Franchise inquiry submissions close in 4 weeks

Submissions to the Federal Government’s current inquiry into franchising close in four weeks on September 12. The inquiry was announced last month and is chaired by Queensland-based Labor MP Bernie Ripoll, and follows two recent state-based inquiries.

The inquiry, to be conducted by the Parliamentary Joint Committee on Corporations and Financial Services, has broad terms of reference, and will report on the operation of the Franchising Code of Conduct and potential improvements in line with the following terms of reference:

1. The nature of the franchising industry, including the rights of both franchisors and franchisees;

2. Whether an obligation for franchisors, franchisees and prospective franchisees to act in good faith should be explicitly incorporated into the Code (having regard to its presence as an element in paragraph 51AC(4)(k) of the Trade Practices Act 1974);

3. Interaction between the Code and Part IVA and Part V Division 1 of the Trade Practices Act 1974, particularly with regard to the obligations in section 51AC of the Act;

4. The operation of the dispute resolution provisions under Part 4 of the Code; and

5. Any other related matters.

Inquiry submissions are due by September 12, with a report due on December 1.

The new inquiry was announced barely four months after the introduction of changes to the Franchising Code of Conduct arising from the last Federal inquiry (the Matthews Report) held in 2006. This inquiry will be the third in nine months for the sector, following-on and prompted by separate state inquiries in Western Australia and South Australia. Click here for inquiry details

Bling retailer Groove in liquidation

Fashion jewellery retailer and aspiring franchisor Groove Accessories has been placed in liquidation. The Brisbane-based business, which was attributed as one of the competitive forces that brought the much larger chain of Kleins stores undone only two months ago, is understood to have sold some of its business prior to going under.  Read more

$12,000 fine for f-word franchisee

The Workplace Ombudsman has fined a Melbourne Donut King franchisee $12,000 for offensive and bullying behaviour in their dealings with an employee. Franchisee Jim Martinoski was fined for placing the worker under duress in putting a workplace agreement before them and telling them their hours would be cut if they did not sign it. He also told the employee to stop asking for their “f…ing payslips..”. The fine is a warning to employers about their conduct and use of language in the workplace, particularly in relation to negotiations with workers, according to the Ombudsman’s office.  Read more

Where Starbucks went wrong

After the furore surrounding the announcement that international coffee icon Starbucks would close three quarters of its 84 Australian stores, observers have pondered what went wrong for the US-based chain in its approach to the local market. Just 23 stores in Brisbane, Sydney and Melbourne will remain open following the Australian closures after losing more than $140 million since commencing operations here in 2000.  An “arrogant” approach that failed to adequately customize the business for Australian tastes and which told local coffee drinkers what they should drink is one reason for the chain’s woes, according to one source.  Read more

Westpac to sell fast food investments

Westpac is reported to be selling off as many as 64 properties occupied by high-profile fast food brands in a rationalization of its unlisted property trust portfolio. The properties are leased to brands including Hungry Jacks, KFC, Red Rooster, Dominos, Chicken Treat and Subway, and are worth up to $100 million dollars. Lessees of the properties are understood to have first right of refusal to buy.  Read more

In other news, the ACCC has announced it will not oppose Westpac’s proposed acquisition of St George Bank.  Read more

Commander Communications placed into receivership

Listed telecommunications franchisor Commander Communications has been placed in receivership after major changes to its executive team in late 2007 failed to stem the business’ massive losses. Receivers McGrathNichol will continue to run the business “as usual”, although up to 30,000 SME customers may affected.  Read more

Aussie John hints at acquisitions and franchise growth

Aussie Home Loans founder John Symons has indicated that despite the depressing market conditions for many mortgage brokers, Aussie is looking for opportunities to grow, including opening new franchises in regional locations and the acquisition of other brokers which may involve a substantial capital raising.  Read more

New web strategy for Cash Converters

Secondhand goods franchisor Cash Converters has completed trials of its Webshop online shopping site across nine company-owned stores and is now gearing up to encourage all 131 of its Australian franchisees to participate in a strategy to take some off the edge away from Ebay.  Read more 1   Read more 2

Q&A: How do I respond to a threat from a franchisee?

A hypothetical scenario where a franchisor is faced with a problem: Customer complaints have been caused by franchisees who aren’t meeting system standards, but are themselves threatening to complain to the authorities about the franchisor. What should you do?  Read more

McDonalds fuels police cars; reviews menu prices as costs increase

Used cooking oil from McDonalds stores in the Philippines will be blended with 40% diesel to fuel police cars in a Manilla district. If the biodiesel idea catches on, more police cars across the country may be powered by waste cooking oil.  Read more

In the United States, McDonalds is reassessing its menu pricing as rising costs and a slowdown in consumer spending takes hold. During a recent visit to New Zealand, McDonalds’ international president and chief operating officer Ralph Alvarez indicated that the key to containing costs was long-term supply arrangements that hedged future commodity prices.  Read more

Strategy versus opportunity: The argument for planned network growth

Demand from prospective franchisees often dictates the growth of a franchise network, rather than a coordinated and balanced strategy that plans structured growth, writes site selection expert Peter Buckingham.  Read more

Parmalat withdraws from Dairy Farmers bid

After months of consideration, Parmalat is reported to have withdrawn from the race to buy Dairy Farmers. The bid process now leaves National Foods to bid for Dairy Farmers (Australian Cooperative Foods Pty Ltd) after it provided court-enforceable undertakings to the ACCC that it not lessen competition by divesting itself of milk processing plants, depots and distribution contracts in New South Wales and South Australia. Parmalat’s former partner in the bidding process, Murray Goulbourn is believed to be now considering a bid in its own right.  Read more

Churning: The dark side of franchising

Few topics provoke greater debate in the franchise sector than the issue of churning. It is a hugely controversial issue that has the capacity to draw strong responses from both franchisors and franchisees alike, though from entirely different perspectives ranging from denial to claims it is endemic in the franchise sector.

But what is churning and why is it such an emotional issue?

At its worst, churning is recognised as the deliberate setting-up of a franchisee to fail so that their business can be resumed and resold by the franchisor.  Read more

Bill payment and more hot food possible at 7-Eleven

The Australian operations of convenience store retailer 7-Eleven is considering bill payment services and expanding its range of mobile phone prepayment offerings as it assess the remains of the Bill Express network which collapsed last month owing almost $250 million. However ownership of Bill Express’s payment terminals and intellectual property remains unclear, with administrators PPB trying to untangle a twisted and opaque ownership structure.  Read more

In the United States, 7-Eleven is expanding its convenience offering to increase hot food cooked in-store, including spiced beef patties and barbeque chicken wings. Approximately 800 US stores will have the new food range by the end of the year.  Read more

The cost of a franchise dispute

The Franchise Advisory Centre is interested in hearing from franchisors and lawyers with experience in managing franchise disputes about the costs involved in resolving disputes. “Costs” might include legal services, other payments, staff salaries for time spent on the dispute, and the foregone opportunity cost of the management time and resources that may have been utilized elsewhere. Details on specific disputes are not sought – just an overview of the costs. Please email a short one-paragraph overview by clicking .

Proctor & Gamble moves into franchising

International fast moving consumer goods giant Proctor & Gamble is moving into franchising, according to a US media report. The company has launched Mr Clean Performance Car Wash sites in Cincinnati as it explores business opportunities in the services sector by capitalizing on its well-known brands. (Mr Clean is a Proctor & Gamble brand of cleaning products in the US).   Read more

Burgers and employee buns in kitchen sink bath

A US Burger King employee has been caught on video taking a bath in the fast food outlet’s kitchen sink to celebrate his birthday. Management advise that the sink has since been disinfected, and all kitchen tools and utensils used for the bath have been disposed. The employee has since resigned or quit.  Read more

$50 reader discount for Small Business Solutions seminar, Sept 1

Readers of Franchise News & Events qualify for a $50 discount to attend the Queensland Government’s Small Business Solutions seminar on Monday, September 1. The full-day program will include high-profile business speakers such as David Koch and Beechworth Baker Tom O’Toole, as well as a range of expert presenters and panelists providing advice and insights on small business issues. The seminar will be held at the Brisbane Technology Park, and will also showcase government-subsidised business mentoring services.  Click here for more information.

Other franchise news:

- Fuel franchisee spills the beans on petrol pricing at inquiry;

- Strathfield in acquisition mode;

- PricewaterhouseCoopers acquires franchise consultancy;

- PostNet opens first franchise in Australia;

- Bendigo Adelaide Bank reports record profit;

- Amway finds new respectability with makeover;

- Healthy Habits moves into Virgin territory;

- Lenards buys back the farm;

- Pizza franchise relationships go to Hell;

- Big Dad keeps the pies coming in family franchise;

- Beacon Lighting goes green with solar power;

- What happens to franchisees when a franchisor goes bankrupt? Some lessons from the US;

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