A Franchisor's Guide to General Security Agreements

A Franchisor's Guide to General Security Agreements (GSA's)

It is becoming increasing common for franchisors to require their franchisees to enter into a General Security Agreement or a GSA as it is more commonly known. This guide aims to assist franchisors to make informed choices about whether or not they should require their franchisees to enter into a GSA and if they do, what priority should their GSA have when compared with a bank's GSA?

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The Harvey Norman Computer Glitch - the legal issues

The recent computer glitch which resulted in 300 Harvey Norman customers purchasing furniture at incorrect prices would have to be an online retailers worst nightmare.  Reports indicate that on 1 October 2015 between the hours of 1am and 8am Harvey Norman’s website offered furniture at heavily discounted prices.  A 3 piece lounge suite was advertised at $103, a 2 piece lounge suite was offered at $95 and a wooden table and chairs were offered at $159.  Harvey Norman has since apologised for the error and at the date of writing this article Harvey Norman has reportedly so far refused to honor the prices electing instead to offer customers a $100 voucher.

So where do the customer and Harvey Norman stand legally? 

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Your guide to the legal aspects of franchising in New Zealand

NO FRANCHISE SPECIFIC LEGISLATION

Unlike Australia and other countries such as the USA and Canada, there is no legislation in New Zealand dedicated to franchising. From a legal perspective there are no barriers to entry – no compulsory disclosure documents or registration requirements. There are however a number of general legal requirements which have application to franchising and this guide contains a summary of the main ones.

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The new Health and Safety at Work Act - Implications for Franchisors

The new Health and Safety at Work Act 2015 comes into force on 4 April 2016 and carries with it maximum fines of $3,000,000 for non-individuals and up to $600,000 or a term of imprisonment of up to 5 years for individuals for the most serious offences.  

The new Act has a much wider reach than the existing Health and Safety in Employment Act 1992 and has the potential to impose duties on franchisors not just in respect of their own workers or work place.  If a Franchisor directs or influences its franchisee's workers, if it subleases or licences premises to its franchisees or supplies goods or plant or equipment which are used in the work place, then it will have additional duties and obligations under the new Act.

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Property Taxation Legislation - New Obligations

New obligations are to be imposed on clients in the majority of residential property transactions pursuant to the Taxation (Land Information and Offshore Persons Information) Act which comes into effect on 1 October 2015.  Buyers and sellers will be required from then to provide additional information for tax compliance purposes.


LINZ will collect additional information when people buy, sell or transfer property. The information will be passed to Inland Revenue, to follow up on those who have property tax obligations – whether they are New Zealanders or from overseas.

Under the new legislation:

1. Property buyers/sellers must provide their IRD number and other details when transferring property (there will be an exemption for the main home, but this doesn’t apply to offshore persons or trusts);
   
   
2. Those who are tax resident in another jurisdiction to also provide the equivalent of their IRD number in that country (if the person is able to claim the main home exemption they do not need to provide this information);
   
   
3. Offshore persons who need to apply for a New Zealand IRD number will be required to have an operational New Zealand bank account as a pre-requisite.

These requirements apply to contracts entered into on, or after, 1 October. From 2 April 2016, all additional information must be provided regardless of when the contract was entered into.

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When is a cigarette not a cigarette?

The answer appears to be when it is an "e-cigarette".  An e-cigarette operates by vaporising a liquid which may or may not contain nicotine.  The "smoker" or "vaper", as they seem to be called, then inhales the vapour. 

E-cigarettes do not burn anything and therefore do not generate smoke or ash.  They do not contain tobacco or tobacco products.  The Smoke-free Environments Act 1990 (Act) deals with the "smoking" of tobacco or other vegetable matter.  The Act includes a definition of "to smoke" which means:

(a)       to smoke, hold, or otherwise have control over an ignited tobacco product, weed or plant; and

(b)     includes to smoke, hold or otherwise have control over an ignited product or thing whose customary use is or includes the inhalation from it of the smoke produced from its combustion or the combustion of any part of it.” (Emphasis added)

An e-cigarette does not involve anything being "ignited" or “combustion” and does not involve tobacco or other vegetable matter.  Therefore it seems clear that the use of e-cigarettes is not covered by the Act. 

Operators of bars, restaurants and passenger service vehicles are nevertheless free (subject to any other legislative or regulatory restrictions) to set the conditions on which patrons may enter their premises or vehicles and could include a prohibition on the use of e-cigarette as if they were covered by the Act.  This should be made explicit by way of signs and printed terms and conditions of entry or carriage as appropriate. 

Entry into premises or a passenger service vehicle where the terms of entry or carriage make it clear that the use of e-cigarettes is not permitted will constitute a contract on those terms between the owner/operator and the patron/passenger entitling the owner/operator to require compliance or refuse (continued) entry, service or carriage. 

Specific legal advice should be obtained in respect of any proposed conditions and their application.