WA state government announces franchise inquiry

The Western Australian state government has announced a wide-ranging review into the operation of franchise businesses in the state. The review will examine the adequacy of existing state and federal legislation and look for patterns of unconscionable conduct. It will also examine remedies currently available to franchisees (and if necessary, recommend changes), as well as review existing practice in Australia and overseas on unconscionable conduct and the renewal of franchise licences.

This is the first time a state government is believed to have announced a formal inquiry into the sector. It follows recent reports about the impending non-renewal of KFC franchises in Western Australia owned by Competitive Foods, whose founder Jack Cowin is better known as the man behind Hungry Jack’s in Australia. The WA state parliament has heard that KFC and its parent YUM had offered to buy the 46 KFC franchises in WA for significantly less than market value, but may instead resume the outlets at the expiry of each franchise term, starting with the KFC store at Rockingham which expires on November 19.  Read more 1

The WA inquiry will invite written submissions, as well as conduct public hearings in metropolitan and regional locations around the state. The inquiry will be chaired by former state and national award-winning franchisee Chris Bothams. In announcing the inquiry, WA Small Business Minister Margaret Quirk said that the inquiry was about “fairness in franchise arrangements” and was being held to “safeguard public interest”.  Read more 2

Coalition releases franchising policy

In response to a request from Franchise News & Events, the federal Coalition has now released its franchising policy. As reported in our last issue, both the Australian Labor Party (ALP) and the Liberal/National coalition were asked to provide a policy statement outlining their respective approaches to franchising if they win government. Both Fran Bailey MP, Minister for Small Business & Tourism, as well as Dr Craig Emerson MP, Shadow Minister for Service Economy, Small Business & Independent Contractors were provided with the same request at the same time, and asked to comment on the future of regulation, enforcement, industrial relations and retail leasing. However as at last issue’s publishing deadline, only Dr Emerson had responded. (Click here to see the ALP franchising policy statement).

The Coalition franchising policy statement was received several days after the last publishing deadline and was sent by Brian Loughnane, federal campaign director of the Coalition Campaign Headquarters, and not by the Minister to whom the original request was made. (To view the details of the policy statement request, click here.)

Liberal/National Coalition releases its franchising policy:

Some highlights of the response from the Coalition about its plans for franchising appear below. If re-elected, the Coalition will:

- Continue to monitor the Franchising Code of Conduct and other regulation to ensure it is working as intended;

- Continue to increase funding available to the ACCC;

- Follow through on a proposed bill to enable the ACCC to seek compensation on behalf of businesses who have suffered loss or damage as a result of illegal secondary boycott conduct;

- Carefully examine the recommendations of the Retail Leasing inquiry, which is due to report on 21 December; and

- Continue to support the current workplace relations system.

The Coalition policy appears to be a continuation of existing government policy, while the ALP policy revealed last issue  supports registration of retail leases (notwithstanding the recommendations of the Retail Leasing inquiry), and to introduce provisions for parties to a franchise agreement to negotiate in good faith with one another under the Franchising Code of Conduct.

Click here to view the full Franchising Policy Statement provided by the Coaltion.

“Not a franchise” decision hinged on marketing plan

Legal reviews of a recent Federal Court decision which determined that a “sub-distribution agreement” was not a franchise agreement under the Franchising Code of Conduct have focused on a lack of a marketing plan or system as the key factor in determining whether or not the business was a franchise. In the case of the ACCC against Kyloe Pty Ltd, Impact Design Accessories Pty Ltd and associated persons in relation to the sale of Polar Krush ice drink businesses, Justice Tracey found that a franchise agreement did not exist within the meaning of the Code. While the court did find that some of the elements of a franchise agreement did exist, the marketing system or plan lacked sufficient real or suggested control by the franchisor to meet this requirement of the Code. In reaching this determination, case law from the United States and Australia was considered as a “system or marketing plan” is not defined in the Franchising Code. Read more 1.  Read more 2.

Former distributors of Polar Krush claim the court did not take into account all the factors involved in the business relationship, and are urging the ACCC to appeal the decision.

Franchisee to buy Price Attack from API

Australian Pharmaceuticals Industries Ltd (API) is reported to be close to finalizing a deal to sell the Price Attack franchised chain to one of its franchisees. API, which earlier this year sold its House franchise network, plans to focus on its core growth businesses in the health and beauty market, and will retain its Priceline, Priceline Pharmacy, Soul Pattinson, Pharmacist Advice and Chemworld Chemist brands. The buyer is understood to be Barry Jarred, a longstanding Price Attack franchisee whose involvement in the network extends prior to API’s purchase from system founder Gary Jackson several years ago.  Read more

Refinancing to reduce RAMS loan book

Customers of RAMS Home Loans are expected to refinance with other lenders instead of paying higher interest rates. RAMS has announced the sale of its brand and franchise operations to Westpac, but will retain its loan book. However the sub-prime crisis in the United States has forced up the cost of funds, and RAMS existing borrowers may refinance elsewhere rather than pay higher than market interest rates.  Read more

ACCC releases quarterly activity details

The Australian Competition and Consumer Commission (ACCC) has released a quarterly publication called ACCCount which details the regulator’s activities. Available as a downloadable PDF, ACCCount outlines the ACCC’s involvement in enforcement of the Trade Practices Act, merger reviews, compliance actions, and economic regulation. The publication is available to the public by free subscription.  Read more.  Download ACCCount

Students to earn and learn at RFG stores

Year 11 and 12 students from 60 south-east Queensland schools will get an insight into how to run a business, plus earn a wage and credit towards a recognised training qualification under an innovative new scheme announced by Retail Food Group. In conjunction with Vocational Education Training coordinators and Federal Government training organizations, students will be able to take up paid places Donut King, Brumb’s and bb’s café franchises while getting credit for a subject for their Year 12 certificate and earning a recognised qualification in Retail Operations or Food Processing (Baking Bread).  Read more

SportsCo opens first of new-look high-tech stores

SportsCo is going high-tech with its new-look store design, and has even introduced a program that video records a customer walking on a treadmill, then analyses the footage using proprietary software to determine the customer’s gait, and finally recommends the right shoe solution for that particular gait. The new technology is featured in the first store to also have the new SportsCo look at Chadstone Shopping Centre in Victoria.  Read more

Self-serve touch screens to make fast food faster

Trials of self-service touch screens in some United States quick service restaurant franchises have been embraced by franchisees, who have realized faster and more accurate ordering speeds, till balances and lower labour costs, according to a newspaper report. What’s more, the touch screens are even better at upselling than staff because they make an upsell suggestion automatically, and are never too embarrassed, shy, or lacking in confidence to ask the question.  Read more 1

However not all fast food chains in the US are quick to take up new technologies, with predictive software and call centre technologies designed to better manage peak trading periods struggling to gain market acceptance.  Read more 2.

Research project to shed light on franchise disputes

A two year research project to be conducted by Griffith University from next year will help build an understanding of how and why franchise conflicts occur. The $220,000 study has been funded by the ACCC in conjunction with a linkage grant from the Australian Research Council. The research is expected to provide an analysis of the most effective methods for anticipating and avoiding conflict. The ACCC is supporting the project as it is often called in too late in franchise sector disputes.  Read more

Aussie cricketers to bat for Bartercard in India

Australian trade franchise Bartercard will step up to the crease in cricket-obsessed India with the support of Australian cricket stars Ricky Ponting and Steve Waugh when it commences operations in February next year.  Read more

Marks & Spencer unveils new international franchise plans

High-profile British retail chain Marks & Spencer has announced it will resume international expansion after rationalizing its foreign operations in recent years. The chain hopes to add to its existing international network of 250 franchised stores by concentrating on Europe, China and India. The new expansion plans were announced in the same week as the retailer reported strong profit figures, with full-year profit tipped to pass 1 billion pounds.  Read more 1.  Read more 2.

Intro to Franchising & Site Selection to complete 2007 education series

The Franchise Advisory Centre’s 2007 education program will wrap up this month with the last Introduction to Franchising and Site Selection seminars for the year. The Introduction to Franchising seminar, held in conjunction with Griffith University, will be held in Brisbane on November 15, and is particularly relevant to potential new franchisors, as well as as new staff of existing franchise brands. Read more 1.  The Site Selection and Territory Planning seminars will be held in Brisbane on November 20 and in Melbourne on November 22, and will be presented by market analysis expert Peter Buckingham.  Read more 2.

Franchise field services survey – responses close tomorrow

Responses for the annual Field Service Role in Franchising survey close tomorrow (November 9). The survey, conducted by Franchise Careers in conjunction with HT Solutions, seeks to establish the key activities, performance indicators and challenges for the franchise field service role. All participants receive a free copy of the survey findings, as well as go into the draw to win a free pass to a 2-day Field Services workshop in 2008, as well as a three month free trial of the HT Solutions MacXimist Field Visit Personal Assistant Program. To complete the survey online, click here.

Other franchise news:

- Lenards celebrates 20 years;

- Zarraffa’s opens training academy for coffee;

- Dairy Farmers profits down, market share up in turnaround;

- Fantastic Furniture to open another 6 stores by June 30;

- Harvey Norman share price and profits surge;

- 7 store openings in month sets record for Mortgage Choice;

- Subway promotion: Would you like a bike with that?

- Dominos to add 60 stores & 25% profit lift by June 30;

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