginning franchising.

If you need help with starting your cafe franchise, our experienced franchising lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions

How can I start a franchise?

Before starting a franchise, you need to have a successful pilot operation. This is the business system that your franchisees will replicate. Then, you need to plan how exactly you will expand and what support you will offer your franchisees.

What is a food control plan?

In New Zealand, if you wish to sell food or drink commercially, you will likely need to comply with food safety laws. Some businesses will need a food control plan. This document sets out what steps you need to take to ensure the food you prepare is safe.

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