Most inquiry submissions now online; hearings continue
Most of the 140 submissions to the Federal Government’s current inquiry into franchising, have now been uploaded to the inquiry’s website. Of the 140 submissions, 13 remain unlisted, two have been withdrawn, three are listed but the submitter’s name has been suppressed, and 14 submissions are confidential and unavailable to view. Public hearings for the inquiry have so far been held in Sydney (October 9), Brisbane (October 10) and Canberra (October 17), with future hearings scheduled for Melbourne (October 24) and Perth (October 30). Hansard transcripts of all public hearings held to date can be found online by clicking here. The most recent hearing on October 17 in Canberra included representations from the federal Department of Innovation, Industry, Science and Research, the Motor Trades Association of Australia, McDonald’s Australia, former Baker’s Delight franchisee Deanne de Leeuw (the first non-corporate franchisee to present at the inquiry hearings to date), KFC parent Yum Foods Australia, and representatives from Australia Post. 

Inquiry chair: Pitfalls exist in franchising
Significant piftalls exist in franchising where franchisors are more interested in selling a system than a product or service, according to franchise inquiry head and Parliamentary Joint Committee on Corporations and Financial Services chair Bernie Ripoll.“Franchising has a unique and wonderful character. It is a hybrid of the master-servant relationship, the employee-employer contract and the entrepreneurial business developer,” says Ripoll.“Yet intriguingly it is none of these… It is both a bargain of freedom with the shackles of risk.”Ripoll, who is currently conducting public hearings for the national franchise inquiry along with other members of his Parliamentary Joint Committee, issued a release earlier this week in which he notes that while both franchisees and franchisors share an equal role in the success of a system, they don’t share equal power.“The reality is that in a franchise agreement it is the franchisee that has the capital risk, up front costs, staff wages, stock purchases and so on,” says Ripoll.“The unequal balance of power exists for a good reason – as to ensure that the brand, quality, image, reputation, system concept and integrity are retained in control by the franchisor.“The unfortunate truth is that with the rapid development in the past decade of franchise systems almost running parallel with global financial growth, we have seen instances of some that have sought to exploit or abuse their market power.“Our job… is to ensure that good franchise systems are supported, while those abusing the success of franchising as a form of business investment are sent the strongest of messages,” says Ripoll.  Read more 

Franchising Australia 2008 survey released
The 2008 Franchising Australia survey has been released, showing a net increase of 140 franchisors in the last two years to a new record high of 1,100 systems, and a 15.4% growth of franchised outlets in the same period. The Franchising Australia Survey is conducted by Griffith University every two years, and is the main source of data on the Australian franchise sector. View the complete survey report by clicking here.  

Fee wi-fi in Australian McDonald’s
McDonald’s will introduce the nation’s largest free wireless internet network when it establishes free wi-fi in its 720 Australian stores by March next year. Wireless internet hotspots were previously only available for a fee, but customers who use the free service from March for just an hour a week could save potentially $728 a year. The wi-fi hotspots will use Telstra’s Next IP network.  Read moreVenezuelan Government closes most McDonalds for two daysThe Venezuelan Government’s tax agency closed 118 of the country’s 132 McDonald’s restaurants over alleged “inconsistencies” in sales and purchase books. The tax agency frequently closes both domestic and international businesses temporarily while it conducts investigations over sometimes “miniscule” record-keeping lapses.  Read more 

National franchise award winners announced
The winners of the Franchise Council of Australia (FCA) MYOB Excellence in Franchising Awards were announced on Saturday, October 18 at the conclusion of the FCA national franchise convention.

The winners are:

- Franchisor of the Year (overall) & Retail Franchisor winner: 7-Eleven Stores;
- Food Franchisor of the Year – The Coffee Club;
- Service Franchisor of the Year – Hotondo Homes;
- Franchisee of the Year – Mark Maumill & Jason Love (Banjo’s Corporation);
- Emerging Franchise System of the Year – Mr Rental;
- Franchise Woman of the Year: Debb Shugg, CEO, Award Group;
- Franchise Innovation of the Year – Gloria Jeans Coffee (“Gloria”);
- Franchise Export of the Year – Ecowash Mobile;
- Media Campaign of the Year – Bakers Delight;
- Franchise Supplier of the Year – Pacnet. 

Urgent small business summit to deal with global financial crisis
The Federal Government has called an urgent Small Business Summit to consult with Australian small business sector representatives on ways to deal with the global economic crisis and to contain its impact on business operators. The Summit will be held tomorrow, Friday October 24 at the Brisbane Convention and Exhibition Centre, and will be attended by Prime Minister Kevin Rudd, Treasurer Wayne Swayne, Small Business Minister Craig Emerson, and Superannuation Minister Nick Sherry.  Attendance at the Summit is by invitation only.  Read more 

Lenard’s opens instore component franchise
Pre-prepared chicken meal retailer Lenard’s has opened its first instore component franchise within a an established butcher shop, signaling a potential new growth opportunity for the business targeting butchers in locations otherwise too small to support a stand-alone Lenards store.  Read more 

 Fresh approach to fees from farm franchise
In response to the tightening of credit markets, Fresh food franchise Yarra Valley Farms has altered its fee model such that franchisees pay exit fees instead of up-front fees to join the group. It has also added a retail model to its existing distribution business.  Read more 

When franchisees behave badly
At the Brisbane hearing of the current Federal Franchise Inquiry recently the term “franchisee opportunism” was raised in the context of problems in franchise relationships.While many of the submissions lodged with the Inquiry have dwelt on issues of opportunistic, unprofessional or even bullying behaviour by franchisors, this was a rare and unique reference to opportunistic behaviour by franchisees, and was mentioned by an academic (not by a franchisor in defence to any criticism from its franchisees). Whereas discussion of opportunistic franchisor behaviour includes such things as churning, encroachment, unreasonably withholding consent to sell, termination, unilateral agreement variations and potentially disadvantageous supply arrangements, franchisee opportunism is an entirely different concept.  Read more 

Pack & Send runner-up in International Franchisor of the Year Awards
Australian freight and logistics franchise Pack and Send was announced as a runner-up in the International Franchisor of the Year Awards announced in conjunction with the Singapore Franchising and Licensing expo and convention held recently. Only one franchisor from each of the 36 member countries of the World Franchise Council can be nominated for the award.  Read more 

ACCC requires Allphones to better inform franchisees
Mobile phone retailer Allphones has given undertakings to the Federal Court in response to an ACCC action forcing it to provide more information to franchisees about phone connection commission disputes, to provide a seven-day cooling off period for any settlements reached arising from commission disputes, and to not withhold consent for the sale of Allphones franchises where the outgoing franchisees refuse to release Allphones from liability over such disputes. Additionally, Allphones is required to give the ACCC seven days notice if it refuses to consent to the transfer of a franchisee’s agreement where the buyer will not agree to a new and different franchise agreement.  Read more 
However a recent media report suggests that franchisees who do not operate under Allphones’ new franchise agreement may incur stock restrictions coming into the busy Christmas trading period.  Read more 

Privacy Commissioner investigates binned client files
The Privacy Commissioner is investigating how 44 client files were found in a recycling bin in a public corridor following the relocation of an Aussie Home Loans office in Sydney’s outer west. Concerns have been raised that the information in the files could have made the clients vulnerable to identity theft and fraud.  Read more 

Financial benchmarks & KPI’s essential for franchisees
Becoming your own boss might be the key factor for many people in deciding to buy a franchise, but it’s the profitability and financial performance of the business that provides real outcomes for franchisees according to financial benchmarking and profit specialist David Campbell. And while the business model is important in determining profitability, it is often the franchisees themselves that are their own worst enemy in achieving a healthy bottom line. Read more

A seminar on Financial Benchmarking and KPI’s for Franchisors and Franchisees will be held in Brisbane on November 12. For more information, click here. 

Carpet franchisees exit to start rival brandEighteen Carpet Court franchisees in New Zealand have broken away to start their own group, Flooring Xtra, which now has almost as many stores as Carpet Court.  Read more 

Site selection & leasing workshops - November
Workshops to improve franchise system site selection and leasing effectiveness will be held next month. A full day Site Selection & Territory Planning workshop will be held in Sydney (November 4), Brisbane (November 6) and Melbourne (November 13). In addition to this, another workshop on Property Lease – Negotiation and Administration will offer insights into how to get the best retail leasing deals. This workshop will be held in Brisbane (November 17), Sydney (November 19) and Melbourne (November 21). 

Franchise Council board election results
The election results for the Franchise Council of Australia (FCA) were announced last week at its annual general meeting with two existing and one new director elected to the board. Re-elected directors were George Yammouni (CEO, Bathroom Werx) and Stephen Giles (partner, Deacons). Also elected was Franchise Advisory Centre director and Franchise News & Events publisher Jason Gehrke.  Read more 

Other franchise news:- Franchisors prepare for the worst as economic clouds gather;- Underworld figure linked to mortgage franchise;- Too late for many businesses to change their model to survive downturn says Gloria Jeans;- New Zealand franchise review submissions deadline four weeks away (November 21);- Dominos US operations to consider vendor finance for franchisees;- NSW Premier Export award for Gloria Jeans;- Harvey Norman wins Telstra dealer of the year;- Franchised services now added to New Zealand Consumer Price Index (CPI);- Reduced credit access slows YUM plan to sell US company-owned stores;- Krispy Kreme changes US business model;- NAB rumoured to be ready to by Wizard Home Loans; 

Franchise Appointments & Departures:
Michel’s Patisserie has appointed Pia Harrison as national marketing manager to guide marketing strategy and promotion in Australia and New Zealand. The chain has also appointed Gary Owen as assistant brand manager and Carla Sunwoo as marketing co-ordinator.McDonald’s Australia has appointed Catriona Noble as its new chief operating officer.– Made a new staff appointment recently? Email details to Franchise News & Events (Free service). 

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