Jul/Aug 2021 Feature – Food & Beverage Franchises. BUSINESS FRANCHISE Australia and New Zealand

FOOD & BEVERAGE FRANCHISING

VOL 15 ISSUE 05 JULY/AUGUST 2021

FOOD & BEVERAGE FRANCHISES

EAT, DRINK & BE TECH SAVVY

A Taste for

FRANCHISING

POST-COVID

TRENDS AND OPPORTUNITIES

IN A CHANGED MARKETPLACE

Business Franchise Australia and New Zealand 31

We understand some of the challenges our Franchise/Multi-Site customers are facing.

In response we have developed two FREE online tools to assist both those staff in the frontline, and those staff whom have been sent home to work.

COVID-19 Declaration A FREE four question checklist for staff to use to declare themselves fit for work if they are in a customer/public facing role.

HomeWork A FREE set of three online actions for staff working from home to undertake to ensure they are creating a safe working environment.

Both the COVID-19 Declaration and HomeWork are FREE to any Franchise Group or Multi-Site whom think they can benefit from these tools.

To find out more call me on 0401 803 302 or send me an email at cbeasley@safetynavigator.co

TO THE 2021

FRANCHISING & BUSINESS OPPORTUNITIES EXPO’S FOR BUSINESS FRANCHISE READERS!

Don’t pay full price!!!

Half Price tickets for Business Franchise magazine readers by entering the code CGB when purchasing tickets online.

“GRAB YOUR TICKET NOW, IT’S REALLY TIME TO STOP DREAMING AND START DOING!”

DATES: MELBOURNE: 20-21 August Melbourne Convention & Exhibition Centre

BRISBANE: 8-9 October Brisbane Convention & Exhibition Centre

For more information go to

www.franchisingexpo.com.au 32 Business Franchise Australia and New Zealand

SYDNEY & PERTH: return in 2022

CONTENTS

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On the Cover 36 Feature Article: Food & Beverage Franchises: Eat, Drink and Be Tech Savvy 44 Expert Advice: A Taste for Franchising Post-Covid

44

48 Expert Advice: Trends and Opportunities in a Changed Marketplace

34 What’s New: Announcements from the Industry

36 Feature Article: Food & Beverage Franchises: Eat, Drink and Be Tech Savvy

39 Focus Feature: Roll’d: Vietnam-easy, Interview with Venice Phan 42 Expert Advice: Food and Beverage Franchises: Trends to Watch Out for Robin La Pere, Franchise Consultant, No Ordinary Businesses and Franchises

46

44 Expert Advice: A Taste for Franchising Post-Covid Seva Surmei, DMAW Lawyers

46 Profile: Choose Franchising – Subway Proves the Way to Securing the Future 48 Expert Advice: Trends and opportunities in a changed market place Corina Vucic, Director, FC Business Solutions

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A regular of Business Franchise Magazine, our special supplement in franchising showcases a different industry each issue To share YOUR SPECIFIC EXPERT INDUSTRY ADVICE or to FEATURE YOUR FRANCHISE in the next issue, please contact: Vikki Bradbury Phone: 03 9787 8077 Email: vikki@cgbpublishing.com

Business Franchise Australia and New Zealand 33

what’snew!

‘BATTER UP’ GREAT AUSTRALIAN FISH & CHIP AWARDS RETURN IN 2021

The Great Australian Fish and Chip Awards, to align with the industry’s brand, Great Australian Seafood, which was launched as a COVID-19 recovery response.

“The awards were not held last year due to COVID, however they’ll be back up and running, and batter (sic) than ever in 2021. The FRDC has done a wonderful job establishing them, and we thank them for their hard work.

“The Great Australian Fish and Chip Awards will commence on October 19 to celebrate International Seafood Day, the national winner announced in December.

Seafood Industry Australia (SIA) has

the Fisheries Research and Development

announced the return of Great Australian

Corporation (FRDC) who established them in

Fish and Chip Awards in 2021.

2017,” SIA Communications Manager Jessica

“We are excited to take over the leadership

McInerney said.

and management of the annual awards from

“The much loved awards will be renamed

“We’re in the process of finalising the details of the awards to ensure they can go ahead in a COVID-responsible manner. But, we’ll be looking for country of origin labelling, fish species identified according to the Fish Names Standards. Most importantly, we’re looking for crisp, golden fish batter or crumbing, and crunchy, creamy fries with just the right amount of salt.”

Pre-register your shop at: www.fishandchipsawards.com.au

ZARRAFFA’S COFFEE DRIVE THRU EXPANSION CONTINUES Forging ahead with plans to increase its drive thru locations, Australian-owned specialty coffee franchisor Zarraffa’s Coffee recently opened a new store in Pialba, Queensland.

The new Pialba store is owned and operated by experienced local franchisees Bec and Chris Bee, who first brought Zarraffa’s to Hervey Bay in 2009.

“We have long held a desire to operate a drive thru store in our hometown, understanding the need for greater convenience, and now locals will be spoilt for choice,” said Bec Bee. “Serving up our handcrafted coffee to more people, both in-store and on-the-go, is another chapter in our 11-year journey with Zarraffa’s.”

Zarraffa’s CEO Marne Sheldon said that after introducing their drive thru model over a decade ago they have been keen to increase their store footprint in suburban areas. The company has plans for at least two more store openings before the end of the year, with a larger program of expansion to come.

Queensland, New South Wales and Western Australia,” said Sheldon.

customers, all while keeping their team

“After weathering the effects of COVID across our territories, it’s a great feeling to be able to implement our expansion plans across

“Bec and Chris are part of our franchise family who have worked hard during recent years to build a solid business with loyal

to see them take this next step.”

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employed. It is hugely rewarding as a business

www.zarraffas.com

MUFFIN BREAK WINS ROY MORGAN COFFEE SHOP OF THE YEAR Australian franchise business, Muffin Break, has taken out the Roy Morgan 2020 Coffee Shop of the Year award. This prestigious annual award celebrates the very best in customer service.

Being named the winner is an exciting achievement for Muffin Break and recognises the exceptional service provided by the dedicated franchise partners of the brand.

Customer service is a major focus of the training provided to every Muffin Break team member. With nationally accredited training programs delivered in a range of formats,

it ensures that each store is consistently delivering excellence.

Throughout 2020, the brand and its franchise partners have constantly pivoted to adapt to the ever-changing climate and new customer shopping and purchasing habits.

“We are delighted to be recognised for our excellence in customer service. Our customers have always been our first priority, and this has been especially important in regards to their safety over the past year. We are proud to be recognised by our customers for this award,” said general manager Natalie Brennan.

Muffin Break has been recognised with numerous other awards over their 32-year history, including winning the Silver Stevie Award and being named fifth most innovative company by The Australian Financial Review for their innovation in training techniques as well as winning the Gold Asia-Pacific Stevie Award for Innovation in Sustainability.

Australia’s largest survey company, Roy Morgan, has over 75 years’ experience in collecting objective, independent information on consumers. https://muffinbreak.com.au/

CONCEPT EIGHT STREAMLINES VIRTUAL BRANDS WITH SINGLE PORTAL SOLUTION Concept Eight, one of Australia’s largest multi-brand franchisors and a leader in the Asian segment of the Australian QSR market, is using a single portal to consolidate the management of all its brands, including, Noodle Box, Pattysmiths Burgers, Wokinabox, Alabama Chicken & Wings, Supreme Leader Korean Krispy Chicken and Double Dragon Dumplings.

The portal uses Redcat’s newly launched virtual brands software solution, which helps restaurant brand owners drive efficiency, control and customer service, including consolidating their virtual brand operation with any existing physical brand(s).

“By consolidating all our brands onto the single system provided by Redcat, we’re able

to save time, run our brands more efficiently and focus more on delivering great food and customer service,” said Concept Eight CEO Grant Lee. Redcat’s Virtual Brands portal offers restaurant brand franchisors: centralised menu management; multi-brand integration with delivery partners; pick-up, delivery, and @table ordering support; integration

of all orders directly into a single kitchen management system; and a single ordering app for Android and iOS. Over 25 years, Concept Eight has grown to 140 restaurants in Australia, becoming the business behind some of Australia’s most loved QSR brands. https://concepteight.com.au/

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FE AT U R E A R T I C L E

FOOD & BEVERAGE FRANCHISES EAT, DRINK & BE TECH SAVVY

Technology is increasingly shaping our lives. Even simple traditions - like going out for a meal - now involve the digital world.

Online ordering, cashless payments and virtual brands are now commonplace in venues across the country.

From restaurants, bars and cafés to bakeries, foodcourts and food trucks, food and beverage franchisors are mastering the art of service with a virtual smile; offering customers what has essentially always been a physical dine-in experience with increasingly contactless, yet connected, capabilities.

The evolution of digital service Food franchisors getting savvy with technology and digital trends is nothing new.

Many brands saw the influence smartphones, social media and mobile apps had on younger demographics and understood the future of their business depended on adapting. Increasingly, older generations began embracing elements of these trends, such as the convenience of making cashless payments or making reservations online.

The use of digital technologies in food and beverage outlets is now no longer an outlier trend. According to a 2017 report1, 95 percent of restaurant owners agreed that technology improved business efficiency and 81 percent of diners said they used a restaurant’s website to place an order online.

36 Business Franchise Australia and New Zealand

And then, in 2020, the pandemic cinched the deal. Covid-19 forced the hands of those lagging behind. Some hoped the crisis would soon pass and business would return to ‘normal’. Others saw the writing on the wall and leaped into action, gathering their best marketing, IT and digital engagement minds together to find ways forward.

Here’s just a glimpse at some of the digital technologies that are now commonplace among food and beverage franchise brands across Australia: - It’s hard to imagine a time when you couldn’t order anything you wanted to eat or drink within a few taps on your phone. Thirdparty food delivery apps like UberEats, MenuLog and Deliveroo have opened up the at-home dining experience, allowing a host of restaurants to capitalise on the trend. Moving ahead, many smaller chain restaurants are following the lead of larger fast-food chains by developing their own integrated online ordering apps.

- while POS

FE ATUR E : FOO D & B E V ER AG E FR A NCH ISES

Some businesses were reluctant to change, however, most could see the value in having a few digital technologies to support their business - a website, a social media account, a POS machine for debit and credit card transactions - the basics, they realised, were now essential.

systems using EFTPOS have become the norm, more savvy establishments are offering payment by a variety of contactless methods, like smartphones and smartwatches. Contactless payment methods are more hygienic than handling cash and also offer greater convenience for customers who prefer instant, paperless transactions. For restaurant owners, digital payments are also more efficient from a cash flow point of view. It’s estimated that cashless payments will triple from $2 trillion to $6 trillion worldwide by 20242.

- what was once the domain of special marketing offers, QR Codes have become essential track-and-trace tools for businesses managing the demands of Covid-19 tracing policies. However, the QR Code is also a safe and convenient tool for restaurants offering menu table service.

Customers can pick and choose their choices through the app without attracting the attention of wait staff, allowing the service delivery to be more efficient for customers and wait staff alike.

- as delivery became the only option for many food service providers during the pandemic, virtual brands became a growth phenomenon.

Virtual brands are ‘restaurants’ that exist only online. Food is prepared in kitchens of existing venues or in purpose-built

“Food and beverage franchisors are mastering the art of service with a virtual smile.”

“Digital innovations have helped many businesses not only stay afloat during endless lockdowns and restrictions on dining out, but have seen them flourish.”

‘dark kitchens’. “Virtual brands offer operators rapid and relatively low-cost market entry with new cuisines and the opportunity to transform your kitchen into a separate revenue generator, while spreading costs across multiple brands”, said Lawrence Pelletier, Director of Sales & Marketing at Redcat, a hospitality IT platform that supports restaurant groups, quick-service restaurants and multi-site franchises. “As for customers, they get a wider choice of foods and restaurants without leaving home.”

These technologies and digital innovations have helped many businesses not only stay afloat during endless lockdowns and restrictions on dining out, but have seen them flourish; attracting new customers in this new era of virtual connection.

The revolution of dine-in and take-away dining brought about by technological advances - and propelled by the pandemic look like they are here to stay. https://pos.toasttab.com/resources/restaurant-technologyindustry-report

1

https://hospitalitytech.com/cashless-king-contactlessinteractions-become-more-important-ever

2

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FE AT U R E A R T I C L E

Explore these Food and Beverage franchises BANJO’S BAKERY CAFÉ - Established in 1984, Banjo’s now has 44 stores across the country with more on the way. Be part of an Australian success story and join a team that’s on the rise by joining a proven business model supported by a strong customer base that enjoys fresh handmade products baked on site every day. https://banjos.com.au/franchising/opportunities/ BK’S TAKEAWAY - Although BK’s Takeaway is one of Australia’s newest franchises, the original store was born over 20 years ago in the rural town of Trafalgar in the heart of Victoria’s Gippsland region. Since then, BK’s Takeaway has grown across Victoria’s regional hubs, providing great Aussie food and friendly country service. https://www.bksfranchising.com.au/ FASTA PASTA - this leading Italian restaurant chain delivers fresh, popular, tasty meals, using the finest quality 100% Australian durum wheat semolina. With 20 Fasta Pasta restaurants Australia-wide, there are many opportunities for growth, particularly in South Australia and regional areas of Victoria, New South Wales and Queensland. https://www.fastapasta.com.au/franchising/ HOG’S BREATH CAFÉ - Home to the famous 18-hour slow cooked prime rib and curly fries, Hog’s prides itself on a menu that mixes beloved classic meals with modern dishes and on-trend ingredients. Celebrating nearly 30 years of successful operation, they now have rare opportunities to join the largest privately owned casual dining group in Australia with Hog’s Australia’s Steakhouse, Hog’s Express and Funky Mexican Cantina. https://www.hogsbreath.com.au/franchising/ LA PORCHETTA - The first La Porchetta Restaurant was opened in 1985, when Italian Born Rocky Pantaleo and Felice Nania took over a run-down pizza shop in Melbourne’s Italian hub. Today, La Porchetta continues to be part of the local community. Just as the kitchen is the centre of Italian family life, their restaurants celebrate that feeling of being at home with delicious food made from fresh ingredients, warm service, great value and a family heart. https://www.laporchetta.com/franchising/ ROLL’D - Roll’d aims to share the things that matter most to us – great food and memorable experiences. With over 85 stores across six states and territories and international expansion in the works, the Roll’d Vietnamese phenomenon shows no signs of slowing down. Stores reflect the lively, fresh nature of Vietnamese street food with fresh high-quality ingredients. https://rolld.com.au/franchise/ SUBWAY - SUBWAY is the world’s largest sandwich chain with more than 44,000 locations around the world. SUBWAY has become the leading choice for people seeking quick, nutritious meals that the whole family can enjoy. With locally-sourced vegetables, premium-quality meats and bread baked daily, Subway stands for fresh. https://subway-franchise.com/au-en/join-the-family/ The Sporting Globe Bar and Grill - The Sporting Globe is a global brand with a local touch - each venue sponsoring local grassroots sporting clubs with strong engagement in the local community. Offering quality Australian pub fare, an abundance of beers on tap in a welcoming atmosphere with the ultimate state-of-the-art sports fit out, The Sporting Globe is a great place to eat, drink and catch a game. https://www.sportingglobe.com.au/franchise

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FO C U S FE AT U R E : R o l l’d

40 Business Franchise Australia and New Zealand

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E X PER T A DV I C E

FOOD AND BEVERAGE FRANCHISES:

TRENDS TO WATCH OUT FOR The American owner of a Mexican restaurant on Auckland’s city fringe asked me to help him franchise his business. This was nearly 20 years ago. But the business didn’t last. It turned out that Kiwis just weren’t ready for Mexican food.

Then everything changed. The American was ahead of his time because about ten years ago, a plethora of Mexican franchises started popping up all over the country. All over the world, in fact.

Food fads come and go The latest in both New Zealand and Australia are foods that were once considered exotic to most of us. Empanadas from South America. Churros from Spain.

Korean BBQ from, well, Korea. Even mainstream franchises like McDonald’s and Subway, keen not to lose market share to these trendier upstarts, are jumping on

the bandwagon. The Golden Arches have even collaborated with K-Pop icons BTS on a menu which reflects the flavours of their home country.

Taehyung’s penchant for them,” complained one Australian BTS fan. Guess who’ll be advising their friends to boycott this ‘travesty’.

The major F&B franchise players are smart.

They understand that, yes, you need to be flexible and adapt part of your menu to local tastes and new trends. But at the end of the day, their core menu – McDonald’s with the Big Mac and Subway with their Classic Chicken Sub – is still their best seller.

Change them at your peril.

The use of influencers and social media may be a ‘must have’ in your F&B franchise marketing, but never forget that online buzz can quickly turn to buzzkill if it’s not carefully managed.

You can’t please all of the people all of the time Getting back to the McDonald’s/BTS collaboration, the BTS Meal created much social media excitement when it was launched in 50 countries – including Australia but not New Zealand – this May. Kiwi ‘BTS Army’ members were naturally devastated by the news. But in the world of social media, influencers aren’t just limited to celebrities with 3 million followers plus.

Your ordinary everyday social media user can have a powerful influence on their 247 friends.

Hell is an upstart franchise that upset the status quo by daring to compete against Pizza Hut and Domino’s – and became New Zealand’s third-largest pizza chain. Part of its success has come from its quirky branding and marketing – it once stuck 550 skins on a billboard to promote its new rabbit meat pizza. But this strategy backfired in 2020 when it launched its Burger Pizza – without telling customers that the topping was completely plant-based. Once news got out, there were claims of misrepresentation and concerns that some unknowing customers could have had allergic reactions to the undisclosed ingredients.

“It is a travesty that an Oreo McFlurry was not included in this meal, given Kim

Hell management shrugged off the warning it was slapped with by the Commerce

42 Business Franchise Australia and New Zealand

The road to Hell is paved with good intentions

Think global, act local Just because we’re choosing to eat our way around the world without leaving town now doesn’t mean we don’t expect these global flavours not to be natural and fresh – and that means locally-sourced.

Robin La Pere | Franchise Consultant NO ORDINARY BUSINESSES AND FRANCHISES

Local sourcing has gained momentum during Covid because of food supply chain security and safety fears, but franchising has gained a somewhat undeserved reputation for standardising and centralising their supply chain management to achieve economies of scale. While this may have to be the case where produce and ingredients simply aren’t available locally in sufficient quantity or quality, many franchises are now taking pains to source locally.

Commission. “We care about the planet and want to start a conversation and raise awareness about sustainable food choices,” they said, pointing out that they had already sold more than 35,000 vegan pizzas in the previous six months.

Where’s the beef?

You know that plant-based eating is moving from the fringe to the mainstream when the big franchises start introducing vegetarian and vegan alternatives to their menus. In Australia, all of the top 10 most visited fast food restaurants except KFC and Red Rooster offer plant-based menu items, and Grill’d even took meat products off its menu for a day to draw attention to its meatfree offerings. Although a little late to the party, McDonald’s came on strong with its McPlant range.

Some franchises have gone the whole hog – probably not the best choice of words – and gone all-plant-based. Soul Burger claims it has “a passion for creating change and social impact through unleashing plantbased brilliance upon Australia”. And Lord of the Fries, which is expanding across both Australia and New Zealand, wants to “help the world eat better and to introduce friends, local and abroad, to more sustainable food options”.

It is estimated that there are 2.5 million

vegetarians and half a million vegans in Australia but by far the biggest market for plant-based cuisine are the flexitarians – people who frequently choose to leave meat and dairy off their plates.

Eat in or eat out in style?

The Covid pandemic has brought about two post-lockdown trends that at first glance appear to contradict each other. The first is that the gamechanger that was the emergence of food delivery apps such as Uber Eats is still very much with us, with people choosing to eat in rather than eat out. The second is the return of the ‘see and be seen’ movement where dining out is a special occasion, an opportunity to enjoy an intimate dinner for two – shared of course with everybody on Instagram – or party in style with a group of friends.

The delivery apps were hailed as the saviour of the food service industry during the lockdowns but what many of we stay-athomes failed to realise is that because the likes of Uber Eats don’t allow restaurants to increase their prices to cover the delivery cost, they are effectively taking a 30% bite out of restaurants’ profits.

The special occasion trend puts more pressure on restauranteurs to perform in terms of ambience, presentation and service – and this should be to the advantage of

It’s a little-known fact that McDonald’s has always involved its franchisees in its supply chain management. In New Zealand, Maccas has just launched their ‘Ordered from Here’ advertising campaign in which four Kiwis ordering from a McDonald’s drive-thru innocently ask what’s in the product, only to find themselves and their car whisked away on a tour of the fresh source of the beef patties and apple pies.

Looking to buy a food service franchise?

It’s certainly an exciting time to get involved in the food and beverage industry. But there are challenges as well as opportunities. The good news is that by joining a franchise rather than going it alone, you gain the benefits not only of a proven business model, but an organisation that is constantly monitoring changing trends and adapting to take advantage of those trends.

Robin La Pere is a franchise consultant with more than 20 years’ experience as a franchise manager, CEO and owner as well as a consultant, coach and speaker on franchising. Based in Auckland, New Zealand, he works with clients throughout Australasia and internationally. He is a specialist in business model development, strategic planning, process improvement, innovation and franchise recruitment marketing. www.noordinary.co.nz

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“The use of influencers and social media may be a ‘must have’ in your F&B franchise marketing, but never forget that online buzz can quickly turn to buzzkill if it’s not carefully managed.”

franchises. But all this depends on how good your staff are, making employee recruitment, training and support more important than ever.

FE ATUR E : FOO D & B E V ER AG E FR A NCH ISES

E X PER T A DV I C E

A Taste for

FRANCHISING POST-COVID Food and beverage franchises are bouncing back in the wake of COVID-19.

Many in the heart of our cities took a hit during the pandemic with a large part of the Australian population working from home.

Franchisees were forced to pivot by starting home deliveries and quick take away services.

By and large food and beverage franchises have weathered the COVID storm. Unable to travel overseas, people have more disposable income to spend at home. They’re more likely to indulge in a novelty dessert, go out for coffee or take their families to a fast-food restaurant.

During COVID the Australian Competition and Consumer Commission (ACCC) advised franchisors to adjust their fees so that franchisees were not paying for services that they were not receiving. Franchisors were also asked to consider suspending services, such as marketing, so those savings could be passed on to franchisees. However, there were no legislative requirements for franchisors to waive, reduce or defer franchise fees during the pandemic.

Now on the road to recovery, there’s a growing appetite for some franchisees to add to their portfolio as business confidence is re-built. One of our franchisee clients, who is a multi-unit franchisee, is looking to acquire more locations, while for workers who lost their jobs during COVID the lure of being the master of their own destiny can be appealing.

The challenge of starting a new business is daunting when it’s a new idea and the brand is unknown. Going out on your own can carry a high level of risk whereas many see taking on a franchise as a more calculated measure. There’s the security of a proven concept, a level of certainty and a trusted

brand people already know. There’s also the support of the franchisor, the marketing and business teams and regular visits from the area manager.

Unfortunately, many in the market for a franchise don’t know their rights and responsibilities and this can lead to legal disputes. Equally, franchisors can run into trouble if they lack experience with franchising and if franchise agreements don’t clearly state expectations and requirements.

The good news is many problems can be avoided if both parties have their eyes wide open when signing on the dotted line.

In our experience, here are some of the traps to avoid.

Traps for franchisees

through a franchise lens, especially if you are buying a business previously operated by a franchisor. For example, do the financial statements reflect the royalty payable to the franchisor?

the menu, products and suppliers than the franchise model allows. requirement to provide personal and bank guarantees), increasing rent and refurbishment costs. franchisor to keep up with upgrades to the brand.

Traps for franchisors sales, location of the franchise and customer profile. essentially a licence to use the brand and operate the business for a limited period of time. Ensure your financial modelling reflects that.

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the Franchising Code of Conduct. There are significant financial penalties for breaching some provisions of the Code. legal advice before they sign a franchise agreement.

Seva Surmei | DMAW Lawyers

franchisee during negotiations about the business. This could lead to a claim by the franchisee down the track. with franchisees who are in breach or don’t follow the model. For example, franchisees may make late payments, sell unapproved products, source products from unapproved suppliers or change the branding. implementing required changes.

Anyone considering entering into a franchise arrangement should be aware of the following:

on the business acquisition from the franchisor or another franchisee, so it may be difficult to walk away. include matters such as payment of fees and royalties, the length of the term and whether there are any options for renewal, the use of the intellectual property, arrangements about the premises, marketing methods, approved products and suppliers, restrictions on the sale of the business, end of term arrangements including restraint of trade clauses and how the agreement may be terminated.

requirements of the Franchising Code of Conduct.

by an operations manual which can be updated by a franchisor from time to time to change or modify approved products, suppliers, plant and equipment, the brand image etc. A franchisee should seek a copy of the operations manual when considering the franchise offering as a whole.

to a franchisee 14 days before the franchisee signs a franchise agreement.

That time should be used by a franchisee to complete due diligence and seek advice.

other franchisees before signing up.

Contact details of current and former franchisees appear in the disclosure document for this purpose.

Before you sign on the dotted line

off period after signing the franchise agreement to decide whether to proceed.

By that stage, however, a franchisee may have probably signed a lease or completed

Ending the relationship specific term with no early termination right for a franchisee. That means a

agreement or walks away early, a franchisor may have a claim against the franchisee (and any guarantors) for loss of royalties, lease payments, legal costs and other expenses. the franchisor may offer to purchase the franchisee’s plant and equipment pursuant to the arrangement set out in the franchise agreement. that will prevent you from competing with the business or operating from the site under a different brand.

Food for thought Many food and beverage franchisees don’t seek legal advice because they assume terms and conditions of a franchise agreement are non-negotiable. Although it is often a franchisor’s position not to negotiate the basic terms of the franchise agreement, there is often room to tailor or at least clarify provisions that may have significant consequences for a franchisee. For example, a franchisee may request that a franchisor not require a major upgrade of the store for five years. That way the franchisee isn’t having to fork out for big ticket items like new equipment, store refurbishment or rebranding while they’re trying to build up the business. Legal advice should be sought to ensure there are no surprises down the track.

Seva Surmei is a principal in the transactions team of DMAW Lawyers which is a leading South Australian based commercial law firm providing services throughout Australia.

Seva specialises in franchising, licensing and distribution, in particular, acting for major franchisors in the establishment, development and operation of franchise systems including providing advice in respect of compliance with the Franchising Code of Conduct.

Seva is a committee member and secretary of the Franchise Council of Australia, a committee member of the Women in Franchising group and has recently been named as a leading lawyer in franchise law

by Best Lawyers (2021 and 2022 editions) and franchise lawyer of the year Adelaide (Best Lawyers 2022 edition). https://dmawlawyers.com.au/

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“Now on the road to recovery, there’s a growing appetite for some franchisees to add to their portfolio as business confidence is re-built.”

franchisee cannot walk away from the franchise agreement in the middle of the term without negotiating an exit arrangement with the franchisor or selling the business to an approved purchaser.

FE ATUR E : FOO D & B E V ER AG E FR A NCH ISES

PR O FI L E : S U BWAY ®

CHOOSE FRANCHISING: SUBWAY® PROVES THE WAY TO SECURE THE FUTURE

Becoming an entrepreneur is no easy feat, especially when venturing into the business world for the first time. Choosing to own a franchise business can provide all of the benefits of being an entrepreneur while allowing access to the vital resources of a big brand.

Country Director of Subway® Australia and New Zealand, Geoff Cockerill, explains why franchising with Subway® is a proven formula for success for many, and has been for 50 years now.

“Franchising gives people the opportunity to own and run their own business with the safety net of an established model, but with high personal reward. It is a business investment that can be life changing and continuously rewarding,” says Mr Cockerill.

You can make it a family affair Owning a franchise business with family members is a great way to build a successful business. With the time spent working alongside family, internal relationships and collaboration can be a breeze as opposed to going solo at the helm or choosing to enter into a business with a friend or non-related business partner.

Family members who own businesses together are typically united by the same goals and ways of working. There is less pressure when it comes to financial performance and more flexibility on time to gain returns on investment.

Mr Cockerill explains that many of the franchisees at Subway® Australia keep it within the family, and the profitability shows.

“We have franchisees that have been with Subway for decades, and whom within their family, own multiple restaurants that remain a legacy passed through generations.

“Franchising with family provides a support network for your nearest and dearest, and we find that our family-owned franchises make

business decisions that future-proof their restaurants, in order for their future family members to benefit from. It’s a wise way to conduct a business, and needless to say, fun and fulfilling to work alongside your family.”

For Subway® franchisee, Dallas Mulholland, his business has been a family affair. After purchasing his first restaurant, it wasn’t long before his own daughters started contributing.

Now, the business has become multigenerational, with daughters Shannon and Casey working alongside their father as owners and carrying on the business.

“I think the Subway business model has actually been developed on the mum-anddad-operated-business model as it lends itself to families so well. My daughter Shannon is already discussing plans to pass down her own restaurant to her son,” says Mr Mulholland.

There’s less risk and more reward When launching a startup, a business needs to be built from the ground up and there are many risks to think about, including economic risk, compliance risk, financial risk, reputational risk – the list goes on.

Franchise ownership generally minimises business risk as working with a large company provides many positives that ensure the success of a franchise business such as brand recognition, marketing, safety protocols and legal requirements. Mr Cockerill explains that these are most of the benefits that franchisees can expect from investing with a known franchise brand.

“Owning a business costs money, takes time and energy and there can be frustration in starting from the ground-up, sometimes it can be years before a profit is close to being returned. By opening a franchise, most of these pitfalls are avoided because a large brand that has been around for decades like Subway, has tried-and-true systems and processes.”

Their success is your success A franchisee can count on the franchise business providing an established product which would already benefit from widespread brand-name recognition. As a franchisee you are also more likely to reap

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the benefits of a well-established customer base which would ordinarily takes years to build.

Similarly, when franchising with a larger business, business owners can benefit from the trust lenders have in the franchisor, and the demonstrated results across other locations. Many franchisors, including Subway®, provide regular business performance updates to major lenders to help them understand the direction and opportunities within the brand for franchisees – as well as the potential financial returns. Essentially, a franchise increases the chances of success because you are entering into business with proven products and methods.

“Our goal is to amplify the Subway brand across Australia and bring healthy, nutritious fast-food options into people’s lives for the greater community benefit. So we want to be a worthwhile option for business owners to be able to do that, while securing success for themselves. To achieve this, we ensure our franchise business model is impossible to say no to. You will find most franchise businesses have the same goal.”

Subway® franchise opportunities are currently available. To learn more about how to join the Subway® family visit: https://subway-franchise.com

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FE ATUR E : FOO D & B E V ER AG E FR A NCH ISES

E X PER T A DV I C E

TRENDS AND OPPORTUNITIES IN A CHANGED MARKETPLACE From small cafes and bakeries, to pizza taverns or Indian restaurants, to providers of fast takeaway, to supermarkets and grocery stores big and small – the food and beverage industry is incredibly diverse.

Its importance to the Australian economy is significant, with Government statistics released in February putting the accommodation and food industry combined as an employer of 851,000 people – 6.5% of the total workforce.

During COVID, the enormous diversity of the industry has meant that each sector has suffered a different level of set-back and challenges. But as an industry, these businesses have shown an amazing ability to adapt, find a niche, refine their focus and service their clients. The sector is predicted to recover over the next five years as economies open up, government venue restrictions ease and consumer confidence rebounds.

But what does the next 12 months bring?

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Corina Vucic | Director | FC BUSINESS SOLUTIONS

sugar, alternatives for dietary requirements including plant-based meat alternatives.

“When it comes to changing or tweaking your menus, don’t underestimate the power of research. Talk to your customers; find out what they like about your offering; why they come back.”

What are the trends and what’s driving the opportunities in this vital sector?

Emerging trends Looking at the movements in the food and beverage industry, both here and overseas, some key emerging trends have been identified by multiple research pieces: transparency on where food is sourced.

Supplier relationships are the key here.

The provenance of food, whether it’s local, organic, sustainable grown and harvested, needs to be documented. zero waste (or if there is waste, that it’s repurposed), energy efficient practices, green suppliers. and a focus on immunity-boosting foods.

trend for adventurous new tastes from around the world. on a plate, make it look great. trend but ranking as one of the most important.

A careful evaluation of these trends shows that there is a clear indication people are taking their social responsibility and environmental beliefs into the choices they make about what foods they eat, how they are prepared and where they buy or consume them.

If you are not moving to a carbon neutral model for your business, you need to. And you need to tell your clients what you are doing. People can’t see that you’ve signed up to green power or they may not know that your takeaway coffee cup is recycled and biodegradable.

When it comes to changing or tweaking your menus, don’t underestimate the power of research. Talk to your customers; find out what they like about your offering; why they come back; whether they would welcome vegan options or international flavours, for example. Don’t make assumptions.

“Provide online menus with free wi-fi, and let people order and pay online. This will save your staff valuable time processing orders and settling bills, and therefore they can put that extra time to good use adding value to the experience.”

What are the opportunities in this sector?

Be a local hero – your community can be the bedrock of your success. People are now more focused on what’s available in their neighbourhood. As a local business, how do you capitalise on this?

These people are not just customers, they are you neighbours.

Smile when they walk in, get to know them, remember their favourite coffee fix, whether they like salt on their chips or want the big brekkie without tomato. And recruit your staff with an eye to people who can provide this charming service.

Amplify what you want to be known for, what your values are: e.g., a blackboard with a quote of the day or a joke; a dog watering station

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FE ATUR E : FOO D & B E V ER AG E FR A NCH ISES

“People are taking their social responsibility and environmental beliefs into the choices they make about what foods they eat, how they are prepared and where they buy or consume them.”

FE ATUR E : FOO D & B E V ER AG E FR A NCH ISES

E X PER T A DV I C E

“If you are offering home delivery of your products, then make it a great experience.”

movements will be of significant benefit to the sector.

Don’t be afraid of change You need to survive, and you need to be profitable. Evaluate your business to see what you can change to help you do this.

Experiment with change.

outside your business; a rewards scheme that benefits local community groups as well as your customers. A half-priced coffee on Fridays for teachers at the local school – there are so many small opportunities to build a persona that cements you as a part of the community.

Create a marketing calendar that includes all the big events locally – footy or netball season kick-offs or finals, school fetes, sports club fundraisers — and see how you can be part of these occasions. Create your own in-store events – coffee or wine or cheese tastings – events that will draw people to your business and allow you to build your database, network and sell.

If you are offering home delivery of your products, then make it a great experience. Well trained delivery people who look smart.

Beautifully presented, well branded packages. A paper carry bag with your logo on it, containers that keep the food or drink warm or cold, little extras like pepper sachets, sauce, branded serviettes – even throw in a “Thanks for your order” card with an incentive for them to come back.

More tech for a better, safer experience During 2021, Australians moved online for many of their requirements, and the convenience they experienced has meant that there is still a focus on getting their information, as well as ordering, online.

Technology applications in the food and beverage industry are moving at light speed and your customers expect you to be offering them the benefits.

Whether it’s for takeaway, home-delivery, groceries or wine, people expect to peruse your offerings, know what it’s going to cost, order easily and pay securely. Collect their mobile number and set up a text to let them know when to pick up their order or when it will be delivered.

Tempt them. Show them what your food or drink looks like. Provide explanations of culinary terms that people may not understand or translations of menu items in other languages. Have photos of your venue – because you really do want to get them out of their home and into your premise.

Ask for feedback on their experience and if they were happy – ask them to post a review.

Let people know when you’ve got a new menu item, aquired a liquor licence, have changed your hours. Post photos of people enjoying your venue, ask questions on Facebook that get a conversation going.

Provide online menus with free wi-fi, and let people order and pay online. This will save your staff valuable time processing orders and settling bills, and therefore they can put that extra time to good use adding value to the experience. Use specials boards to highlight those menu items you want to move.

The return of tourism Tourists and mobile workforces play a great part in so many small businesses in this sector. A return of international travel may be a way off but people are travelling more domestically and across the Tasman. These

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Shape the hours you are open to maximise your trending times.

When is your local hub eating, drinking, shopping? Is there an opportunity to provide a service when no-one else is?

Experiment with different open hours and see what happens. Give the change a decent chance of proving itself but if it’s not working, stop the experiment – you don’t want dead time and dead wages.

Look at what is popular and what’s not ordered or left in the display cabinet. Work to keep your inventory lean. Stick to the basics but ensure you do them really well. Invest in the best and freshest ingredients to build an offering that is focused, manageable and great quality.

The next 12 months will be challenging for businesses in the food and drink sector. But it’s not all bad news. If you can be flexible in your thinking, engage meaningfully in your local community, keep your offerings fresh, have fun and be a fun place to experience, you’ll be giving yourself the best chance of thriving in this brave new world.

Corina Vucic is the Director of FC Business Solutions. With over 20 years in the franchise industry, and extensive operational and management experience, she works closely with leaders to take their business to the next level.

Whatever their goals, Corina coaches, mentors and supports business owners and executives to maximise success and minimise risk for long-term business prosperity and security.

To discuss how Corina’s expertise can help take your business to new heights, contact: 03 9533 0028 cv@fcbs.com.au www.fcbs.com.au