Migrants cry foul over new franchise deal

Police are investigating an alleged scam in which people, mainly Chinese immigrants, claim to have been sold non-existent franchise businesses.

The New Zealand Herald
February 26, 2008

Migrants cry foul over new franchise deal
Lincoln Tan

Police are investigating an alleged scam in which people, mainly Chinese immigrants, claim to have been sold non-existent franchise businesses.

This comes as the Franchise Association prepares to send a submission to Parliament calling for tougher franchise controls.

It also follows a case being investigated by the Serious Fraud Office in which Green Acres area manager Keith Lapham is accused of selling bogus ironing franchises.

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.

However, they say the only work they got was free cleaning arrangements the firm had with cafes, offices and retail outlets.

"There was no business, and we have all been conned," said Zhou Ping, an immigrant from Fujian, China, who bought two franchise businesses for $40,000 with his friend Shudeng Ye in April last year.

"I have not received a single cent in payment from Green Power, and all the hours I had put in cleaning a video shop and other retail outlets turned out to be just free services the company had offered them," he said in Mandarin.

The Herald has made repeated unsuccessful attempts to contact Green Power.

A Remuera lawyer, Winston Wang, who says he acts for the company, said it "did not want to be contacted".

The Companies Office website lists Chen Ji of Epsom as the sole director of Green Power Ltd.

However, Mr Wang said that he had never met Chen Ji and that he could not help the Herald to contact anyone at Green Power because it would breach a "confidentiality" understanding he had with his clients.

Robin Hassan, owner of Indian Sweets and Video, which used Mr Zhou's services, said the understanding he had with Green Power in engaging Mr Zhou's services was that it had been part of a "free trial offer".

"One of the Green Power reps dropped in and asked if I wanted to have my shop cleaned as part of a free trial, so I said, 'Why not?'

"They did a good job, but my business is small and I do not have the money to continue engaging them after the free trial ended."

Veena Kumar of Raven's Fire and Security in Papatoetoe said the cleaning service was used only because it was free.

"There was never any mention of payment," she said.

Mr Zhou, Mr Ye and another franchisee, Lucia Lu, have made a complaint against Green Power to the police.

Because many of the complainants speak limited English, police Asian liaison officer Raymond Wong was approached. He has confirmed that the police are investigating.

Mr Wong said he had advised victims to report the matter to the Commerce Commission so that investigations could be "two-pronged".

Other victims have also asked National MP Pansy Wong for help.

The franchisees say they were attracted to Green Power by the guaranteed weekly income and the fact that English was not a requirement for operating the business.

"The understanding was that Green Power will get the business for us, and all we have to do is do the cleaning and we don't have to speak English or even meet the clients," Mr Zhou said.

He got his business through an advert in a local Chinese language newspaper, the Mandarin Pages.

"I was really excited when I first saw the advertisement, because I know that as an immigrant whose English is a barrier to getting a job, the only way to survive in New Zealand is to buy my own business and is maybe the only way for me to improve the quality of life for me and my family."

The Franchise Association is finalising details of its recommendations to the parliamentary finance and expenditure committee. It will give its submission to the MPs on Thursday.

The recommendations will likely include a call for a registration system for franchise companies and their franchise systems, regulations to disqualify companies and compulsory mediation before any legal disputes.

Association chief executive Peter Fergusson said a change in legislation was needed to give people added protection in franchised businesses.

Board members met Commerce Minister Lianne Dalziel this month with their concerns.


A group of Chinese immigrants who paid $20,000 each for Green Power cleaning franchises with a guaranteed weekly income of $1000 claim they have not been paid.

Former Green Acres area manager Keith Lapham is accused of selling about 200 non-existent ironing franchises to investors who paid between $21,000 and $25,000 each. The franchisees are mainly Chinese and Indian immigrants.

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Risks: Fraud, Outright scam, Language shortcomings create a vulnerability, Register franchisees and franchisors, Mediation as information gathering, Immigrants as prey, Franchisor association still maintains fiction of representing franchisees, Franchisors want the minimum regulation they can get away with, China, New Zealand, 20080226 Migrants cry

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