High Court Ketchell appeal finds in favour of franchisor

The High Court appeal in the landmark Ketchell case has found in favour of the franchisor in a unanimous decision by all five judges. The decision was handed-down on August 26 after being heard on June 10.

The case has been watched with keen interest by the franchise sector and overturns a previous New South Wales Court of Appeal finding that a franchise agreement is deemed to be illegal, where the franchisor (Master Education Services Pty Ltd) had not received a written statement from the franchisee (Ketchell) to state that they had received, read, and had reasonable opportunity to understand the franchisor’s disclosure document and the Franchising Code of Conduct.

The Franchise Council of Australia (FCA) which funded the High Court appeal by up to $200,000 from its own resources and a special contribution from its members, has welcomed the decision as resolving the biggest legal issue the sector has faced in 30 years.

The High Court finding is in contrast to a recent Federal Court judgment (Hoy Mobile Pty Ltd vs Allphones) which described the New South Wales Court of Appeal finding in Ketchell as “plainly wrong”. The decision is likely to lead to the collapse of impending litigation by disaffected franchises in New South Wales, according to a media report, although will not protect franchisors from substantial breaches of the Franchising Code of Conduct, such as the failure to provide a disclosure document.

Click here to read the full High Court decision

Retail Leasing inquiry recommends greater disclosure & transparency

The long-awaited final report of the Productivity Commission’s inquiry into the Market for Retail Tenancy Leases in Australia, which commenced more than 12 months ago, was released this week and recommended that greater disclosure and transparency be applied to address the information imbalance between landlords and tenants.

The report recommends a move to a nationally-consistent retail lease framework to reduce costs and increase efficiency, and emphasizes dispute resolution and disclosure as central to a more effective retail sector. The characteristics of a national approach, disclosure and dispute resolution are all familiar to the franchise sector as these were key factors underpinning the introduction of the Franchising Code of Conduct in 1998.

The report also suggests “a more focused approach” to the shopping centre segment of the market via a national shopping centre code of conduct, but has not recommend wholesale changes advocated by retailer lobby groups. Read key points from the Report;  Read the full report

Franchise inquiry submissions close in 2 weeks

Submissions to the Federal Government’s current inquiry into franchising close in two weeks on September 12.  Click here for inquiry details

New Zealand franchise legislation discussion document released

The New Zealand Government has released a discussion document inviting comment on whether legislation of the franchise sector there is required in the wake of a fraud scandal earlier this year. Commerce Minister Lianne Dalziel announced at the Auckland Franchise Expo recently that three key problems identified in the NZ franchise sector were the information imbalance between franchisors and franchisees, cost-effective dispute resolution mechanisms, and a contractual power imbalance in franchise agreements.

The 35-page discussion document canvasses three options: To maintain the current, unregulated environment; To bolster education efforts in the franchise sector, particularly for prospective franchisees; or to introduce franchise-specific legislation (a move supported by the Franchise Association of New Zealand).

Submissions to the NZ government close on November 21, however concerns have been raised over the timing of the process, with an election scheduled for no later than November 15. Read more  See Discussion Document

US cookie empire crumbles but Australian operations OK

The planned bankruptcy in the United States of Mrs Fields franchisor Famous Brands to enable urgently-needed financial restructuring will not affect the operations of the brand in Australia, which is independently owned and operated locally. Cookies Australia managing director Andrew Benefield says that the brand will continue to trade as usual in Australia with no impact caused by the US bankruptcy. Debbie Fields, who founded the business 31 years ago and sold out to the current owners in 1996, has issued a statement to distance herself from the Chapter 11 bankruptcy, but wishes the company well.  Read more 1; Read more 2;  Read more 3

Which bank likely buyer for Aussie Home Loans

The Commonwealth Bank is reported to be just weeks away from signing a deal to acquire 30% of Aussie Home Loans for approximately $60 million, according to a report in The Australian.

Aussie founder John Symons, who built the business on a wave of bank-bashing rhetoric, has indicated that he continues to look for opportunities for the business to grow, including opening new franchises in regional locations and the acquisition of other brokers.  Read more

Meanwhile Aussie has entered into a strategic alliance with AMP to provide the loan broker’s customers with mortgage protection insurance after a competitive tender process, and in keeping with similar alliances with other financial services groups to provide personal and car loans, among others.

Read more

Lenards opens first Extra store

The first Lenard’s Extra store in a new company-owned chain to exploit consumer demand for value-added and pre-cooked meals has opened in Brisbane following the recent sale of a stake in the Lenards business to Blue Sky Private Equity. The opening of the new store concept is a key growth strategy for Lenards, which has 190 franchise stores.  Read more

Dairy Farmers to sell to National Foods

Japanese-owned National Foods has bid $910 million to emerge as the successful buyer-in-waiting of Dairy Farmers after a sale process lasting several months. The deal will require Dairy Farmers shareholder approval to be voted later this year.  Read more

The stages of an intrapreneur career path for franchisees

For many prospective franchisees, buying a franchise is akin to buying themselves a job. The analogy is not without its flaws, but in the main, this is frequently the approach.

So just like any job where an employee would expect to receive pay increases over time, as well as opportunities for promotion and career development, why shouldn’t franchising be any different?

By treating franchising as a career path, successful franchisees may be able to increase their income and wealth, as well as enjoy a rewarding and fulfilling working life. Such franchisees are intrapreneurs, or inside entrepreneurs, whose innovation and drive can accelerate their business development within a larger organisation by drawing on its resources, rather than striking out on their own. Franchisee intrapreneurs make full use of the framework and concept of the franchise system to build their own entrepreneurial success. To see the 9 career stages of a mobile service franchisee, and the 7 career stages of a retail franchisee, click here.

Quiznos opens everywhere (except Australia); Dominos to sell subs

US-based toasted sub sandwich franchise Quiznos has recently announced it is preparing to open franchises throughout the Middle East, Europe, Asia and South America. It already has operations in the United Kingdom and Canada, but is unlikely to plan a return to Australia in the near future, after its market failure and subsequent ACCC prosecution here.  Read more

Meanwhile pizza giant Dominos has added subs to its menu in the United States to help arrest a decline in same store sales and hasn’t ruled out adding a wider variety of menu items.  Read more

Piqued mortgage brokers feel the pinch in NZ

New Zealand-based mortgage broking franchises Mike Pero Mortgages and Adam Parore Mortgages have launched a war of words against each other as the NZ broking market continues to shrink.  Read more

QLD considers junk food TV advertising ban

Queensland Premier Anna Bligh has released a discussion paper that proposes the banning of junk food advertising during children’s television programming. The move has been labeled as “nanny-state” populism by the Queensland opposition and is not supported by research conducted by the Australian Communications and Media Authority (ACMA), which has found little evidence to link childhood obesity and television advertising. However ACMA itself has come under fire for its research from parents and health groups.  Read more 1;  Read more 2

Pizza franchise for sale in online auction from $1

An unhappy Hell’s Pizza franchisee in New Zealand has decided to sell his NZ$830,000 store on online auction site TradeMe with a reserve of just $1. The auction on TradeMe, which is bigger than Ebay in New Zealand, has already received national media coverage and highlighted dissatisfaction within the Hell Pizza system.  Read more

Limited places remain for franchise mediation course

Only three places are left for the Franchise Mediation Course to be conducted by the Accord Group in Melbourne from October 13 to 17. The four day course (plus extra assessment day for participants who wish to be accredited to the panel of mediators for the Office of the Mediation Advisor) costs $2,495 and provides comprehensive and practical training to resolve disputes between franchisees and franchisors. Read more

Other franchise news:

- Franchise Council of Australia announces regional awards winners;

- NightOwl convenience stores expand into Victoria;

- Eagle Boys posts 21.9% profit increase;

- Kenny’s Cardiology opens its first two stores in New Zealand;

- Marginal drop for Count Financial earnings;

- Better IT results in shorter customer queues;

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