How To Start A Fish And Chips Business

Fish and chips are a staple takeaway food. With fish and chips, you don’t have to worry about introducing a new food to your potential customers, most people are already familiar with it. All that’s left to do is create the best fish and chips that leave people coming back for more.

Feel like you’re up to the task? Great! Starting a fish and chips business means you need to master that awesome fish and chips combo — we’ll leave that part to you though. There’s more to setting up your fish and chips business — planning, registering and following the relevant regulations are all crucial factors to properly setting up your business.

That’s where we come in – keep reading to know more about starting a fish and chips business in 2024.

Is A Fish And Chips Business Profitable?

Making a general statement on whether a fish and chips business is a profitable venture is difficult, as it depends on the individual business. However, it’s still important to wonder whether your fish and chips business is going to be a profitable venture.

The best way to answer this question is to analyse, research, study, take notes and compile a thorough business plan. A business plan doesn’t just need to contain the financial plans for your business – it covers anything relevant from market research, competitors, equipment, maintenance, staff training, business operations, legal regulations, contracts and more. Once you’ve taken the time to create a well thought out business plan, you’ll be in a better position to identify the strengths and weaknesses of your fish and chips business — providing you with more clarity about the risks and opportunities.

How To Start A Fish And Chips Business In New Zealand

To legally operate a business in New Zealand, your business needs to be registered. Therefore, that’s your first official step to starting a fish and chips business — registering your business.

To register your business, you will need to select the right business structure. Sole trader, partnership and company structures are the most commonly registered structures, so let's take a closer look at them.

Sole Trader

Sole trader businesses mean precisely what the name suggests. They are for ‘sole traders’ or individuals who own or operate the business themselves. Setting up business as a sole trader is a relatively simple process. It requires applying for a New Zealand Business Number (NZBN) which can be done through a simple, online application. If your fish and chips business has a name that differs from your personal name, then you will also need to register a business name. After that, you’re all good to operate your business as a sole trader.

Despite a sole trader business having the easiest set up process, it does come with the drawback of offering very little legal protection to the business owner. When you register your business as a sole trader, the business is legally attached to you. This lack of legal separation between you and your business means that you will be liable for everything that happens within your fish and chips business. We don’t usually recommend this level of risk, especially if your business is a serious endeavour.

Partnership

A partnership business set up is similar to a sole trader business except instead of one person, multiple people responsible for the business. The partnership will need to have an NZBN and again, a business name will need to be registered, unless the personal names of the partners will be used as the business name. It’s also a good idea to lay down the rules of the partnership though a legal document signed by all partners, such as a Partnership Agreement. This can help prevent disputes, draw out important processes and ensure all partners are on the same page.

It's important to note that in a general partnership, the partners are personally liable for the business’s debts and obligations. This means that if the business faces financial difficulties or one partner acts irresponsibly, all partners may be personally liable, which can be a significant risk.

Company

Many business owners see registering a company as a complicated and daunting task. However, this doesn't need to be the case. Even though company registration is more complex compared to other business structures, with the right legal help it can be pretty simple.

Moreover, when you register your fish and chips business as a company, it will become an independent entity, existing separately from you. As such, you will be able to have limited liability when it comes to your company, providing you with much more legal protection and ensuring your personal assets aren’t impacted by your company.

Registering a company involves deciding how your company will be governed, determining company officeholders, shareholders and following the regulations set out by the Companies Office. It’s a good idea to have a legal expert help out with this, as you want your fish and chips company to be set up the right way.

What Is The Legal Side To Starting A Fish And Chips Business?

Starting a fish and chips business isn’t just about a great business plan and registering your business the right way. There’s a number of legal considerations you will need to take into account. Primarily, the laws your fish and chips business will need to follow, as well as the contracts needed to protect it. Let's take a closer look below.

Laws Affecting Your Fish And Chips Business

Your fish and chips company will be impacted by laws and regulations, just like any other business. We’ve listed a few regulations to look out for; however, it’s always a good idea to chat with a legal expert, as the exact laws impacting your fish and chips business will depend on your individual circumstances.

Food Safety Regulations: The Australia New Zealand Food Standards Code (FSANZ) outlines the practices your business must comply with to ensure food is handled, stored, and prepared safely. This includes proper food handling, temperature control, hygiene standards, and labelling requirements to ensure food safety in your fish and chips business.

Fair Trading Act (FTA): The FTA in New Zealand governs the legal standards businesses must adhere to when providing goods and services to consumers. This includes important matters such as pricing, product labelling, refunds, and the quality of goods sold. Being aware of your legal obligations under the FTA is crucial to avoid penalties and ensure customer satisfaction.

Local And Regional Regulations: Local regulations will play a pretty significant role for your fish and chips business. They’ll determine where you can open your business, the licences and permits you will need, relevant environmental laws and a few more things. It’s important to do your due diligence and make sure your business is compliant with the relevant local and regional regulations.

Data And Privacy Law: If you collect customer information through payment systems, online orders, or use security cameras, you must comply with New Zealand's privacy laws. This includes the Privacy Act 2020, which governs the collection, storage, and handling of personal information. It's important to ensure your practices align with privacy regulations to protect customer data and avoid legal breaches.

Employment Law: If you hire staff to work in your fish and chips business, then it’s imperative your employment practices are in line with New Zealand’s Employment Relations Act. This means providing your employees with the correct wages, breaks, and working conditions. Additionally, the workplace environment you provide for all your employees should meet the standards under WorkSafe New Zealand.

Legal Documents For Your Fish And Chips Business

Contracts help secure your fish and chips business, manage risk, limit liabilities and safeguard your business – it’s important to have them drafted by a legal expert to meet the needs of your specific business. Here’s a few legal agreements you may want to look into getting.

Supply Agreement: Naturally, you will need ingredients and materials to run your fish and chips shop. Ordinarily, businesses like to engage a supplier that routinely delivers what they need. If you do so, it’s important to have a supply agreement that covers terms such as payment, liabilities, terminations, dispute resolutions and much more so both parties are aware of their responsibilities.

Employment Contract: When you hire an employee to work in your business, it’s important they are aware of both their rights and responsibilities. An employer agreement covers their role description, payment, breaks, leaves, entitlements and anything else relevant to their role – that way both you and your employee can be on the same page regarding the terms of their employment.

Shareholders Agreement: If you're setting up a company, then a shareholders agreement is an important contract between you and the other shareholders. This agreement sets out how disputes are handled, what happens when a shareholder wants to leave and more – it’s necessary to get one that’s catered to suit the needs of your fish and chips venture.

Non-Disclosure Agreement (NDA): NDA’s are important for maintaining the privacy and confidentiality of your fish and chips business. Perhaps there’s a recipe you don’t want getting into the wrong hands, information about your business operations or sensitive information regarding your employees – no matter the reason, legally securing information through an NDA is a good way to maintain your businesses privacy.

Should I Buy An Existing Fish And Chips Shop Instead?

You can always go ahead and buy a fish and chips shop rather than starting one from scratch. There’s two main ways to do this, either through purchasing a fish and chips business directly or buying into a franchise.

Purchasing A Fish And Chips Business

If you’re thinking of buying a fish and chips business, there are two main types of sales you need to be aware of: a share sale and an asset sale.

Share Sale

In a share sale, the buyer purchases the shares of the company that owns the business. This means the buyer becomes the new owner of the company, including all its assets, liabilities, contracts, and any other business interests. Essentially, the buyer steps into the shoes of the existing owners and takes over the business in its entirety, including both its benefits and any risks (such as existing liabilities).

Asset Sale

In an asset sale, the buyer purchases specific assets of the business rather than the company itself. These assets might include equipment, intellectual property, leases, stock, and goodwill. The buyer doesn't assume ownership of the company itself and may not take on its liabilities unless explicitly agreed upon. This type of sale allows more flexibility, as the buyer can choose which assets to acquire without taking on the entire business structure.

When purchasing a fish and chips business, it’s crucial to understand whether you are entering into a share sale or an asset sale, as each has different implications for what you will own, your responsibilities, and the liabilities you may inherit. Seeking expert legal advice during the sale process ensures that you understand your rights and obligations and helps the transaction proceed smoothly.

Buy Into A Fish And Chips Franchise

Another way to purchase a pre-existing fish and chips business is to buy into a franchise. It’s important to note that when you agree to purchase a franchise, you don’t own the entire franchise network—you are only purchasing the rights to operate a particular franchise location.

In a franchise agreement, the franchisee receives the rights to use the franchisor’s intellectual property, business model, branding, and an operations manual that guides you through running the business. In return, franchisees typically pay an initial franchise fee and ongoing royalties or fees to the franchisor.

Franchising is a regulated area in New Zealand, governed by the New Zealand Franchise Association Code of Practice, which outlines the rights and obligations of both franchisors and franchisees. Because of the complexities, it’s a good idea to consult with a legal expert before entering into a franchise agreement.

Key Takeaways

A fish and chips business can be a great new business however, it’s important to take care of the legal considerations when starting one. To summarise what we’ve discussed:

• You can operate your fish and chips business as a sole trader, partnership, or company. Each structure has different levels of legal protection, with sole traders having the least and companies offering limited liability
• Compliance with food safety regulations, consumer laws, local council regulations, and privacy laws is essential. Employment laws, such as the Employment Relations Act, also apply if hiring staff
• Supply agreements, employment contracts, and non-disclosure agreements help protect your business. A shareholders agreement may be necessary if you form a company
• Buying into a franchise allows you to use the franchisor’s brand and business model but comes with ongoing fees and obligations under the New Zealand Franchise Association Code of Practice
• When purchasing a fish and chips business, there are two types of sales—share sales (buying the company) and asset sales (buying specific assets). Each has different implications for liabilities and ownership
• Given the complexities of both starting and purchasing a fish and chips business, seeking expert legal advice is highly recommended to ensure smooth operations and compliance

If you would like a consultation on starting a fish and chips business, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.