Volume of franchise inquiry submissions exceed expectations

At least 140 submissions have been received to the Federal Government’s current inquiry into franchising, exceeding the expectations of inquiry head and Parliamentary Joint Committee on Corporations and Financial Services chair Bernie Ripoll.Addressing a franchise sector gathering this week, Ripoll commented that he expected anywhere from 50 to 70 submissions to the inquiry, and was pleasantly surprised at the level of interest in the inquiry and the number of submissions received. Of the 140 submissions so far noted on the inquiry website as received, 79 are yet to be uploaded or are confidential, while a further two submissions have been withdrawn. The remainder of submissions are from former franchisees, small and large franchise brands, business associations, academics, advisors and government agencies.The current inquiry has attracted the most submissions of any recent franchising inquiry, with the Matthews Review of the disclosure provisions of the Franchising Code of Conduct in late 2006 attracting 75 submissions, the Western Australian franchise inquiry this year attracting 90, and the South Australian franchise inquiry receiving 46 submissions.Inquiry chair Bernie Ripoll said that the Joint Committee had set a short timeframe to conduct this inquiry to deal with issues highlighted by the recent WA and SA state inquiries, and to develop a national approach in preference to the possibility of separate state regulation of the franchise sector.He said that the committee was “pro-franchising” and is committed to its deadline of providing a report to Parliament on December 1.“Franchising is strong and healthy. The regulatory framework is pretty solid, but that doesn’t mean to say it can’t be improved,” said Ripoll.“We’re hoping that out of this report we find a solid position on a range of issues to take to the government.”  Click here for inquiry details    View a recent article about the inquiry 

Inquiry hearings start today

Although submissions to the national inquiry are now closed, public hearings featuring testimony and comment from selected submission authors commence in Sydney today (October 9) and in Brisbane tomorrow (October 10). (Click here for details of the location and programs of these two hearings).Each hearing features seven to eight appearances of different individuals or groups before the Parliamentary Joint Committee. Five of the 15 combined appearances between the Sydney and Brisbane hearings are presented by academics, five are presented by business associations including franchisee representative groups, two lawyers, two franchisors and a combined franchisor/franchisee.Further hearing dates are understood to be planned as follows: Canberra – October 17, Melbourne – October 24, Perth – October 30 

Understanding kamikaze conflict in franchising

Bringing an opposing parting to their senses via mediation, rather than bringing them to their knees via escalating conflict was the key message of a seminar on “kamikaze conflict” presented by Griffith University’s Asia-Pacific Centre for Franchising Excellence this week. Featuring dispute resolution expert and Griffith Law School Professor Jeff Giddings, the seminar examined the nature and causes of conflict and how conflicts that spiral out of control can be destructive to the interests of both parties. The seminar was also attended by federal franchising inquiry chairman and Member for Oxley, Bernie Ripoll. Read more 1   Read more 2 

The pros and cons of franchisee recruitment incentives

Offering franchisees deal sweeteners such as income guarantees, vendor financing, bonus packages, or buy-back guarantees can help lift rates of franchisee recruitment, but what are the advantages and disadvantages of such offers to both franchisee and franchisor? Do such offers cause franchisees to rush into poorly considered decisions? Read more in this examination of franchisee recruitment incentives. 

Franchise regulation review continues in New Zealand

The Review of Franchising Regulation in New Zealand remains opens for submissions until November 21. To see the review’s 35-page discussion document, click here. 

Unconscionable Conduct definition submissions close next week

A Federal Government Senate Economics Committee inquiry to develop a “clear statutory definition of unconscionable conduct” closes for public submissions on October 17. The inquiry was called in September and is due to report on December 3, just two days after the reporting deadline for the current franchising inquiry. Specifically, the purpose of the inquiry is to consider:The need to develop a clear statutory definition of unconscionable conduct for the purposes of Part IVA of the Trade Practice Act 1974 and the scope and content of such a definition.The findings of such an inquiry could have a profound impact on the franchise sector, where franchisee disputes often allege unconscionable behaviour.  For more information, click here. 

Franchising like a “master-servant” relationship

In a recent article in The Australian on the outcome of the High Court appeal of the Ketchell case, the Franchisees Association of Australia commented that the decision was based on the assumption that agreements between franchisees and franchisors are negotiated between equals.“In reality, it is more like a master-servant relationship,” says Franchisees Association president and former Federal Small Business Minister David Beddall.  Read more 

Franchisor of failed Firepower system found in London

Tim Johnston, the founder and franchisor of fuel additive group Firepower, which collapsed earlier this year under tens of millions of dollars debt and left sporting clubs it had sponsored in ruins, has been found living in London and has given his first interview in two years. Described as a corporate conman and the most wanted man in Australian sport, Johnston recently gave an interview to The Australian, claiming that investors in the failed franchise will soon be rewarded. With a business partner, he is currently attempting to resuscitate the Firepower concept in the United Kingdom under the brand of Greenpower, despite media reports that its fuel additives fail to produce any improvements in fuel consumption and that product tests had been faked. Firepower was a major sponsor of Australian sporting teams and owner of national basketball team the Sydney Kings, which collapsed when Firepower’s promised funding dried up earlier this year.  Read more 

Burger King downsizes to open first Whopper Bar

International fast food giant Burger King has announced it will open its first downsized store concept, the Whopper Bar, in an entertainment precinct in Orlando, Florida. The Whopper Bar will have a smaller footprint, a modern feel and a Whopper topper area where diners can customize their burgers. Hailed as the start of a “new generation” of Burger King restaurants, company executives say the ground-breaking concept will allow the chain to “tap into new channels and reach customers in places where we traditionally found it difficult to operate.”  Read more 

Retail landlord prosecuted for unconscionable conduct

The ACCC has instituted proceedings against the landlord and general manager of Paramount Retail Centre in Melbourne, alleging unconscionable conduct and false representations. Dukemaster Pty Ltd and its general manager Patricia Wong are alleged to have taken unfair advantage of their stronger bargaining position, exerted undue pressure and used unfair tactics against certain tenants. The ACCC is seeking compensation orders for the affected tenants, as well as declarations, injunctions, compliance orders and costs. The matter has been filed in the Federal Court’s Fast Track list for a scheduling conference on November 12.  Read moreThe case will be keenly watched by the franchise sector and various retail bodies which have previously submitted to the Federal Productivity Commission Inquiry into the Market for Retail Tenancy Leases in Australia that landlord behaviour is often unconscionable, particularly in relation to lease renewals.  Read more 

Bungled telco contract bundles unravel small business

The ACCC is prosecuting 28 parties for misleading conduct and third line forcing in relation to bundled telecommunications contracts purporting to provide small businesses with “free” equipment based on their existing phone usage. Whereas business customers were given to believe their telecommunications costs would remain the same or even decrease in return for free equipment and call credits provided by Clear Communications, Axis Telecoms, WorldTel and National Telecoms Group, the ACCC allege that the equipment was actually financed under rental agreements by finance companies unrelated to the telecommunications providers. To see the 28 respondents to the ACCC investigation, click here.Meanwhile a separate action under similar circumstances has been launched by Gold Coast law firm Attwood Marshall over a $70 million claim on behalf of 200 small businesses who accepted similar “free equipment” deals from Fresh Telecoms. These deals also had exclusive dealing arrangements with equipment financiers that were allegedly undisclosed and resulted in equipment being charged at higher prices and at significant rates of interest. Fresh Telecoms emailed its customers in July to advise that “financial difficulties” prevented it from continuing to provide landline and mobile connections, and to switch carriers within 24 hours to avoid loss of service. Businesses that did not receive the email only learned of the problem when their phones went dead the next day.  Read more 

CBA announces Bankwest deal. More bank mergers to follow

The Commonwealth Bank has announced a $2.1 billion deal to buy the Australian operations of BankWest, a regional subsidiary of British parent HBOS which has made a name for itself in Australian franchise lending in recent years.  Read moreMeanwhile Australia’s other Big 4 banks are reported to be looking at acquisitions, with Westpac already committed to buying St George, and Queensland-based Metway now up for sale.  Read more 

Franchise prospects for mentally ill café

A Melbourne cafe funded by a health group and which employs mentally ill people is considering franchising itself as an employment and rehabilitation opportunity for people with mental illnesses. Madcap Café in Melbourne’s Dandenong Plaza was established by the Eastern Regions Mental Health Association to provide employment and life skills to people with mental illnesses, and already employs six staff with conditions including schizophrenia, psychosis, bipolar disorder and depression.  Read more 

Franchise cup choice predicts US presidential elections

Customers of convenience retailer 7-Eleven in the United States are faced with a choice when buying coffee – will they have a Barack Obama or John McCain cup to drink it from? The cheeky marketing ploy, where customers choose the cup featuring the candidate they are most likely to vote for in the upcoming presidential elections, has successfully predicted the outcome of the last two elections. Cup sales are counted at the register and daily updates are posted online at www.7-election.com. Undecided or abstaining voters can still buy their coffee in regular cups.  Read more 

Hair loss franchisee faces Federal Court

A former franchisee of Advanced Hair Studio, a hair replacement chain, today faces Federal Court in Hobart following civil and criminal proceedings instituted by the ACCC for false, misleading and deceptive conduct. Narnia Investments Pty Ltd and its director Simon Clarke allegedly misrepresented a customer’s termination and refund rights in relation to a $15,500 hair replacement treatment, and which is the subject of the civil proceedings.Both the company and its director also face criminal proceedings for knowingly providing false and misleading information to the ACCC in response to a section 1555 notice, which requires recipients to provide certain documents or information to the ACCC.  Read more 

Introduction to Franchising seminars - November

Readers are advised that the date previously advertised for the Sydney Introduction to Franchising seminar has now changed to Tuesday, November 18. Seminars will also be held in Brisbane on November 11 and Melbourne on November 14. Introduction to Franchising provides an overview of best practice in the franchise sector, including common franchise agreement obligations, the Franchising Code of Conduct, royalties, the nature of the franchise relationship and different franchise models. The seminar is suited to potential franchisees, as well as new franchisors and new staff working for franchise brands.  Click here for more information. 

Voting closes tomorrow for Franchise Council board election

Voting for the election of three directors to the board of the Franchise Council of Australia (FCA) closes tomorrow (Friday, October 10). Franchise Advisory Centre director and Franchise News & Events publisher Jason Gehrke is nominated and seeks to bring new energy to the FCA board and a fresh vision for the challenges that lay ahead for the franchise sector if elected. He is the only candidate who is not already an incumbent director.  Read more  

cknowledgement of support – Herbert Geer

The Franchise Advisory Centre wishes to publicly acknowledge recent contract advice provided by Erin Walford and Bruce McGregor from the Brisbane office of law firm Herbert Geer (formerly Nicol Robinson Halletts). 

Other franchise news:- Franchise Council convention opens next week;- Franchisees buy out franchisor of Black & White Home Services chain; - End of the yellow brick road for Toy Kingdom;- Melbourne Franchise Expo opens tomorrow;- Saturation for the franchised coffee market in Australia?;- QLD-based convenience retailer NightOwl expands to Victoria;- Jumping J-Jays announces franchisee success expanding beyond weekend trading;- Jim’s Mowing in Britain to be bigger than in Australia;- Credit squeeze affecting small business growth;- Feeding the elderly to be franchised;- Snap-On Tools offers new franchisees consignment deal on start-up inventory;- Civic Video franchisees win cash for outstanding performance;- Michel’s Patisserie pink cupcake campaign raises awareness and funds for breast cancer;- Chooks fresh & tasty promotes conservation with Perth Zoo fundraiser;- LJ Hooker raises $3 million for charity in WA; 

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