Franchising is an important part of New Zealand’s economy. It helps businesses grow and creates jobs in many industries. But it’s important to get employment practices right from the start.
Problems can spread across franchise systems
MBIE’s experience shows that many employment issues in franchising are not one-off mistakes.
Instead, they often come from:
- systems that are set up the wrong way
- unclear guidance
- gaps in understanding employment rules.
Because franchises use the same systems across many sites, one mistake can impact multiple workplaces.
This means the problem is often in the system, not just one business.
Common employment issues
MBIE sees the same issues come up again and again, including:
- not paying the minimum wage or correct leave
- confusion about work hours
- unpaid trial shifts
- poor record-keeping
- not fixing problems early.
Franchisors can help set up good systems
MBIE says franchisors play an important role in helping prevent these issues.
It’s critical that employment rules are clear and built into the franchise system.
This can include:
- providing clear employment agreement templates
- setting rules for pay and record-keeping
- checking systems are working properly
- acting early when problems are found.
This will create better outcomes for workers, franchisees and the business brand.
A simple way to manage employment
MBIE recommends thinking about employment across 3 stages:
- Plan — set up clear rules and systems from the start.
- Source — get hiring and onboarding right, make sure employees have agreements and are paid correctly.
- Manage — keep checking systems over time and fix issues early.
This approach can help stop problems before they get bigger.
Employers are still responsible
Franchisees still have legal responsibilities as employers.
This means they must:
- meet minimum employment standards
- pay staff correctly
- keep accurate records.
Even with support, they are responsible for doing this.
Advice for people buying a franchise
If you are thinking about buying a franchise, it's important to understand your responsibilities.
You should ask:
- what employment guidance does the franchisor provide?
- how is payroll managed?
- what checks or audits are done?
- what happens if something goes wrong?
Asking these questions early can help avoid problems later.
Read the full article
Read the full article for more detail, including real examples and practical advice:
Getting employment in franchising — Franchise New Zealand(external link)