August 18, 2008
The national Labour government of Helen Clark announced on August 15th that:
The Ministry of Economic Development is conducting a review of franchising regulation to explore whether there are any widespread problems in the franchising sector which may require franchise specific regulation.
The announcement, via the Ministry of Economic Development, can be seen here or the Discussion Paper can be downloaded here [Review of Franchising Regulation in New Zealand, pdf]
- There have certainly been enough high profile franchise nightmares and spectacular fraud investigations to justify this action: Blue Chip, Green Acres, Green Power. And, usually, only the most severe ever surface into the national media [tip of the iceberg].
Further coverage was provided by the Franchise New Zealand trade magazine in an article named: Government Wants Feedback on Franchise Regulation.
Interestingly, the Commerce Minister Lianne Dalziel made the government’s annoucement at a franchise sales show. You can see her entire speech here and please find below Minister Dalziel’s concluding remarks to her franchisor marketing and franchise banker audience:
Can I conclude by congratulating all of you for participating in this Expo and can I thank the Franchise Association for its advocacy for a sector that is a vital part of the New Zealand economy. Can I acknowledge the sponsorship of Westpac – these events don’t happen without sponsors – and can I congratulate those of you who have been chosen as the ‘show stoppers’ for going the extra mile.
It is important, at certain times, to remind those in authority that they serve citizens’ interests as well as corporate interests.
- I would encourage franchise investors and those affected by no franchise industry oversight [such as Blue Chip] to voice their opinions to their elected officials, current government, media outlets and financial institutions.
March 13, 2008
In a recent New Zealand story, it seems the people who own both the Green Acres system and the bank that loaned into a +200 victim ($5-million) scam want the losers to make a decision:
…sign a “rescue package” or warned that the company would commence proceedings to get back the $25,000 its financial arm, FBL Finance, had paid on his behalf to former area manager Keith Lapham.
Another bank seems to also say one thing and do another:
…Finance Now Ltd, also issued a final notice to about 30 Green Acres franchisees as it too sought repayments for about $150,000.
In franchising, it is not uncommon for banks and franchisors to work very closely; Even including unauthorized withdraws from business accounts.
“The company had taken one instalment out from my account for $700 to pay the loan and I immediately had to cancel that bank account so they cannot continue to take out any more.”
He has written to Green Acres asking for the amount to be refunded, but said he had not had a response.
Meanwhile, since Dec 2008, the police have been doing exactly what about the missing cash?
Yesterday, Serious Fraud Office chief executive Grant Liddell told the Herald that investigations into the Green Acres case were ongoing and that a decision had yet to be reached of whether any charges would be laid [my emphasis].
February 27, 2008
Migrants cry foul over new franchise deal, Lincoln Tan
Green Power’s locked and unstaffed Birkenhead headquarters. Photo / Paul Estcourt
Police are investigating an alleged scam in which people, mainly Chinese immigrants, claim to have been sold non-existent franchise businesses.
It is believed as many as 30 people may have been conned in the latest case, involving commercial cleaning franchise company Green Power.
The Herald has spoken to six Chinese immigrants who each paid $20,000 or more to Green Power for their franchises, which guaranteed a weekly income of $1000.
Only a franchisor association could believe that registering systems and franchisees, mandatory mediation and voluntary disclosure is going to redeem their reputation.
It’s not that I mind corporations asking for what they want: That’s their job. Don’t get me wrong. I would do the same.
What makes even a fool despair is the regularity that governments “drop their drawers”, no matter how short-sighted and reckless the consequences.