Hot Topics: Behind the Headlines

BEhiND ThE

HeADlINeS

Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for more than 30 years at franchisee, franchisor and advisor level. He advises both existing and potential franchisors and franchisees, and conducts franchise education programs throughout Australia. He has been awarded for his franchise achievements, and publishes Franchise News & Events, Australia’s only fortnightly electronic news bulletin on franchising issues. In his spare time, Jason is a passionate collector of military antiques. www.franchiseadvice.com.au

Franchise disclosure register website now online

The Australian Government’s new Franchise Disclosure Register that was legislated into existence by the latest changes to the Franchising Code of Conduct on March 31 is now available online at www.franchisedisclosure.gov.au Franchisors will be required to upload certain information to create a profile on the Register by logging-in with a MyGov ID, and publish disclosure information about their franchise no later by November 14. The Register will go live and be searchable by potential franchisees and others from November 15. The online Register will be operated by the Government, but will not vet or check documents before they are uploaded. Franchisors will be responsible for the accuracy of all information contained in their disclosure documents, with access to the online register available for free to any member of the public. The Register will require franchisors to keep their information up to date, and must be updated at least once a year by the 14th day of the fifth month following the end of the financial year (ie. within two weeks after the franchisor updates their disclosure document each year). Failure to provide this information will be a breach of the Code and incur a civil penalty. The Code changes state that the Register may contain a franchisor’s disclosure document, key facts sheet and standard form agreement, although at the very least a franchisor must provide their name, trading name, ABN, office address, phone and email contacts, and ANZSIC division and subdivision codes for the industry in which the business operates. To see the Register website, visit www.franchisedisclosure.gov.au

Increased code penalties up to $10m commence

From 15 April 2022 penalties for breaching the Franchising Code increase and more clauses of the Code carry a penalty, according to an Australian Competition and Consumer Commission (ACCC) statement. In most cases where a penalty for breach of the Code is incurred, the maximum penalty will be up to $133,200 according the ACCC, however for certain provisions, greater financial penalties apply. These provisions are: • the disclosure of materially relevant facts (cl 17(1) and (2))

• restricting the freedom of association of franchisees or prospective franchisees (cl 33)

• terms of agreement for new vehicle dealership agreements (cl 46A(1)-(3) and cl 46B). For these seven provisions there are greater maximum pecuniary penalties per contravention, which for corporations, will be the greater of $10 million, or three times the value of the benefit received, or 10% of annual turnover in the preceding 12 months, if a court cannot determine then benefit obtained from the offence. Franchisors are also reminded that if someone expresses an interest or formally applies to buy a franchise, franchisors must give them a copy of the information statement, and from 15 April 2022, this must happen no later than 7 days after a prospective franchisee expresses an interest.

Macca’s knockoff trademark appears in russia

A local alternative to burger chain McDonald’s is gearing up to open in Russia, complete with a yellow and red logo that looks almost identical to McDonald’s golden arches, according to a media report. Russian burger restaurant chain Uncle Vanya filed its trademark, which resembles the golden arches albeit tilted 90 degrees to the right, on March 12 after McDonald’s suspended operations in the country in response to the war in Ukraine. Uncle Vanya’s arches form part of a letter “B” in the Cyrillic alphabet, corresponding to “V” in Vanya. A parliamentary speaker and officials in Russia have encouraged Russian brands to take over McDonald’s locations and ignore patents and trademarks owned by entities from countries deemed hostile by the Russian government.

Franchise class action settles for $98m

Convenience retail franchisor 7-Eleven has agreed to pay $98 million to settle a class action lodged by franchisee entities encompassing 600 stores which claimed the company misled them about the accuracy of labour costs and average wages, according to a media report. The class action resulted from a 2015 investigation into underpayment breaches by 7-Eleven franchisees, which the franchisees claimed the franchisor was aware of, and the subsequent back-payment of more than $170 million by 7-Eleven to the underpaid workers. Lodged in 2018, the lawsuit alleged 7-Eleven provided prospective franchisees with misleading documents and records relating to the profitability of stores, and that they knowingly offered franchise agreements for stores which could only turn a profit if staff were underpaid, not paid, or paid below award rates. Franchisees were reportedly told employee costs would be around 7%t of business costs, when in reality they were around 13%.

Lawnmowing franchise ditches petrol mowers

New Zealand lawnmowing franchise LawnRite has swapped petrol-powered lawnmowers and gardening equipment for solar rechargeable battery-powered equipment, for both economic and environmental reasons, according to a media report. Over the last six months, LawnRite operators have had their trailers modified to become solar powered charging stations for their equipment. The switch to solar costs around NZD$2,500 but will reportedly save franchisees up to NZD$40 per day in fuel. LawnRite’s parent company, Rite Group, is investigating how its other brands, including CleanRite and WashRite, could also switch to renewable energy.

Franchising code changes twice in just two weeks

Franchising regulations in Australia were amended twice within 14 days in March as the Australian Parliament rose ahead of the upcoming federal election. The first changes were issued on March 17 and doubled financial penalties for breaches of the Code, as well as expanded the range of breaches for which penalties could be applied, and introduced a new mega penalty of $10 million, or three times the value of the benefit derived from the contravening behaviour, or 10% of the franchisor’s turnover, whichever is the greater. The second changes issued just two weeks later on March 31, enshrined the concept of a Franchise Disclosure Register into the Franchising Code, which had been announced by the Government last year in response to the 2018 Inquiry into the Franchising Code of Conduct. The new Register is mandatory from November 14 this year, and will require franchisors to provide certain prescribed information for inclusion in the publicly-searchable register.

convenience chain delivers 300 tons of aid to Ukraine

A convenience retail chain in Poland with more than 4,000 stores has provided almost 300 tons of food and essential hygiene products to Ukraine, with the latest delivery of 60 tons sent direct to Ukraine’s capital Kyiv, according to a media statement. In Poland, the Zabka chain is ubiquitous, with about 15.5 million Poles living with 500m of a Zabka store. The nation shares a border with Ukraine and has been flooded with more than 1.5 million Ukrainian refugees fleeing the war. Zabka franchisees are providing humanitarian support, while the chain is also collecting donations for charities including the Red Cross and company staff are encouraged to assist in aid efforts.

new Zealand franchise award winners announced

The winners of the Westpac New Zealand Franchise Awards were announced in an online event held on March 6. The Franchise System of the Year award was won by commercial cleaning brand CrestClean, and the Franchisee of the Year was awarded to Gary and Kirsten Camoin, franchisees of rival cleaning chain Paramount. The awards were due to be held in 2021 but were delayed until this year due to the pandemic, and recognised 75 finalists across all categories. Franchise New Zealand was awarded Service Provider of the Year for its magazine and website which promotes franchising and educates franchise buyers in New Zealand.

What is the best way to expand your business? What is the best way to expand your business? Licensees, network members or franchisees? What is the best way to expand your business?

Licensees, network members or franchisees? Licensees, network members or franchisees?

With 25 years in the industry, we know how to successfully grow With 25 years in the industry, we know how to successfully grow a business locally, nationally and internationally. a business locally, nationally and internationally. Let’s work out the best expansion system for your business. One that’s With 25 years in the industry, we know how to successfully grow a business locally, nationally and internationally. Let’s work out the best expansion system for your business. One that’s built around your products and business systems. built around your products and business systems. Let’s work out the best expansion system for your business. One that’s built around your products and business systems.

Putting it all together is our responsibility. Contact Colin Crawford Our team of specialist consultants provides a one-stop-shop for business planning, system manuals, legal documentation, and most National Franchise Manager 0425 838 800 FREECALL 1300 249 276 importantly, recruiting suitable candidates that will build your network.

Putting it all together is our responsibility. Contact Colin Crawford Our team of specialist consultants provides a one-stop-shop for business planning, system manuals, legal documentation, and most National Franchise Manager 0425 838 800 FREECALL 1300 249 276 importantly, recruiting suitable candidates that will build your network. www.franchisedevelopments.com.au Melbourne I Sydney I Gold Coast I Adelaide I Hobart I Perth

Putting it all together is our responsibility. Contact Colin Crawford Our team of specialist consultants provides a one-stop-shop for business planning, system manuals, legal documentation, and most National Franchise Manager 0425 838 800 FREECALL 1300 249 276 importantly, recruiting suitable candidates that will build your network.

www.franchisedevelopments.com.au www.franchisedevelopments.com.au Melbourne I Sydney I Gold Coast I Adelaide I Hobart I Perth Melbourne I Sydney I Gold Coast I Adelaide I Hobart I Perth