ACCC clears Bakers Delight of unconscionable conduct

The Australian Conpetition and Consumer Commission (ACCC) has cleared national retail chain Bakers Delight of unconscionable conduct in its dealings with its franchisees. In an unusual move, the ACCC made the announcement in response to the large amount of publicity surrounding the investigation, including media reports and a mention in Federal Parliament late last year.

After analysing documentary evidence and interviewing witnesses, the ACCC found:

- Bakers Delight had not engaged in unconscionable conduct or breached the Franchising Code of Conduct;

- Franchisee allegations could not be substantiated or were contradicted by evidence;

- Steps taken by Bakers Delight to remedy alleged wrongdoing in relation to verbal representations were reasonable, or other factors led to losses suffered by franchisees;

- No evidence of systemic compliance problems was uncovered.

The ACCC noted that Bakers Delight co-operated during the investigation, and that ongoing discussions are being held to ensure Bakers Delight’s trade practices law compliance procedures and complaint handling processes are able to deal with issues that might arise in future.

Read ACCC statement  More background to this story

Pre-nuptial contact termination a precedent for Ketchell?

A ruling by three Family Court judges that a pre-nuptial agreement between a married couple was invalid on the grounds that a required certificate was not provided may set a precedent for the forthcoming appeal in the High Court of the franchising landmark Ketchell case.

A pre-nuptial agreement requires both parties to obtain independent legal advice, and for their soliticitors to affix a certificate to the agreement that the advice has been given. In the case of Black and Black heard in the Family Court earlier this year, the certificates were provided, but when a change was subsequently made to the agreement, one party’s solicitor forgot to prepare a fresh certificate and the whole agreement was set aside, according to a recent article in the Australian Financial Review. A technical requirement for a similar certificate lies at the core of the Ketchell case. Read more

Commission cuts infuriate mortgage brokers

Mortgage brokers across Australia, many in franchise networks, are infuriated by bank moves to cut commissions following an announcement by Westpac recently. The bank told brokers it would cut commissions unilaterally by 0.2% from 0.7% from its up-front commissions, and 0.1% from its 0.25% trailing commission.

The move has immediately angered mortgage brokers, who were not consulted on the commission reduction, and have led to fears that other banks will follow suit. Banks are claiming that increased credit costs and decreasing loan volumes are now causing losses on loans offered through brokers, however mortgage brokers, who provide about 40% of mortgage products to borrowers, are demanding to know why they are being singled out for 35% remuneration reductions to boost bank profits. Read Mortgage & Finance Association of Australia statement  Read more 1  Read more 2

NSW proposes retail lease advocate; releases discussion paper

The New South Wales government has released a discussion paper proposing a series of changes to the NSW Retail Leases Act to correct the power imbalance between retail tenants and landlords. Proposals include the establishment of a Retail Advocate to investigate and advocate on behalf of retailers, a rent reduction during the period between the end of a lease and the tenant and landlord agreeing on a new lease, as well as other opportunities for rent reduction based on tenancy mix changes or increased competition. Interested parties have until May 26 to provide their feedback on the discussion paper and proposals.  Read more 1  Read more 2   Download full discussion paper  

The release of the discussion paper follows the recent Productivity Commission inquiry into retail leasing, for which the final report is yet to be publicly released.

2020 Summit proposes junk food tax

Last weekend’s 2020 Summit in Canberra, in which 1002 Australians came together to generate ideas for the future of the nature, has proposed a tax on junk food as part of an overhaul of the national health system. However the Summit also drew criticism for not adequately representing the small business sector. Read more  See other business ideas from the Summit

Mafia “franchise” expands in Australia

A resurgent Mafia, a criminal network thought to have been in decline in Australia 10 years ago, has appeared as a key player in a $38 billion drug trade, with an Italian Parliament report describing mafia operations as a franchise “like a fast food chain”. Australia has featured as a money-laundering hub in the report, with Calabrian Mafia group ‘Ndrangheta, also known as L’Onorata Societa, identified as offering the same “recognisable brand and identical criminal product all over the world”, according to the report quoted in news sources recently. Read more

Parents “dump” children at McDonalds to visit nearby pub

Two children aged 10 and 12, and a 12-month old baby were left unattended by their mothers at a McDonalds restaurant in Atherton, north Queensland, while the women drank at a pub nearby. Police were called after the staff became concerned for the children. Franchisee and former Australian rugby league player Greg Dowling said parents dropping children at the restaurant’s playground and going off was quite common, but called police on this occasion because it was too much pressure on the kdis to look after the baby.  Read more

Franchisors line up to support FCA Ketchell case funding

The Franchise Council of Australia (FCA) has received voluntary contributions from approximately 50 franchisors to assist in funding the High Court appeal of the landmark Ketchell case. The FCA has asked members to make voluntary contributions to the Ketchell case costs, with suggested donation amounts ranging from $500 to $1,000. Read more

WA franchise inquiry report submitted

The final report of the Western Australian franchise inquiry has now been presented to WA Small Business Minister Margaret Quirk. A date for the public release of the report is yet to be announced.  Read more

Multilingual information available for NZ franchise buyers

In response to recent scams involving the sale of fraudulent franchises to non-English speaking migrants, the Franchise Association of New Zealand will soon launch information for potential franchisees in Chinese, Korean and Hindi. Read more

Dairy Farmers coy on sale

Dairy Farmers remains coy on the sale of its business describing main suitor National Foods as “the first of a number of parties interested in acquiring or merging with the business”, according to media reports. Meanwhile National Foods has already asked the ACCC if it has any concerns over the possible acquisition.  Read more

Dare Gallery placed in voluntary administration

Fledgling furniture retail franchise Dare Gallery placed in voluntary administration earlier this month following a post-Christmas sales slump, may already have a potential buyer according to its administrator. The 13-store chain has been affected by interest rate rises and poor trading. Read more

Mortage advisor has home repossessed, jailed for contempt

A Melbourne mortgage advisor who fell behind in his own home loan repayments had his house repossessed, and was then jailed for failing to respond to bank legal action and court orders. Derek Balogh blames problems with a former business associate and partner for falling behind in his repayments in 2006, and was sent to jail for 14 days last month for contempt of court for failing to comply with court orders to surrender the house. Mr Balogh said that as a mortgage consultant who had helped other people save their homes from repossession, he should have known better. Read more

Forget commercial marriage, franchising is an entrepreneurial alliance

The term “commercial marriage” has been used to describe the relationship between franchisors and franchisees, but increasingly this is now seen as an entrepreneurial alliance where franchisees are “intrapreneurs”, or entrepreneurs inside a larger organisation. While these new terms originate from the United States, they are more descriptive of the cultural approach to franchising in Australia than the US, according to Franchise Advisory Centre director Jason Gehrke. Read more

Cookie Man turns 50

Cookie Man, one of Australia’s oldest home-grown franchise systems, turned 50 this month. The business, which bakes and retails specialty biscuits was started in 1958 by Kevin and Evelyne Hicks in Melbourne, and has just opened its 50^th store. The system is now owned by listed franchisor Allied Brands. Read more

How to stop ex-franchisees destroying your system (free seminar)

From copycat concepts to scathing media coverage and litigation, ex-franchisees can be a potentially destructive force for any franchise system. With franchisors now required to disclose contact details of former franchisees under changes to the Franchising Code of Conduct, ex-franchisees have more scope than ever to influence the future success of a franchise brand. Attend this free franchise sector briefing, presented by Franchising Australia Survey author Professor Lorelle Frazer from Griffith University and Jason Gehrke from the Franchise Advisory Centre, and learn:

- Why ex-franchisees engage in destructive behaviour, and what they hope to achieve;

- Common types of destructive activity, and how to monitor and minimise it;

- Developing processes to maintain positive brand engagement among ex-franchisees.

Be the first to hear this new insight into franchising and how it might apply to your business. This free evening seminar will be held in Brisbane on May 12,  Sydney on May 19, and Melbourne on May 20. For full event information, including locations, and booking details, click here.

Celebrate World Intellectual Property Day – April 26

April 26 marks World Intellectual Property Day – an occasion when business owners can toast the innovations and legal protections that allow them to grow and prosper. Read more

Education support acknowledgements

The Franchise Advisory Centre wishes to publicly acknowledge the support of the following organisations who have provided assistance with recent education programs:

- ANZ Bank (www.anz.com.au);

- Dibbs Abbott Stillman Lawyers (Brisbane & Sydney offices) (www.daslaw.com.au);

- Griffith University, Graduate Business School (www.griffith.edu.au/business);

- Hall & Wilcox Lawyers (Melbourne) (www.hallandwilcox.com.au);

- Small Business Development Corporation of Western Australia (www.sbdc.gov.au).

ANZAC Day – Lest we forget

Tomorrow is ANZAC Day – a time for all Australians to pause and remember the bonds that unite a free nation, and the folly of war. Lest we forget.

Other franchise news:

- Allied Brands to launch Kenny’s Cardiology in New Zealand;

- Dominos offers paid maternity leave to head office staff;

- Unions to resist closure of Fisher & Paykel manufacturing plant;

- Real estate agents come under fire over fee increases;

- Green Acres franchise fraud victims demand compensation from franchisor;

- KiwiBank leads growth of NZ bank branches;

- Pizza margins flattened by commodity prices rises;

- Should CEO’s front their own advertising?

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This person has a high level of written and oral communication and presentation skill, is commercially astute, a strategic thinker and able to engage at a very senior level as well as direct staff and relate effectively with Franchisees. Email or phone (07) 3716 0400 for more information.

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