CODE OF PRACTICE (Revised April 2018)

Transcription

1 FRANCHISE ASSOCIATION OF NEW ZEALAND INCORPORATED CODE OF PRACTICE (Revised April 2018) CONTENTS 1. NAME AND PURPOSE 2. INTERPRETATION 3. STANDARDS OF CONDUCT 4. CONTINUING COMPLIANCE 5. SUPPLY OF CODE OF PRACTICE AND CODE OF ETHICS 6. AGREEMENTS TO REQUIRE OBSERVANCE 7. DOCUMENT COMPLIANCE CHECKS AND THE SCRUTINEER 8. COOLING OFF PERIOD AND PREPAYMENTS 9. DISPUTE RESOLUTION 10. IDENTIFICATION AS A FRANCHISE 11. CERTIFICATION 12. AFFILIATE MEMBERS 13. NON-COMPLIANCE 14. DISCLOSURE DOCUMENTS 15. DISCLOSURE DOCUMENT CONTENTS APPENDIX A Disclsure Dcument Cntents APPENDIX B Franchisr Financial Data Certificates FRANCHISE ASSOCIATION OF NEW ZEALAND INC. ( the Assciatin ) FRANCHISING CODE OF PRACTICE ( the Cde ) Scrutineer means the independent persn r persns appinted by the Assciatin t review and scrutinise applicatins fr membership and the dcumentatin used by Members, and prspective members, fr cmpliance with the Cde Other terms and expressins used in the Cde which are defined r explained in the Rules shall be interpreted and defined and have the same meanings as prvided fr in the Rules In this Cde, references: T clause numbers shall be t clauses f this Cde In the singular number shall include plural, and vice versa In any ne gender shall include all genders. 3. STANDARDS OF CONDUCT All Members shall act in an ethical, hnest and lawful manner and endeavur t pursue best franchise business practice f the time and place. Franchisrs and Franchisees shall in their dealings with ne anther avid the fllwing cnduct where such cnduct wuld cause significant detriment t either party s business: Cnduct which is unnecessary and unreasnable in relatin t the risks t be incurred by ne party. Cnduct that is nt reasnably necessary fr the prtectin f the legitimate business interests f the Franchisr, Franchisee r franchise system. Any ther cnduct which is in breach f the Cde f Ethics r f this Cde. 1. NAME AND PURPOSE 1.1. The Franchising Cde f Practice has been established by and is administered by the Franchise Assciatin f New Zealand Incrprated. It is a regulatin f the Assciatin The purpse f the Cde is t prmte high standards f Franchising cnduct and prcedure in accrdance with the bjects f the Assciatin. 2. INTERPRETATION Definitins 2.1. In this Cde the fllwing terms shall have the fllwing meaning: Assciatin means the Franchise Assciatin f New Zealand Incrprated. Cde means this Cde f Practice and includes all its parts. Cde f Ethics means the Cde f Ethics f the Assciatin. Disclsure Dcument means a dcument prviding the infrmatin and supplied in accrdance with the prvisins f clauses 14 and 15 and Schedule A. franchise means a business perated as a franchise, as that term is further defined in the Rules. franchise agreement means an agreement t grant and accept the grant f a franchise, as further described in the Rules. Franchisr Members includes all members f the Assciatin wh grant franchises including Master Franchisees / Sub-Franchisrs and thers fulfilling a similar rle, hwever described, where they, r their Franchisr is a member f the Assciatin. Member and Members means members f the Assciatin. preliminary agreement means an agreement t enter int a franchise agreement Rules means the Rules f the Assciatin. 4. CONTINUING COMPLIANCE All Members f the Assciatin shall cmply with the Cdes and Rules at all times. 5. SUPPLY OF CODE OF PRACTICE AND CODE OF ETHICS 5.1. Befre granting a franchise, a Franchisr Member will either supply t each prspective Franchisee a cpy f the Cde and f the Cde f Ethics r ensure that the prspective Franchisee already has cpies f the Cde and the Cde f Ethics r has direct and immediately available electrnic access t cpies f them If current cpies f the Cdes (r either f them) are nt held by a prspective Franchisee then cpies shall be supplied t the prspective Franchisee at least seven (7) days prir t the signing by the Franchisee f the franchise agreement (r, if preceded by the signing f a preliminary agreement, seven (7) days befre the Franchisee becmes bund by the preliminary agreement t prceed). Cpies may be supplied r made available in hard cpy r electrnically Where a new franchise agreement is granted t the transferee r assignee f a franchise the Franchisr Member must either supply t the prspective Franchisee cpies f bth Cdes r ensure that they are available in the same way. 6. AGREEMENTS TO REQUIRE OBSERVANCE 6.1. T prmte the bservance f their bligatins where a Franchisr Member grants a franchise t a Franchisee (and whether directly r thrugh a Master Franchisee/Sub-Franchisr) then each franchise agreement shall cntain prvisins requiring bth the Franchisr (and/each Master Franchisee/Sub- Franchisr) and the Franchisee t bserve and cmply with the prvisins f the Rules, the Cde, and the Cde f Ethics Where a Franchisr Member grants a master franchise then each master franchise agreement shall cntain prvisins requiring bth the Franchisr Member and the Master Franchisee/Sub-Franchisr t bserve and cmply with the prvisins f the Rules, the Cde, and the Cde f Ethics T prmte the bservance f their bligatins, where a Franchisr

2 member grants a franchise t a Franchisee (and whether directly r thrugh a Master Franchisee/Sub-Franchisr) then each franchise agreement shall cntain prvisins requiring the Franchisee (and/ each Master Franchisee/Sub Franchisr), t bserve and cmply with the laws f New Zealand. Specific reference is t be included t including all laws relating t Emplyment, Health and Safety, Fair Trading and Tax Where a Franchisr member grants a master franchise then each master franchise agreement shall cntain prvisins requiring bth the Franchisr Member and the Master Franchisee/Sub-Franchisr t bserve and cmply with the laws f New Zealand. Specific reference is t be included t including all laws relating t Emplyment, Health and Safety, Fair Trading and Tax 7. DOCUMENT COMPLIANCE CHECKS AND THE SCRUTINEER 7.1. T ensure initial cmpliance with the Rules, the Cde, and the Cde f Ethics the Assciatin requires that, befre acceptance fr membership, prspective Members supply t the Scrutineer cpies f their franchise agreements, master franchise agreements, preliminary agreements, independent advice certificates and Disclsure Dcuments and certain accunting and ther infrmatin as referred t in mre detail in the Rules and elsewhere in this Cde T ensure subsequent cmpliance by each Member with relevant bligatins: a) Each Franchisr Member r Franchisr Multi Brand Member must each secnd year (r when a material change is made) supply t the Scrutineer (r t the Assciatin's executive fficer) an up t date Disclsure Dcument and all current frms f franchise agreement being issued; b) N Franchisr Member shall remve frm any apprved dcument any prvisin which is required by this Cde t be cntained within it; c) N Franchisr Member shall use dcuments (whether in additin t r in place f existing apprved dcuments) which d nt cntain the prvisins required by this Cde t be cntained within them; and d) Each Member shall, where requested by ntice in writing by the Assciatin t d s, supply t the Assciatin (r the Scrutineer) within ne mnth a cpy f any f the types f dcument referred t in clause 7.1 in their current frms Where a franchise agreement, r a preliminary agreement (if used), r a master franchise/sub-franchise agreement (if used) is supplied t the Scrutineer r t the Assciatin's executive fficer and the applicant r ther party supplying the dcument requires that the cntents f the dcument be kept in cnfidence then the applicant r ther party supplying them shuld advise the Scrutineer r the Assciatin's executive fficer f this requirement at the time the dcument is supplied. Cnfidentiality shuld nt be required fr dcuments which are in the public dmain (including by being available n websites r by ther generally available electrnic means) The Scrutineer shall be entitled t reprt t the Bard f the Assciatin with respect t the existence, and if apprpriate with extracts f relevant prtins and prvisins f the cntents f all dcuments supplied where they relate t issues f cmpliance with the Cde r the Cde f Ethics. N Member shall endeavur t claim cnfidentiality (including by claim against third parties) fr any dcument f the type referred t in clause 7.1 r take any actin fr the purpse r having the effect f preventing its examinatin by the Scrutineer The prvisins as t cnfidentiality and return apply bth in relatin t dcuments supplied n applicatin fr membership and in relatin t any subsequent cmpliance review. 8. COOLING OFF PERIOD AND PREPAYMENTS 8.1. T ensure that new Franchisees have an pprtunity at the utset t recnsider their decisin t enter a franchise every franchise agreement granted by a Member (and whether granted directly r thrugh a Master Franchisee/Sub-Franchisee) must cntain a cling ff prvisin as described in clause 8.2, unless entry int the franchise agreement is preceded by seven (7) days r mre by entry int a preliminary agreement which cntains a cling ff prvisin A cling ff prvisin fr the purpses f the Cde is a prvisin allwing the Franchisee a perid f nt less than seven (7) days frm the date f entry int the franchise agreement (r preliminary agreement as the case may be) during which the Franchisee may, by frmal ntice t the Franchisr (r Master Franchisee/Sub-Franchisr as the case may be) elect t withdraw frm the agreement at its discretin If a Franchisee r prspective Franchisee gives ntice t withdraw during the cling ff perid, then the Franchisee shall nt be bliged t prceed further and shall nt be bund by any prvisins f the franchise agreement (r preliminary agreement as the case may be) except prvisins relating t cnfidentiality and the prtectin f intellectual prperty and ther prprietary rights. In additin, the Franchisee r prspective Franchisee shall nt be bliged t pay any further mnies and shall be entitled t be prmptly refunded all mnies already paid except fr certain expenses as prvided in clause The Franchisr (and/r Master Franchisee/Sub-Franchisr as the case may be) shall be entitled t retain reasnable expenses incurred in relatin t the prpsed grant f a franchise t the extent clearly prvided fr in the franchise agreement (and/r in the preliminary agreement) and/r in the Disclsure Dcument If cntained in the preliminary agreement the cling ff prvisin des nt need t be cntained in the franchise agreement Where a Franchisr requires any payment prir t the signing f a franchise agreement, the Franchisr shall clearly specify in writing t the prspective Franchisee the purpse fr which the mneys are required, the terms and cnditins gverning the refunding r applicatin f such mneys and identify wh shall hld such mneys Agreements in renewal r extensin f a franchise agreement, including replacement franchise agreements, are nt required t cntain a cling ff prvisin Franchise agreements granted t the transferee r assignee f a franchise, including replacement franchise agreements, are nt required t cntain a cling ff prvisin. 9. DISPUTE RESOLUTION 9.1. T assist the readier reslutin f any dispute which may arise, every franchise agreement shall cntain alternative dispute reslutin prvisins The alternative dispute reslutin prvisins shall be either as fllws, r t similar effect: Subject t subclause (9), unless a party has cmplied with the fllwing subclauses (1) t (8) that party may nt cmmence curt prceedings r arbitratin relating t any dispute with any ther party t this Agreement. (1) Where a dispute arises between the Franchisr and the Franchisee ( the parties ), the cmplainant will set ut in writing the nature f the dispute. (2) Bth parties will make every effrt t reslve the dispute by mutual negtiatin. (3) In the event that the parties are unable t reach a reslutin f the dispute within twenty ne (21) days f the dispute first being raised by ne party with the ther, either party may by ntice in writing ( the Mediatin Ntice ) ntify the ther party that it seeks t have the dispute reslved by mediatin. (4) If the parties have nt agreed within ten (10) days f the issue f the Mediatin Ntice n the chice f a mediatr, then either f them may at any time apply t either the Chairpersn r ther prper fficer f the Franchise Assciatin f New Zealand Inc r t the Chairpersn fr the time being r ther prper fficer f the New Zealand Law Sciety t nminate a Mediatr fr the purpse f the dispute. Such Mediatr may be (but is nt required t be) chsen frm any panel f mediatrs frm time t time nminated fr the purpse by the Franchise Assciatin f New Zealand Inc. (5) The prceedings f the Mediatr will be as infrmal as is cnsistent with the prper cnduct f the matter and shall allw the Mediatr t cmmunicate privately with the respective parties and their lawyers and the parties shall be entitled but nt bliged t be legally represented. The Mediatr may c-pt ther expert assistance. (6) In any mediatin the fllwing shall apply: (e) (f) (g) (h) everything that ccurs befre the Mediatr will be in cnfidence and in clsed sessin; all discussins will be n a withut prejudice basis; n dcuments brught int existence specifically fr the purpse f the mediatin prcess shall be called int evidence in any subsequent litigatin by either party; each party t the mediatin shall be given prper pprtunity t present its case; the Mediatr shall be required t act fairly, in gd faith and withut bias fr the purpse f seeking a reslutin f the dispute and t treat all matters in cnfidence and t have regard t the fairness and reasnableness f all matters relating t the dispute including the need fr the Franchisr t maintain the integrity f its name, image and the System and the reasnable interests f ther franchisees and members f the System; the parties t the mediatin and the Mediatr shall cperate with a view t the mediatin being determined as speedily as pssible and within furteen (14) days after referral t the Mediatr; the csts f the mediatin will be brne by the parties equally unless therwise agreed r determined by the Mediatr and the parties shall grant immunity frm liability t the Mediatr; the parties t the mediatin shall each reprt back t the Mediatr within furteen (14) days f the end f the

3 10. IDENTIFICATION AS A FRANCHISE (i) mediatin hearings n actins taken, based n the utcme f the mediatin; and subject t the ther prvisins f this clause, the Mediatr shall have the right t determine prcedures relating t the cnduct f the mediatin. (7) If the dispute is nt reslved within frty five (45) days f referral t mediatin any party which has cmplied with the prvisins f this clause may by written ntice terminate the dispute reslutin prcess and may then cmmence Curt prceedings and/r take any ther actin it sees fit relating t the dispute. (8) The parties may by agreement in writing between them agree t extend any f the time perids referred t in the previus prvisins f this clause and, if they d, the extended time perids shall apply and be binding n the parties in substitutin fr the relevant time perid cntained in this clause. (9) Nthing cntained in these prvisins shall prevent a party frm seeking injunctive relief frm an apprpriate Curt, where failure t btain such relief wuld cause irreparable damage t the party cncerned r the franchise system. Further, these dispute reslutin prcedures will nt apply t events giving rise t rights t the immediate terminatin f the franchise agreement where such events are clearly specified in the franchise agreement. S that thse with whm they deal are infrmed that they are dealing with a Franchisee, every franchise agreement granted by a Franchisr Member (and whether granted directly r thrugh a Master Franchisee/Sub-Franchisee) must cntain a prvisin requiring each Franchisee t clearly identify, bth within its business premises and n apprpriate statinery and n its websites, that the Franchisee s business is being perated under franchise frm the Franchisr. 11. CERTIFICATION Befre the executin f any franchise agreement Franchisr Members shall require each Franchisee t certify that the Franchisee has received and has read the fllwing dcuments: The Disclsure Dcument. A cpy f the Cde f Practice. A cpy f the Cde f Ethics Befre the executin f any franchise agreement Franchisr Members will require each Franchisee t either: 12. AFFILIATE MEMBERS Prduce a certificate frm a slicitr certifying that the slicitr is acting independently fr the Franchisee and has explained the franchise agreement (and preliminary agreement if there is ne) t the Franchisee; r Sign a statement that the franchise agreement has been explained by a slicitr r that the Franchisee declined t take independent legal advice Affiliate Members shall in the curse f their franchising business r practice: (1) Prvide clients and prspective clients n request with a written resume r prfile shwing any relevant qualificatins franchising educatin and experience f the Member (r thse f the senir r ther relevant nminated franchise adviser within the Member); (2) Respect the cnfidentiality f all infrmatin received cncerning a client s business which is nt in the public dmain and nt disclse r permit disclsure f any such infrmatin withut the client s prir written permissin; (3) Disclse t clients and prspective clients details f any persnal r financial interests r ther material circumstances which may create a cnflict f interest in respect f that client and in particular withut dergating frm the generality f the freging: Any directrship r significant interest in any business which cmpetes with the client; Any financial interest in gds r services recmmended by the Member fr use by the client; Any persnal relatinship with any individual in the client s emplyment; The existence but nt the name f any existing franchise client f the Member whse business may directly cmpete with that f the client r prspective client; (4) Nt advise any Franchisee r prspective Franchisee in relatin t any franchise pprtunity ffered by any Franchisr fr whm the Member has acted withut full disclsure f relevant circumstances Where an Affiliate Member is a firm and nt an individual the Affiliate shall nminate the individual r individuals within the firm wh are their senir nminated franchise adviser r advisers. 13. NON-COMPLIANCE Fr the investigatin f pssible nn-cmpliance with the Cde and s as t seek cmpliance the Assciatin, thrugh the Bard, may pursue the fllwing prcedures, in additin t any ther entitlements it may have under the Rules r at law In the event that the Bard has reasn t believe that a Member has failed t cmply with the Cde, it may ntify the Member cncerned in writing requesting that the Member respnd in writing within furteen (14) days f the date f the ntice shwing why the Member shuld nt face sanctin by the Assciatin. Bth prir t issuing this ntice and after receiving the Member s respnse, if any, the Assciatin may make such infrmal investigatins as t the allegatins f nn-cmpliance as (in its unfettered discretin) it thinks apprpriate In the event that the Member t whm ntice has been given under clause 13.2 fails t respnd within the furteen (14) day respnse perid r the respnse made des nt satisfy the Bard, then the Bard may impse such sanctins as the Regulatins f the Assciatin allw. These may include remval, r suspensin f that Member frm membership f the Assciatin and the recvery f reasnable csts incurred by the Assciatin A sub-cmmittee f the Bard cmprising a slicitr wh shall be a FANZ Member but nt the Hnrary Slicitr and such ther members as the Bard may frm time t time appint will cnsider all issues relating t the matter, including any respnse received frm the Member and will determine if the Member has failed t shw cause why it shuld nt be remved r have ther sanctins applied. In the event that the subcmmittee determines that the Member has failed t shw cause why it shuld nt be remved frm membership r therwise be sanctined the Member will be ntified f that decisin in writing and f the right t appeal t the Bard. If the decisin is suspensin r remval frm membership, then in either case membership shall be suspended immediately. If the decisin is remval, then the Member s name will be remved frm the membership f the Assciatin, within twenty ne (21) days after written ntice has been given t the Member. Any ther sanctins shall nt cme int effect until twenty ne (21) days after written ntice has been given t the Member In the event that the Member disputes the findings f the sub- cmmittee it may within the twenty ne (21) day perid ldge a written appeal with the Assciatin. The matter will then be referred t the Bard fr its deliberatin. The members f the sub-cmmittee referred t in clause 13.4 shall nt vte in relatin t any reslutin in relatin t the appeal. The Bard may refer this appeal t an independent third party fr expert pinin and/r recmmendatin t the Bard. In the event that the Bard determines that the Member has failed t shw cause why it shuld nt be remved frm the membership f the Assciatin and r face ther sanctin then the Bard shall ntify the Member accrdingly and the Member s name will be remved, and/r any ther sanctins impsed will cme int effect seven (7) days after the date f the ntice frm the Bard A Member which has been remved frm membership f the Assciatin fr any reasn may apply fr re-registratin after twelve (12) mnths frm the date f remval frm the membership f the Assciatin prvided it can demnstrate t the satisfactin f the Bard that it is prepared and able t cmply with the Rules and the Cde in all respects Where a Member has been remved frm membership f the Assciatin: (1) If it is a Franchisr Member, it must prmptly ntify all f its Franchisees (and Master Franchisees/Sub-Franchisrs) in writing that it has been s remved. (2) It must make n further representatin that it is a member f the Assciatin. 14. DISCLOSURE DOCUMENTS Franchisr Members will prvide disclsure by way f a Disclsure Dcument in accrdance with the prvisins f this Cde The Disclsure Dcument will be updated at least annually and be prvided t all prspective Franchisees at least furteen (14) days prir t signing a franchise agreement (r, if preceded by the signing f a preliminary agreement, furteen (14) days befre the prspective Franchisee becmes bund by the preliminary agreement t prceed. A Disclsure Dcument is required t be prvided t an existing Franchisee in cnjunctin with the renewal f the franchise agreement within ne mnth f being requested by the Franchisee The Disclsure Dcument is t cmply with such f the cntents f this Cde as are applicable t the relevant franchise system and the cntents f the Disclsure Dcument shall set a minimum standard which may be exceeded by supplying mre infrmatin than is necessary The financial disclsure cntained within the Disclsure Dcument shall be updated n an annual basis and shall be prvided t any existing Franchisee at any time upn request by the Franchisee.

4 14.5. Franchisrs shall be at liberty t add further cmment t further explain r clarify the financial disclsure, e.g. where the Franchisr is a cmpany which is part f a grup f cmpanies and the basic infrmatin may nt present the financial psitin mst apprpriately Where a Franchisr and a Master Franchisee/Sub-Franchisr bth enter int a cntractual arrangement with a Franchisee, the Disclsure Dcument will cntain material infrmatin in relatin t bth the Franchisr and Master Franchisee/Sub-Franchisr including financial disclsure relating t bth the Franchisr and the Master Franchisee/Sub-Franchisr Where the Franchisr is nt in a direct cntractual arrangement with the Franchisee and the Franchise is granted nly by the Master Franchisee/Sub-Franchisr then the Disclsure Dcument must fully disclse the implicatins fr the Franchise Agreement shuld the Master Franchisee/Sub Franchisr's agreement with the Franchisr be terminated Financial disclsure shall be prvided by a vendr Franchisee which is a member f the Assciatin t an apprved purchaser f that Franchisee s business and such financial disclsure will include the accuntant s r auditr s reprts as the case may be. 15. DISCLOSURE DOCUMENT CONTENTS Each Disclsure Dcument will cntain the infrmatin required t be shwn as set ut in Appendixes A and B. APPENDIX A Disclsure Dcument Cntents Each Disclsure Dcument will cntain the fllwing infrmatin (and Members are encuraged t shw the infrmatin in the fllwing rder): (e) (f) (g) (h) A summary f the terms and cnditins fr the purchase f services, gds, fixtures, prperty, etc frm the Franchisr and the situatin applying if the surce f gds/prducts supplied by the Franchisr fails, plus relevant cmments/cnditins with respect t rebates etc frm suppliers. The basis f Franchisr s invlvement/apprval fr site selectin. A summary f the terms and cnditins relating t terminatin, renewal, gdwill and assignment f the franchise. A summary f the main bligatins f the Franchisr (including initial and nging training t be prvided). (8) A tabulated list f cmpnents making up the franchise purchase eg franchise fee, stck, fixtures/fittings, wrking capital, etc with (estimated) individual csts, ttalled t reflect the full utlay. A summary f thse items which culd be leased and (estimated) csts invlved. (9) Details f any financial requirements by the Franchisr f the Franchisee, e.g. a specific amunt f nn-brrwed capital twards the franchise purchase price. (10) Regarding franchises, Franchisees, and utlets: The number f existing franchises, the number f utlets, and details f Franchisr wned utlets. A list f existing Franchisees (including address and phne number f each and year cmmenced business) shuld be available fr reference purpses. Shuld a full list be impractical then a list f all Franchisees in each city r twn r regin (as apprpriate t the circumstances) shuld be prvided. The number f franchises terminated r nt renewed ver the past tw (2) years. Details f any current unreslved litigatin with any existing r frmer Franchisees. (11) Regarding financial prjectins prvided: (1) Name, registered ffice and physical business address f the Franchisr. State if a member f any ther relevant trade r industry assciatin (2) Names, jb descriptins, qualificatins (if any) f the Franchisr s directrs/executive fficers/principals. (3) A detailed resume f the business experience f the Franchisr (and any related entities) and its directrs/secretary/executive fficers/principals including: Length f experience in the type f business ffered in the franchise. Length f experience in perating r ffering the franchise. Length f experience in perating r ffering ther franchises and a descriptin f thse franchises. (4) A viability statement with key financial infrmatin in respect f the Franchisr frm the Franchisr s directrs/principals in accrdance with Appendix B (prvided that the requirement t supply the infrmatin specified in paragraph f Appendix B des nt apply if the statement prvided in paragraph f Appendix B is supprted by an independent audit prvided by an auditr within the preceding 12 mnths and a cpy f the auditr s reprt is supplied). The infrmatin and statements set ut in Appendix B shall nt be required t be prvided by a Franchisr which is a whlly wned subsidiary f a public cmpany whse shares are publicly traded n the New Zealand Stck Exchange where: Where written prjectins are prvided with respect t levels f ptential sales, incme, grss/net prfits r ther financial prjectins etc frm the franchise r franchises f a similar nature particulars f the basis/assumptins upn which the representatins are made shall be prvided. Each page f the prjectins shuld be qualified with respect t its basis/assumptins, fr example: These figures represent ACTUAL perfrmance by either the Franchisr r a Franchisee. There is n guarantee that yu will achieve these figures and nr is it intended that yu shuld rely n them as a guarantee. OR These figures indicate the grss prfit margins and revenue expenses at stated prjected turnver levels which have been experienced by the Franchisr in its wn peratins at prjected turnver levels r (the Franchisees n average in the last prfit and lss accunts which have been supplied t the Franchisr). There is n guarantee that yu will achieve the same results, nr is it intended that yu shuld rely n them as a guarantee. And Franchisrs shuld be aware that the issue f these warnings des nt, by itself, prvide prtectin frm legal claims. The Franchisr r its parent cmpany has btained frm the New Zealand Securities Cmmissin an exemptin fr the prvisin f separate accunts fr subsidiary cmpanies; and The Franchisr prvides in place f the infrmatin and statements set ut in Appendix B the audited annual reprt f the parent cmpany cntaining cnslidated financial statements including thse f the Franchisr. (5) As an alternative t the viability statement referred t in clause 4, a current signed and dated slvency certificate in the frm set ut in item c) f Appendix B. (6) Details f any bankruptcies, receiverships, liquidatins, placements in administratin r appintment f a statutry manager, r materially relevant debt recvery, criminal, civil r administrative prceedings by a Statutry Public Agency which are current r have ccurred r fr which judgment has been entered against the Franchisr ( and any related entities) r any f its directrs/executive fficers/principals within the last five (5) years. (7) A summary f the main particulars and features f the franchise including: The nature and perid f existence f the franchise system and hw it has develped. A clear statement whether r nt depreciatin and any salary/wages fr the Franchisee and the cst f servicing lans are included. (12) A statement as t whether the territry r site t be franchised has been subject t any trading activity, particularly a previus franchise in the same franchise system within the previus 5 years, and if s, the histry and details including the circumstance f any cessatin f the franchise. (13) A statement in it indicating that this Disclsure Dcument shuld help yu make up yur mind. While it includes sme infrmatin abut yur Franchise Agreement, d nt rely n it alne t understand yur Franchise Agreement. Read all f yur Franchise Agreement carefully. Buying a franchise is a serius undertaking. Take yur time t decide. Yu are als required t have the Franchise Agreement explained t yu by a slicitr experienced in franchising and yu shuld seek financial advice n the franchise prpsitin frm an accuntant experienced in franchising. (14) A Certificate in the fllwing frm r t the same effect The Directrs (r, if the Franchise is nt wned by a Cmpany, the Prprietrs ) f the Franchisr have reasnable grunds t believe that the Franchisr will be able t pay its debts as and when they fall due and the Franchisr is slvent as at tday s date. Each Directr r Prprietr prviding the certificate shuld sign it, date it and add his r her name legibly underneath their signatures and their ffice (e.g. Directr r Prprietr ). Examples f any trade mark, lg, symbl, r ther relevant frms f intellectual prperty used t market r prmte any frm f intellectual prperty f the Franchisr s gds r services and steps taken t prtect these and details f any threatened r pending litigatin in relatin t these. Details f payments t be made by the Franchisee t the Franchisr (including the methd f calculatin if applicable, and the amunt t be refunded by the Franchisr if the Franchisee terminates the franchise agreement within the cling ff perid). Particulars f any restrictins impsed n the Franchisee (e.g. territrial, r the ffer f cmpeting franchises). (15) Each Disclsure Dcument shuld als be signed and dated at the end by the same persns as are required t execute any Franchise Agreement fr the Franchisr each f whm shall als add his r her name legibly underneath their signatures and their ffice (e.g. Directr r Prprietr ).

5 APPENDIX B Franchisr Financial Infrmatin Franchisr Financial Data The Franchisr will supply the Franchisee with at least the fllwing minimum Key Financial Data extracted frm accunts prepared in accrdance with generally accepted accunting practice, tgether with a signed Statement as belw: Key Financial Data cncerning [name] the franchisr, fr the last tw financial years, extracted frm accunts prepared in accrdance with generally accepted accunting practice: / /20 / /20 Current Assets $ $ Nn-current tangible assets $ $ Nn-current intangible assets $ $ Ttal Assets $ $ Current liabilities $ $ Nn-current liabilities $ $ Sharehlders equity (prprietrs/trust funds, if applicable) $ $ Franchisr Financial Infrmatin (T be placed at the end f the Franchisr Financial Data sectin f the Disclsure Dcument) We certify that there have been n significant material changes [r as the case may be] in the Franchisr s financial psitin since the (latest date abve) and the Franchisr has reasnable grunds t believe that it will be able t pay its debts as and when they fall due and the Franchisr is slvent as at tday s date. Dated Signed fr and n behalf f the Franchisr Signature: Psitin*: Signature: Psitin: * Nte: The psitin f all signatries must be shwn e.g. Directr r Prprietr : Where the Franchisr is a cmpany with tw r mre directrs at least tw directrs need t sign; where there is nly ne directr, that directr must sign: Where the Franchisr is a partnership r a trust a minimum f tw partners r trustees must sign; where there is nly ne partner r trustee that partner r trustee must sign. Where the Franchisr is a sle trader he r she must sign. Franchisr Certificate [INSERT NAME OF COMPANY] (the Franchisr) FRANCHISOR CERTIFICATE T: Ptential franchisees f the Cmpany The Franchisr hereby certifies that, as at the date f this certificate: the Franchisr has reviewed and cnsidered: (i) the mst recent financial statements f the Franchisr; and (ii) the accunting recrds f the Franchisr (including the Franchisr s mst recent [Drafting nte: Insert mnthly r ther applicable perid] management accunts), and the Franchisr cnfirms that such recrds are current r fr the immediately previus financial year (as applicable); the Franchisr has reviewed and cnsidered all ther material circumstances that the Franchisr knws affect (r may affect) the value f the Franchisr s assets and liabilities, including its cntingent liabilities. the Franchisr has reviewed and cnsidered the financial perfrmance f the Franchisr, the Franchisr s future plans and budget, and the Franchisr s frecast f future cnditins f the markets in which the Franchisr perates. Having cnducted the abve review the Franchisr is f the view and hereby certifies that the Franchisr is satisfied n reasnable grunds that: The Franchisr is able t pay its debts as they becme due in the nrmal curse f business; The value f the Franchisr s assets exceed the value f its liabilities, including cntingent liabilities; and The Franchisr has sufficient resurces and infrastructure t fulfil its bligatins as Franchisr in accrdance with the terms f the Franchisr s franchise agreements t bth its current franchisees and any additinal franchisees that the Franchisr currently prpses t add within the next financial year (being the year ended [Drafting nte: Set ut date]) Signed: Directr Directr. Dated: [Drafting nte: this Franchisr certificate must be signed by tw directrs unless the Franchisr has nly ne Directr, in which case that Directr must sign]