ACCC launches franchise investigation website

The Australian Competition and Consumer Commission (ACCC) has launched a website outlining its processes to investigate franchise complaints, as well as details of complaints that have been prosecuted. The ACCC receives about 1,000 franchise complaints each year, with some reflected by high-profile media reports that are often critical of the ACCC’s role in regulating the sector. The purpose of the website is to “dispel any misinformation regarding the ACCC’s investigation and enforcement process” according to ACCC chairman Graeme Samuel. Click here to visit the site

Private equity encircles Borders

A sale of the Borders bookstore operations in the United Kingdom and Ireland to a private equity firm could foreshadow an imminent sale of the Australian business to a similar buyer, according to media reports. Inside Retailing Online has reported that Risk Capital Partners has acquired the UK operations, while Pacific Equity Partners which own Angus & Robertson in Australia, are believed to be the front runners to acquire the local Borders operations. Read more

New record set for credit card debt

With the Christmas retail season due to commence in the next few weeks, Australians are carrying their highest-ever level of credit card debt, as part a total debt amount equal to more than 160% of annual incomes. Read more

Wizard expands to India with top 5 plan

Wizard Home Loans plans to be among the top five mortgage companies in India by 2011 following the announcement of its plans to open 250 branches in four years and invest US$200 million. Wizard has applied for an operating license in India, but in the meantime will offer its products through the Indian operations of its parent company, GE Money. Read more

Franchise system changes name to be politically correct

A 77-store coffee chain in the United States has decided to change its 12 year old name amid concerns that the original name was offensive to an ethnic minority. Beaner’s Coffee, which was named in reference to the beans from which coffee is made, has been operating since 1995 and has stores across nine states. However beaner is also understood to be a disparaging term for America’s sizeable Hispanic population. Beaner’s will not change its branding, with all logos and colour schemes remaining the same, with only the change of name from Beaner’s Coffee to Biggby Coffee. Read more

Coca-Cola bids for Golden Circle

Beverage franchise Coca-Cola Amatil has made a conditional offer for 100% of shares in Queensland beverage and fruit processor Golden Circle. Read more

Franchisor loses third-line forcing permission

The Australian Competition and Consumer Commission (ACCC) has revoked a third line forcing notification for fridge repair franchise Seal-A-Fridge and its owners, stating that there was little or no public benefit in the end product supplied to consumers. Third line forcing notifications - where franchisors can direct franchisees to purchase from specific suppliers - can be granted by the ACCC if it will result in higher quality to end users, lower prices to franchisees and consistency across a network.  Read more

Video Ezy approved to acquire Blockbuster Video

Video Ezy has been approved by the ACCC to acquire the Australian operations of Blockbuster Video after providing court-enforceable undertakings that restrict Video Ezy’s exclusive purchasing of DVD’s for rental or retail markets, and to implement a Trade Practices compliance program. The two brands will continue to operate separately, with Video Ezy entering into a new 10 year master franchise agreement with Blockbuster’s US parent. The undertaking for a Trade Practices compliance program, which will include both staff and franchisees, addresses ACCC concerns that franchisees of the two networks could mistakenly think they can collude on prices in local markets. Read more

US study reveals franchises are better employers

A new employment study in the United States has busted the myth that jobs in franchises, particularly quick service restaurants, are not the underpaid and unstimulating “McJobs” many are perceived to be. The study by the Wharton Center for Human Resources in conjunction with the Instituto de Empresa Business School in Spain found that employees of franchises were better paid, and on average received more training and formal instruction than employees of non-franchised businesses. However the study also found that franchises have a higher turnover of employees among their non-managerial staff, and generally employ less experienced and less educated workers. Read more

Media reports in Australia about franchisees underpaying staff following the introduction of WorkChoices legislation have sparked concern about employment conditions in the franchise sector. A series of free seminars addressing the topic of Reducing Franchisor risk from Franchisee Industrial Relations Misconduct will be held in Brisbane, Sydney and Melbourne next month. For dates and details, click here.

CEOs, not boards, drive corporate governance

Chief executive officers and managing directors are greater champions of corporate governance than boards of directors, including chairmen, according to an Australian Institute of Management survey released recently. CEO’s scored more highly than chairmen as initiators of corporate governance change. Read more

Burger King launches branded chip snacks

Burger King has launched two branded chip snacks for sale in vending machines, convenience and grocery stores in the United States. Through a licensing deal with The Inventure Group, the trans-fat free chips will be available in packets from one to five and a half ounces for general sale through food retailers, as well as through a limited number of Burger King outlets. This is Burger King’s first foray into the retail snack market and is a highly innovative method of extending its brand presence beyond the traditional sphere of quick service restaurants. Read more

Branson sells Virgin Music

International entrepreneur Sir Richard Branson has sold the Virgin Music business in the United Kingdom and Ireland to a management consortium after a37-year association with the brand. Branson started Virgin as a mail-order record company in 1970, but recently the Virgin group has been divesting itself of its entertainment retail operations, through franchising and outright sales. Read more

Online poll: Is household debt getting out of control?

With news that credit card debt in Australia has hit a record high, plus other media reports of increased debt-stress we ask the question in this edition’s online poll: Is household debt getting out of control? Franchisors and field support staff may observe this in their communities, franchisees or the employees of franchisees. Vote now in the online poll.

Regulation recommended for mortgage brokers

A federal government parliamentary committee has recommended that mortgage brokers and other non-bank lenders should be regulated nationally, rather than by varying state-by-state legislation. House Economics Committee chairman Bruce Baird said regulation of financial products was already a federal responsibility except in relation to credit. Concerns of predatory lending practices highlighted by the subprime mortgage meltdown in the United States have lead to calls for greater government regulation, with Treasuer Peter Costello flagging the possibility of regulation, according to media reports. Read more 1  Read more 2

Mortgage broking has been one of the more notable growth areas of the franchise sector in recent years, with a number of new franchised mortgage brokers entering the market. A recent survey found that predatory lending – the practice of forcing loans onto borrowers who are incapable of making the necessary repayments – does exist among fringe lenders in Australia, with survey sponsor Wizard Home Loans calling for such lenders to be named and shamed in a “red list”. Read more 3  See survey here

RAMS rallies amid raid rumours; credit crisis causes UK bank run

Shares in franchised mortgage lender RAMS rose almost 17% this week amid market speculation that the company had become a takeover target. Closing at 97 cents earlier this week, RAMS shares were still less than half their float value of $2.50 just two months ago, mainly due to funding difficulties arising from the US subprime meltdown. Read more 1

Meanwhile in the United Kingdom, the international credit crisis has sparked a run on one bank as nervous deposit holders seek to extricate their cash. In scenes reminiscent of Germany’s Weimar Republic, depositors queued for hours outside branches of the Newcastle-based Northern Rock, despite guarantees by the British Government that all deposit funds were safe. The run has caused the bank’s shares to drop more than 70% in value in just 12 days. Read more 2   Read more 3

In Australia, Adelaide Bank (which is working on a $4 billion merger deal with Bendigo Bank) has rejected market speculation that it is also affected by the credit crisis. Read more 4

Trade Practices amendments pass Senate

Changes to the Trade Practices Act that affect market power provisions (Section 46) and unconscionable conduct (Section 51AC) were passed by the Senate recently. Under the changes, misuse of market power provisions will have greater clarity in establishing a threshold for a substantial degree of market power, and unilateral contract variations will be introduced as a factor to consider in unconscionable conduct, among others. Read more

Input sought for Madrid Protocol on trade mark protection

IP Australia, the federal government body responsible for the registration of trademarks and patents is calling for input from trade mark owners and their representatives on the future of the Madrid Protocol, an international agreement between a number of countries which enables a trade mark to be protected in member countries by filing an application in the home country. Input is sought on two key points: The provision of information on the status of an international registration, and the future of international registration and the Madrid system, plus other areas. Submissions must reach IP Australia by November 9. To view the official discussion paper, click here.

IP Australia is also seeking input to proposed changes to the way information about trade mark applications is exchanged between countries, for which submissions close on October 17. Click here for more information.

Final mediation course for 2007

The last franchise mediation course to be conducted this year will be held in Melbourne from October 29 to November 2. The five-day course meets the mediator training requirements of most state law societies, and can qualify participants to be appointed to the Office of the Mediation Advisor’s panel of mediators. A limited number of places are still available. Click here for more information.

Other franchise news:

- Just Cuts takes Australian hairdressing to India;

- Mortgage Choice celebrates 15 years; Unveils new branding campaign;

- McDonalds dividend increases by 50%;

- Privacy Law review submissions close December 7.

Franchise Appointments & Departures:

- Mortgage Choice has appointed Scott Ayles to the position of Franchise Development Manager for Western Australia;

- Former New Zealand Natural general manager for Australia & New Zealand David Ciantar has been appointed to the role of General Manager for Cookie Man;

- RE/MAX Real Estate has appointed Nick Thiele as Australian Regional Director;

- Franchise consultant Kate Johnson has started her own consultancy, Ordium, which specializes in franchise operations manuals;

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Franchise Jobs:

PoolWerx have positions vacant for a Communications Officer, and a Supply & Logistics Manager at its national office in Brisbane. Email Victoria Rogers for more information at .

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