Franchising Code change requires further clarity

A change to the disclosure provisions of the Franchising Code of Conduct announced earlier this month that requires franchisees to receive the franchise agreement in the form in which it is “to be executed” may require further clarity. If this requirement is maintained in full, it is possible that franchise disclosure will take longer, and possibly require repeated issuing of disclosure documents as details in franchise agreements (such as commencement dates due to site availability) change or become available. A seminar on the Code Amendments in Brisbane last week addressed this topic, with participants airing concerns at the potential for delays and costs involved in repeated disclosure.

The Code changes, which take effect from March 1 next year, include other requirements, such as the provision of a list of past as well as current franchisees, disclosure of suppliers that pay rebates on franchisee purchases, disclosure updates within 14 days for any materially relevant change, and a change to the timing for the update of disclosure documents from three to four months after the end of the financial year.

Free seminars to be held in Sydney (September 12) and Melbourne (September 20) from 7.30-9.00am will update franchisors on the Code Amendments and their effects. This has been jointly organized by the Franchise Advisory Centre and Dibbs Abbott Stillman Lawyers. To RSVP for this event, click on RSVP Sydney or RSVP Melbourne.

Allied Brands completes Kenny’s acquisition

Allied Brands, the ASX-listed Australian master franchisee of Baskin Robbins, last week completed its acquisition of card and gift retail franchise Kenny’s Cardiology in a deal worth $5.8 million. (Kenny’s has 32 stores, primarily in Queensland and New South Wales). This is the second acquisition for Allied Brands in 12 months, after the recent purchase of the 46-store Cookie Man chain earlier this year for $5.83 million. Despite two purchases in a relatively short period, Allied Brands managing director Peter Graham has not ruled-out further acquisitions as the company builds its stable of brands. Read more 1  Read more 2

Meanwhile the master franchisee for Cookie Man in India, which already has 18 stores operating in 10 cities, has announced plans to add another 15 stores by the end of next year. Read more 3

Quiznos woes increase with US franchisee class action

Following a recent ACCC prosecution and court-enforceable undertaking to refund the franchise fees of Australian franchisees, US-based toasted sandwich sub franchise Quiznos is now also facing a class action by approximately 5,000 of its franchisees in the United States. The suit claims that Quiznos “systematically defrauded its franchisees” by overcharging for food, supplies and services, and that Quiznos misrepresented key facts about business operations when selling the franchises. Read more

Unfair dismissal exemption boosts employment

Exemption from unfair dismissal claims have boosted employment in the small business sector to record levels, according to a joint St George / Australian Chamber of Commerce and Industry (ACCI) survey released recently. The survey examined national trends and conditions for the small business sector in Australia, reporting that key indicators remained generally positive, although increasing wages are eroding small business profits. Read Survey

Video Ezy e-box launch combats online competition

Video rental franchise Video Ezy plans to stave off online competition for movie downloads by introducing an electronic movie box that can download movies in Video Ezy stores in just 80 seconds. CSustomers pay for the number of times they watch a movie, which are then self-erased after 30 days. The home media centres are expected to cost between $200 and $800 and be released in time for Christmas. Read more

McDonalds Europe sets new look for Golden Arches

McDonalds stores in Europe are enjoying growing sales thanks to store makeovers that do away with the red and yellow plastic furniture and replace it with lime-green designer chairs, zebra prints and dark leather upholstery. Sales in remodeled stores have grown on average 4.5%, and an initial remodeling of stores in France has been so successful that all 1,280 European McDonalds outlets will receive the makeover treatment. Other European innovations include healthier menus, greater product customization for regional tastes, rental iPods and internet access. The changes are being embraced by consumers, but could be seen by some as pushing the brand envelope too far. Read more 1

Meanwhile in the United States, the humble Big Mac has celebrated its 40^th birthday as the centerpiece of a new McDonalds Big Mac Museum Restaurant, complete with Big Mac memorabilia, special exhibits, and the world’s largest Big Mac statue. The restaurant has been opened by Big Mac creator and McDonalds franchisee Jim Delligatti, 89, who invented the burger in 1967, and which featured on McDonalds menus throughout the US a year later. Read more 2

Dunkin’ Donuts experiments with pizza sales

The assault on the US pizza market announced earlier this year by sandwich chain Subway has been joined by Dunkin’ Donuts, which is preparing to launch a personal pepperoni pizza than can be cooked in just 90 seconds. Subway is planning to offer 8-inch personal pizzas in 13,000 of its 21,000 US stores, and could achieve a slice of up to one percent of the US $30 billion pizza market. Read more

Retail leasing debate goes public

The public release of submissions to the Productivity Commission’s Retail Leasing inquiry by the Franchise Council of Australia and the Shopping Centre Council has highlighted tensions between the two organizations, however both groups agree that national retail leasing regulations should replace the current system of state regulation. Read more

The Productivity Commission is due to release its initial report in late September, and has received 127 submissions, many of which are able to be viewed online. Click here to see the full list.

Casual mall licensing code receives ACCC approval

The Shopping Centre Council of Australia’s Casual Mall Licensing Code of Practice has been authorized by the Australian Competition and Consumer Commission (ACCC). The Code provides guidelines for temporary traders operating in common areas of shopping centres. ACCC authorization provides immunity from court action that might otherwise raise concerns under the Trade Practices Act. The voluntary Code which is optional for shopping centres to follow, restricts the granting of a casual mall lease directly adjacent to a competitor’s existing outlet. Read more

Labor’s new IR policy dismisses unfair dismissal

The Labor Party’s industrial relations policy Forward with Fairness, launched this week by leader Kevin Rudd, will remove the unfair dismissal exemption for small businesses employing more than 15 staff who dismiss anyone employed for 12 months or longer. Workplace agreements are also to be phased out when they expire, with new awards to replace them for workers earning less than $100,000 per year from 2010. Read more

Poll Results: Character towns split franchise community

Last issue’s Franchise News & Events reported that residents of a “character” area of Hobart had petitioned to ban fast food franchises for fear that the presence of national and multinational brands would blight the ambience of the area. The issue was reflected in the Franchise News & Events online poll, which posed the question: “Should franchises be banned from “character” towns?”

Despite early indications that the franchise community itself thought franchises should be banned from character towns, the final result ended in a tie between the Yes and the No votes. Given that voters were drawn from franchise system executives, management personnel and advisors, the result is notable in that there was not overwhelming support to establish franchises in such locations.

Online Poll: How will the Code changes affect your system?

With the changes to the Franchising Code of Conduct announced earlier this month requiring additional information to be disclosed to prospective franchisees, as well as proscribing new ways for how that information is disclosed, what will be the affect on your system? Have your say and vote now in our online poll where you can choose from one of three options: No change – business as usual; Small change – more admin work; or Large change – recruitment delays and reworking of procedures. Click here to vote (see the poll in the top right of the page).

Free seminar to assist franchisees reach full potential

A free seminar which identifies and discusses the specific behaviours of “high performing” and “low performing” franchisees, and which presents a method to improve franchisee performance across a network will be presented by Red Day Coaching Partner Jacinta Creedy around Australia in September. Drawing on research conducted by Griffith University, Jacinta, an experienced former franchisee who has operated several businesses, will explore 10 critical “mind shifts” for franchisees to create a highly valuable business and which introduce tangible results-achievement systems for franchise organisations that can enhance franchisees’ business management abilities. For more details, click here.

Franklins to compete with Coles & Woolies by franchising

Supermarket retailer Franklins is to expand its franchise operations to head off competition from larger rivals Coles and Woolworths. Using the Pick ’n Pay model developed by its South African parent company, Franklins plans to add another four supermarkets in the six months, as well as look at opportunities to convert independent supermarkets to the Franklins brand. Read more

ID theft and privacy concerns Australian consumers

A national survey released this week by the Office of the Australian Privacy Commissioner has found that up to nine percent of Australians have experienced identity theft, and that identify theft is a concern to 60% of the population. Only 37% of consumers trusted retailers to responsibly manage their private information, and less than 17% trusted online transactions. Read more

Other franchise news:

- 7-Eleven celebrates 30 years in Australian convenience retailing;

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