State franchise inquiries urge further federal legislation

State franchise inquiries in Western Australia and South Australia, which have released their findings in the last few days, both recommend further national legislation for the franchise sector, as well as greater enforcement powers for the Australian Competition and Consumer Commission (ACCC). Strengthened national legislation, as well as an increased emphasis on pre-entry eduction for franchisees and franchisors, is a consistent theme across both reports despite the different frames of reference for both inquiries, which also declined to recommend specific state-based franchise legislation for the sector despite the early concerns of some observers.

Key recommendations include greater disclosure for prospective franchisees, mandatory dispute resolution processes including the establishment of a Franchise Ombudsman, and greater transparency and accountability in end-of-agreement arrangements relating to goodwill on expiry.

At approximately 100 pages each, both reports cover common issues and make significant recommendations, which if implemented, would result in important changes to the Australian franchising landscape.

Education for franchisees and franchisors is also a strong theme, with both reports quoting extracts from Franchise Advisory Centre submissions on the role of education in improving outcomes for all stakeholders (See related article below: Why franchise education is essential to improving business outcomes).

Both inquiries commenced in late 2007, with the WA inquiry chaired by successful former Franchisee of the Year winner Chris Bothams, while the SA inquiry was conducted by the state government’s Economic and Finance Committee.

- Click on these links to see the Western Australian franchise inquiry report and government statement.

- Click on these links to see the South Australian report and inquiry website (then select “65 Report – Franchises” under “Completed Inquiries”).

While many observers are still reviewing the inquiry reports, initial responses from the franchise sector has varied from cautiously supportive to outrage, according to media articles. Read more 1  Read more 2  Read more 3  Read more 4

Kleins group placed in voluntary administration

National jewellery retailer Kleins has entered voluntary administration with debts estimated at $20 million. Kleins Franchising, The Jewellery Chain and a related import company were placed in administration late last week, casting a pall on the future of the network’s 150 franchised and 50 company-owned stores. A creditors meeting is scheduled to be held next week, with landlords understood to be owed outstanding rents. Concerns about the tenure of franchisees who sublet shops from Kleins have also been raised. Read more 1  Read more 2

Trade Practices Act changes crack down on predatory pricing

Changes announced to the Trade Practices Act this week will make it illegal for corporate bullies to undercut smaller competitors in an attempt to send them to the wall. The burden of proof on victims of predatory pricing will no longer be as onerous, and a new Deputy Chairperson position for small business will be created within the ACCC among the changes announced by Federal Small Business Minister Craig Emerson to reduce anti-competitive behaviour.  Read more 1

However, uncertainty exists over how effective these changes may be, or in some cases, may actually favour big businesses over small businesses. Read more 2

Europcar buys back Australian and NZ master franchise

International car rental firm Europcar will acquire the Australian and New Zealand operations of its Asia-Pacific master franchisee, ECA Car Rental, giving the company direct operations in markets outside of Europe for the first time. The deal involves a fleet of 7,000 vehicles and an annual turnover of $123 million. Read more

Dream run ends for ambitious start-up donut chain

The dream run for Brisbane-based Dreamy Donuts has come to an end with receivers and managers appointed last week to the franchisor of the 15-store chain. The franchise, which started in early 2006 by ex-photographer turned donut entrepreneur Grant Weston, grew by nearly a dozen stores in the second half of 2007, with bold plans to open a further 30 in 2008. The company also opened a dedicated production facility to improve supply to its growing chain, but ran into difficulties and was looking for a cash injection from an equity partner prior to the appointment of receivers. The factory, a company-owned store and the franchise outlets continue to trade while the receivers seek potential buyers.  Read more 1  Read more 2

ACCC quarterly report card online

The ACCC’s quarterly update on industry code (including the Franchising Code of Conduct) and Trade Practices Act enforcement actions for the period January 1 to March 31 2008 is now online. The report summarises ACCC activities, including prosecutions commenced and completed during the period. To download a copy, click here.

Concerns over wellbeing of fitness franchise

Victorian-based franchise Beach House Health and Fitness, ranked as one of Australia’s hottest franchises by BRW magazine in 2007, has been the subject of claims involving unpaid debts, overdue employee entitlements, and breaches of member privacy according to a recent article in The Age.

The media report said the franchise, which announced it would have 100 outlets by the end of 2007, currently has 37 but has closed or rebranded as many as 13 outlets in recent months. Read more

New owners for Garage World and Shed Boss chain

Cairns-based national steel building and garage chains Garage World and Shed Boss have entered an agreement to be acquired by Fletcher Building Steel Division, parent company of Stramit Building Products. The businesses will continue to be operated by existing management, according to a company statement. Read more

Business confidence lowest since 2001

Business confidence in Australia has ebbed to its lowest level since 2001, according to a quarterly business report issued by the National Australia Bank. In the wake of interest rate rises and world financial crises, business confidence has sunk to its lowest point in seven years. Read more

API profits on track following franchise divestments

Diversified retail franchisor Australia Pharmaceutical Industries (API) has reported strong profits for the first half of the 2008 financial year following the sale of its Price Attack and House brands. The company continues to operate and grow its network of Priceline stores, which it plans to continue to franchise, as well as a large number of pharmacies. Read more

Why franchise education is essential to improving business outcomes

The strong educational focus of both the Western Australian and South Australian Franchise Inquiry reports released in the last few days underlines the importance of franchisees knowing what they are in for before buying a franchise.

The decision to buy a franchise is one that is often treated emotionally rather than rationally. Many of the appeals of self-employment stem from a desire to be one’s own boss, to be in control of one’s own destiny and to enjoy a better lifestyle by having more time with family, with these non-financial considerations accounting for up to 80% of the decision to become self-employed.

To get past these emotional drivers in order to make balanced business decisions, franchisees need to better educate themselves prior to buying a franchise. Read more

Free Ex-Factor seminars filling fast

Free seminars on the topic of “How to stop ex-franchisees destroying a system” to be held in Brisbane, Sydney and Melbourne this month are filling fast. More than 90 people have booked so far for the Brisbane seminar on May 12, with strong registrations also received for Sydney and Melbourne on May 19 and 20 respectively.

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, will discuss:

- 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.

For full seminar information, including locations and booking details, click here.

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.wa.gov.au).

Other franchise news:

- Mitre 10 to grow via acquisitions;

- Coles Express dearest for fuel;

- Restaurant Brands lifts profits following store sales & closures;

- Wendy’s International sells to parent of rival for US$2.3 billion;

- Dominos Australia employee Adam Pratt celebrates 20 years on the job;

- NZ pharmacy chain Chemist Care to be acquired by Life Pharmacy;

- Chinese growth to offset effects of US recession for KFC;

- Baskin-Robbins co-founder dies, aged 90;

Franchise Appointments & Departures:

Brumby’s Bakeries has appointed Michelle McBride as National Marketing Manager and Lisa Gatenby as Senior Marketing Co-ordinator.

Betta Electrical director Rex Graham has announced his retirement from the company’s board.

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FRANCHISE JOBS

Positions Vacant:

2 Franchise Business Managers and 1 Franchise Development Manager - Ella Baché

Ella Baché are Australia’s foremost award winning skincare franchise. With a dynamic people culture and a brand heritage of 70 years, we require a number of professionals to assist in growing our franchise business. Candidates will demonstrate indepth knowledge of franchising processes and possess high level financial, coaching and negotiating abilities. Positions vacant are: Franchise Business Manager NSW and Franchise Business Manager QLD. For these roles, candidates must possess 5+years experience in a similar role. Also available is a newly created Franchise Development Manager position requiring a candidate with 5+ years experience in similar role including considerable lease negotiation exposure. Please email your resumes and expressions of interest to Michelle Bakar National HR Manager or call (02) 9432 5014.

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Retail Network Development Manager - Optus

As part of the ongoing development of the Optus World retail network nationally, we are currently searching for a seasoned Retail Network Development Manager to drive the quality of our national retail footprint to achieve optimal representation in each market, thus gaining competitive advantage. The scope of the role covers all areas of network development from identification of new store opportunities, rationalisation opportunities through to negotiation of commercial terms on leases on behalf of Optus or its franchisees.  Some interstate travel is involved.

To be successful for this role, you will have extensive experience in retail leasing – negotiating commercial terms, doing deals and lease management  complimented by experience in creating a network plan – complete with identification of new opportunities, relocation and closures.

Senior Database Analyst (Geo Mapping) - Optus

Optus is expanding its capability within the existing Consumer Sales Strategy Group. Database analysis and Geo Mapping has been identified as a required capability to drive and support our Consumer Sales Channel Development team. 

The Database Analyst will be responsible for the overall collection, maintenance and development of demographic modelling tools to support the Consumer Sales business Unit it making strategic and tactical decisions. This role is seen as a critical step forward for Consumer Sales in adapting to this ever changing Telecommunications market place.

To be successful for this role, you will have a strong blend of technical and business skills and have a firm understanding of relational databases, complimented by the ability to convert analytical findings into meaningful and actionable insights for a variety of audiences.   Geo Mapping / GIS knowledge is also essential.

For more information on these two roles, please contact Karina Ghozali on 02 8082 4043 or send an email to

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Do you have a job vacancy in your system and need to get word to potential candidates already working in the franchise sector? details to Franchise News & Events for inclusion in our fortnightly e-bulletin. (Cost applies – Contact us for details).

Candidates Available:

Senior Franchising Executive Available

A high-level candidate seeks appointment with a SE Queensland-based Franchisor.  With general management, senior executive and board experience, this person is engaged in national Franchise Management and responsible for:

- managing Franchisor/ee relationships and communication

- documentation and compliance with the Code;

-  training and development including internal coaching

- developing and implementing franchise sales strategy nationally.

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.

Franchising Mentor. 25+ years experience

Available to mentor start-up, growing and mature systems. Litigation avoidance and understanding of franchisee issues. Email or phone (07) 3716 0400 for more information.

Enhance your corporate governance and the strategic capability of your board

Experienced franchisor (200+ outlets & 20+ years experience) with proven strategy development skills available for non-executive board positions. Click here to enquire in confidence, or phone (07) 3716 0400.

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