The recent ongoing media exposé highlighting serious concerns within a New Zealand franchise has reignited a conversation that the industry can no longer ignore: Are work guarantees doing more harm than good in franchising? While the article focuses on one company, the wider implications stretch across the entire franchise sector, especially in service-based systems like commercial and domestic cleaning.
As a leading franchise development consultancy in New Zealand, one issue we continue to see misunderstood, by both franchisors and franchisees, is the role and reality of work guarantees.
The Work Guarantee Problem Isn’t the Clause, It’s the Communication
A work guarantee, when structured correctly and delivered transparently, can provide early reassurance to new franchisees. But in far too many cases, what’s sold as a "guarantee" is actually a conditional promise loaded with caveats, and those caveats often aren’t well explained.
A typical example is the non-performance clause, which allows the franchisor to reduce the guaranteed amount if a job is lost due to franchisee error or customer dissatisfaction. While legally valid and arguably fair, this clause frequently blindsides franchisees if they are not properly walked through the real-world implications.
Transparency isn’t a luxury, it’s a duty. If a guarantee includes conditions like:
- Required acceptance of all jobs
- Minimum availability
- Territory restrictions
- Admin or lead-generation fees
- Reductions for service issues or customer cancellations
These must be explained well before a franchisee signs on the dotted line. Too often, they’re buried in fine print and not discussed until induction, long after recruitment messaging has promised “peace of mind.”
You Can’t Guarantee What You Don’t Already Have
In my opinion, no franchisor should offer a work guarantee unless they already have that value of work available, not in the pipeline, not projected, available. Promising $2,000 a week and delivering less than that several months later is both unethical and undermines the trust on which franchise systems are built.
I’m aware of many cases where franchisees wait up to a year to receive the full value of their guarantee. Many are forced to take on additional jobs to make ends meet while they wait. That’s not a safety net, it’s a marketing tactic dressed up as support. Franchisors offering guarantees should be prepared to deliver on them immediately or not offer them at all.
The Hidden Cost of the Guarantee Mindset
It’s become almost an expectation, franchise buyers ask, “Do you offer a work guarantee?” and base their decision on the answer. This puts pressure on franchisors to offer guarantees they may not be equipped to fulfil, just to stay competitive.
But franchisors who don’t offer guarantees are often the ones doing it right. They provide training, marketing support, and guidance to help franchisees build their own customer base, skills that foster true business ownership, not dependency.
Ironically, franchisees entering a system with no guarantee, but strong acquisition support are often better off. They tend to learn faster, earn more over time, and build resilience. Those entering with a fixed guarantee frequently earn less per hour and can end up feeling like employees in their own business.
Guarantees Shouldn’t Be Used as a Marketing Tool
I believe that work guarantees have no place in franchise marketing. If a franchisor has secured an existing customer base to be handed to a new franchisee on day one, then yes, protecting that income for a limited period (e.g., 3 to 6 months) is reasonable. But beyond that, the focus should shift to empowerment.
Instead of guarantees, franchisors should be providing:
- Marketing services that deliver real leads
- Training on quoting, customer service, and upselling
- Support systems to help franchisees retain and grow their base
This is a win-win. Franchisors build an engaged, motivated network, and franchisees feel real ownership over their success.
If a franchisee has been involved in securing the customer from the outset, they are more likely to value the relationship and more likely to retain it. That’s how sustainable franchise systems are built.
Immigrants, Misinformation, and the Risk of Misunderstanding
The franchise sector continues to be a beacon of opportunity for new migrants to New Zealand. But that opportunity can become exploitation if the offer isn’t understood in full. Language barriers, cultural differences, and limited business experience can all contribute to franchisees’ misunderstanding what a work guarantee really entails.
The responsibility here lies with both parties. Franchisees must ask the hard questions and seek independent advice. But franchisors must also lead with clarity. Work guarantees are often tied to service contracts with high churn rates. A job lost due to poor service, or even just a customer’s subjective view, can reduce the guaranteed income. These risks need to be communicated clearly and early.
It’s Time for Industry-Wide Accountability
This issue isn’t an isolated one. It’s about an industry that must hold itself to a higher standard. At TMPlus, we work with franchisors to structure guarantees (when appropriate) that are realistic, ethical, and clearly communicated. But more often than not, we advise against them. Why? Because we believe that long-term success comes from building capability, not making promises.
Franchisors must prioritise transparency over sales tactics. If your system is strong, your support robust, and your marketing structured, you don’t need a guarantee to sell your franchise. And if you do, it’s time to rethink your model.