NZQA Expiring unit standard
6412 version 7
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Title
Investigate and evaluate small business franchising options
Level
6
Credits
Purpose
10
This unit standard is relevant for evaluation of franchising as an
option for small business operations, and for providing advice for
prospective franchisers and franchisees.
People credited with this unit standard are able to: identify the
core elements of business franchise ventures; determine the
essential requirements for establishing franchise business
operations; and evaluate franchise proposals.
Classification
Business Environment > Business Culture and Environment
Available grade
Achieved
Explanatory notes
Small business enterprises are diverse, and investigation and evaluation of franchising
options could require consideration of a range of current legislation, such as – Commerce Act
1986; Resource Management Act 1991; Sale of Goods Act 1908; Fair Trading Act 1986;
Consumer Guarantees Act 1993; Health and Safety in Employment Act 1992; Employment
Relations Act 2000; Companies Act 1993; Income Tax Act 2007; Goods and Services Tax
Act 1985.
Outcomes and evidence requirements
Outcome 1
Identify the core elements of business franchise ventures.
Evidence requirements
1.1
Types of business franchises are identified and key factors differentiated.
Range
1.2
franchise types – integrated business operations; single product or
service operations; manufacturing and wholesale; manufacturing
and retail; wholesale and retail; retail product; retail service; ideas;
intellectual property.
The concept of franchising is interpreted in terms of individual business
enterprises linked under agreed business terms to offer standardised products
and/or services in specified areas with mutual marketing strategies and selling
techniques.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
6412 version 7
Page 2 of 5
1.3
Franchise types are identified in relation to existing franchise business operations.
1.4
The business idea to be franchised is defined and evaluated in terms of suitability
for franchising, track record in the marketplace if an existing franchise operation,
or likelihood of success in the marketplace if a new franchise operation.
1.5
Sample cost structures of franchise operations are identified in terms of resources,
benefits, rights included in the cost, payments and liabilities for products and/or
services, goodwill, royalties, and other resources.
1.6
Responsibilities of franchiser(s) are investigated in relation to specific franchise
venture operations.
Range
1.7
responsibilities may include but are not limited to – supply of
products and/or services; product and/or service quality provisions;
business training support; operational support; marketing and
promotion support; provision of financial and statistical information
on overall performance of group operations; financial and statistical
services to franchisee; franchise establishment support; risk
management support; dispute negotiation procedures; legal and
regulatory compliance assurance.
Responsibilities of franchisee(s) are investigated in relation to specific franchise
venture operations.
Range
responsibilities may include but are not limited to – capital
requirements; form and terms of payment for franchise; royalty
payments; goodwill payments; skills and expertise; personal work
commitment; operational, marketing, and promotional requirements;
reporting; organisational responsibilities; term of involvement.
Outcome 2
Determine the essential requirements for establishing franchise business operations.
Evidence requirements
2.1
The need for strong and durable business franchise concept(s) is investigated and
determined in terms of potential to establish a positive business image and viable
franchise operation.
2.2
The principles of franchiser organisations are assessed in terms of reputation,
business expertise, and financial stability.
2.3
The range, availability, and quality of products, services, ideas, and intellectual
property are determined in relation to similar products in the marketplace.
2.4
The structure of the franchiser organisation is analysed, and the number of
franchise outlets to be established and the capacity of the business venture to
support franchise outlets is determined and evaluated as franchise establishment
considerations.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
6412 version 7
Page 3 of 5
2.5
For an existing business venture, the viability of establishing franchise outlets is
determined in relation to previous business performance, organisational and
financial structure, business life cycle stage, and capacity of the organisation to
support franchise outlets.
2.6
For an established franchiser, the performance of previously established franchise
outlets is determined and contrasted with franchiser projections.
2.7
Business performance of competing businesses and franchise operations is
researched and evaluated for its impact on the proposed franchise operation.
2.8
Resources, expertise, and benefits to be provided by the franchiser are
determined in relation to the needs of the proposed franchise operation.
2.9
Resources, business background, expertise, and benefits required by the
franchisee are determined in relation to the needs of the proposed franchise
operation.
2.10
The franchise business plan is evaluated in terms of business establishment,
operation and development strategies, and strategies are assessed in relation to
undertakings given and projections made.
2.11
The operations manual for franchise operations is evaluated in terms of adequacy
for the nature of the operations and the franchisee's ability to achieve operational
standards and targets.
2.12
The nature and extent of marketing and promotional resources and support are
determined in terms of adequacy to support franchise concept and meet
marketing goals.
2.13
Communication needs are determined, and proposed processes and channels
are assessed in terms of their effectiveness in meeting identified needs.
2.14
Site selection parameters are obtained and reviewed for their ability to meet
franchise performance projections.
Outcome 3
Evaluate franchise proposals.
Evidence requirements
3.1
Franchiser proposals are evaluated and assessed in terms of attractiveness and
viability of franchise operation.
Range
franchiser proposals may include but are not limited to – range,
availability, and quality of products, services, ideas, intellectual
property; franchise area and territorial rights; distribution
arrangements; marketing and promotion support and requirements;
royalty levels and responsibilities; legal and regulatory requirements;
training support; operational support; administrative support; pilot
operation opportunities.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
3.2
Costs of investment in the franchise are established and the attractiveness of
franchise investment is assessed in comparison with other forms of investment
available.
Range
3.3
6412 version 7
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franchise costs – franchise purchase cost and payment terms;
franchise fees; asset and liability specifications and costs;
availability, extent, and cost of franchiser finance; availability, extent,
and cost of external finance; goodwill cost; royalty, trademark, patent
cost(s); costs of management services; costs of operational support;
marketing and promotion costs.
Resource levels and costs, operating plans, and operating methods are evaluated
in terms of adequacy to meet the requirements of the proposed franchise venture
operations and ability to attain projected revenue and profit projections.
Range
resource levels and costs may include but are not limited to –
inventory levels and costs; pricing structures, and pricing
standardisation requirements; operational, training, and
organisational support provisions and costs; product and/or service
supply undertakings; quality assurance provisions and costs;
marketing and promotion resources and costs.
3.4
Provisions for the supply and interpretation of business information and statistics
for overall franchiser organisation and individual franchise operation are identified
and evaluated for their ability to support the business operation.
3.5
Resources, expertise, and benefits to be provided by the franchiser and
franchisee are established and evaluated for their adequacy for the proposed
franchise venture.
3.6
Financial and business capacity of franchiser principals and organisation are
assessed in terms of ability to meet undertakings to the proposed franchise
venture.
3.7
Financial and business capacity of franchisee is assessed in terms of ability to
meet undertakings for the proposed franchise venture.
3.8
Business performance of previously established franchise operations is reviewed,
and results are contrasted with undertakings given by franchiser.
3.9
Provisions for the parties to assess franchise business performance in relation to
projections and review and renegotiate aspects of the franchise arrangements are
interpreted and evaluated.
3.10
Provisions for sale of the proposed franchise operation are interpreted, and rights
of franchiser and franchisee are evaluated in terms of meeting their respective
needs.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016
NZQA Expiring unit standard
6412 version 7
Page 5 of 5
3.11
Provisions for rights and responsibilities of the franchiser and franchisee at the
conclusion of the franchise period are interpreted and evaluated in terms of
meeting their respective needs.
3.12
Relevant information gathered from evaluation of franchise proposals is specified
and conclusions that communicate results of the evaluation in a manner and form
that meets user requirements are formulated.
This unit standard is expiring. Assessment against the standard must take place by
the last date for assessment set out below.
Status information and last date for assessment for superseded versions
Process
Version Date
Last Date for Assessment
Registration
1
22 February 1996
31 December 2015
Revision
2
12 May 1999
31 December 2015
Revision
3
8 February 2001
31 December 2015
Revision
4
12 January 2006
31 December 2015
Rollover and
Revision
5
22 August 2008
31 December 2015
Rollover and
Revision
6
20 September 2012
31 December 2018
Review
7
19 May 2016
31 December 2018
Consent and Moderation Requirements (CMR) reference
0113
This CMR can be accessed at http://www.nzqa.govt.nz/framework/search/index.do.
Please note
Providers must be granted consent to assess against standards (accredited) by NZQA,
before they can report credits from assessment against unit standards or deliver courses
of study leading to that assessment.
Industry Training Organisations must be granted consent to assess against standards by
NZQA before they can register credits from assessment against unit standards.
Providers and Industry Training Organisations, which have been granted consent and
which are assessing against unit standards must engage with the moderation system that
applies to those standards.
Requirements for consent to assess and an outline of the moderation system that applies
to this standard are outlined in the Consent and Moderation Requirements (CMR). The
CMR also includes useful information about special requirements for organisations wishing
to develop education and training programmes, such as minimum qualifications for tutors
and assessors, and special resource requirements.
NZQA National Qualifications Services
SSB Code 130301
 New Zealand Qualifications Authority 2016