Business Franchise AUS & NZ Guide 10th edition by CGB Publishing

Your key to buying, managing and profiting from your own franchise

See inside for

FRANCHISES AVAILABLE Right now!

JOIN THE

DREAM TEAM We are looking for dynamic people who love dealing with others and are passionate about retailing. The Snooze brand has a strong history of over 40 years in retailing and has built a very solid franchise system. We provide franchise partners with a stable platform to start their business and offer support across the entire business including: • Marketing and Promotional Support • Business Management Support • Product Development and Buying Power • Proven operating system that includes comprehensive product and sales training • Assistance in site selection and property negotiations • Business finance available to approved applicants

Visit snooze.com.au or email franchising@snooze.com.au or call (03) 9830 4166

It’s amazing what a little snooze can do. snooze.com.au

WE ARE EXPANDING.

OPPORTUNITIES AVAILABLE Australia’s leading

hair and beauty brand.

The future looks bright for Hairhouse Warehouse, with careful product curation, outstanding professional services and stylish, contemporary brand positioning ensuring it’s the go-to place for good hair, wherever you are in Australia.

“By joining Hairhouse Warehouse, you not only become part of a recognised brand, but you also have a huge amount of resources at your disposal in the form of training, systems and support.

”

- Michael Godbee, Tamworth Franchisee

What you get: A proven profitable turnkey operation Support with leasing, store design and setup Induction program and ongoing training A full retail marketing program A strong team culture Exclusive stock of the world’s leading hair and beauty brands

For more information about franchising with Hairhouse Warehouse contact Peter Fiasco on 0451 370 060 or email franchising@hairhousewarehouse.com.au

hairhousefranchising.com.au

The Franchise Guide 2017 is published by CGB Publishing Pty Ltd PO Box 968 Mt Eliza VIC 3930 Australia Phone: 03 9787 8077 Fax: 03 9787 8499 *** The information and contents in this publication are believed by the publisher to be true, correct and accurate but no independent investigation has been undertaken. Accordingly, the publisher does not represent or warrant that the information and contents are true, correct or accurate and recommends that each reader seek appropriate professional advice, guidance and direction before acting or relying on all information contained herein. Opinions expressed in the articles contained in this publication are not necessarily those of the publisher. PUBLISHERâ&#x20AC;&#x2122;S SUGGESTED RETAIL PRICE $19.95 ÂŠ 2016 CGB Publishing Pty Ltd all rights reserved. ISBN 978-0-9803923-9-5

Contents Preface ................................................................................................................................................................................................ 1 CHAPTER 1: What is franchising?............................................................................................................. 3 Rod Young, DC Strategy Group CHAPTER 2: Are you suited to franchising?............................................................................11 Peter Fiasco CFE, Hairhouse Warehouse CHAPTER 3: What does Due Diligence really mean?.....................................................17 Elizabeth Gillam MBA, Franchisee Success CHAPTER 4: Funding your franchise..................................................................................................27 Ian Watt, Westpac CHAPTER 5: Understanding the documentATION...............................................................35 Bianca Sevastos & Marwan Kojok, Baybridge Lawyers CHAPTER 6: What you need to know before you buy..................................................45 Michael Purcell, MSI Taylor Business Services CHAPTER 7: What a Franchisee can expect from their Franchisor....53 Gavin Culmsee, Bedshed CHAPTER 8: Where should i locate my business?...................................................59 Peter Buckingham CFE, Spectrum Analysis CHAPTER 9: Marketing & Social Media for Franchisees........................................73 Katherine Grace, Elemental Solutions Marketing CHAPTER 10: HR Compliance: What you need to know.................................................81 HR Central Chapter 11: Growing the franchise....................................................................................................93

Tania Allen, Vision Alliance

CHAPTER 12: Franchising in Australia.......................................................................................... 103 The Franchise Council of Australia CHAPTER 13: Franchising in New Zealand. ............................................................................... 111 Rory MacDonald, MacDonald Lewis Law CHAPTER 14: How to franchise your business simply............................................. 119 Brian Keen, Franchise Simply Franchise Listings.................................................................................................................................................... 129 Professional Services Listings.............................................................................................................. 153 Publications...................................................................................................................................................................... 164 Helpful Organisations....................................................................................................................................... 165 Index. ............................................................................................................................................................................................ 166

Preface Joanne Tuffy | Editor CGB Publishing Pty Ltd

he aim of this publication is to give you a sound starting point to begin your franchising journey. With approximately 1600 systems to choose from, franchising offers ‘anybody and everybody’ the opportunity to own and operate a business. No matter what your work background or qualifications are, there is a franchise system available to suit your finances, family, skills and lifestyle. Franchising has helped realise the business dreams of tens of thousands of Australians and New Zealanders. With more franchising outlets per capita than the USA - the original home of franchising - Australasia is now known as the ‘franchising capital of the world’. Franchising is a multi-billion dollar industry in Australia and New Zealand, together adding more than $190 billion to our countries’ economies, providing employment for more than half a million Aussies and Kiwis! Originally all about food - with the cafe, restaurant and takeaway sectors continuing to evolve and expand - franchising has grown to include practically every type of product and service imaginable. Categories include automotive, beauty, business services, cleaning, clothing alterations, courier services, financial services, fitness and retail amongst many others. Franchising has many advantages over independent business ownership, because it allows franchisees to own their own business without being totally alone, and research has shown that franchises are more likely to succeed than independent businesses. This book is set out to assist new and potential franchisees as you proceed on your way to becoming a member of a very special community of business owners. We have included a wealth of information from leaders in the franchising industry – giving you professional insight on how to research, select, buy and successfully run your own franchise. We have asked franchisors, franchise lawyers, accountants and consultants to share with us their tips and tricks to achieving personal and financial stability. -1-

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Once you are convinced that a franchise system is the right move for you, we have a selection of the leading franchise systems currently available listed at the back of the book. Browse through the categories and see which systems interest you most. So, no matter where you are on your franchising journey, whether you are simply toying with the idea of business ownership or have made the decision already to become your own boss, this book will help you on your franchising path to success.

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Chapter 1

What is Franchising? Rod Young | Chairman DC Strategy Group

About the Author Rod has over 30 years’ experience in franchising, licensing and business development in Australia, Europe, China, South East Asia, India and the United States and is considered one of the world’s leading franchise consultants. He has been a key advisor to some of Australasia’s leading franchise groups. His business interests have also included roles as both a franchisee and franchisor. As well as his role of Chairman of the DC Strategy Group, he currently is the Executive Chairman and Global CEO of Cartridge World and serves on the Board of several national and international companies as well as on the Board of Governors of the ASEAN Franchise Association and the Indian Franchise Association. DC Strategy, the firm Rod founded, is the region’s premier endto-end franchise consulting, legal, franchise recruitment and brand and marketing firm, providing strategic advice and services to the franchise community. The specialist teams at DCS have been involved in developing many of the region’s most successful franchise networks

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ranchising is one of the most dynamic business development strategies of the 21st Century. It is based on a business format that allows an organisation to expand on a local, regional, national and global scale by using capital and more critically the operational day-to-day management and commitment provided by each franchisee to establish new locations in new suburbs, markets, regions or countries.

A good franchise is a successful business concept developed by the franchisor that grows into a multi-unit network through granting the rights to their intellectual property (IP) to operate one or more individual units to carefully screened and selected franchisees. The franchisor charges the franchisee an initial one-off franchise fee for the right to use the franchisor’s system, brand and trade mark in a defined territory. The franchisees in turn operate their businesses under the guidance of the franchisor who receives an ongoing royalty typically calculated as a percentage of sales. Buying access to the franchisor’s proven and profitable concept supported by training, systems, marketing, brand and often the franchisor’s product reduces the risk for franchisees running their own businesses. Franchising is all about harnessing the passion, the brand, the technology and the proven business format of the franchisor. In the right franchise system, franchisees that are properly trained and are self-motivated, committed and enthusiastic, win and keep customers in the local community and build a business that can be sold by the franchisee in the future reaping capital gain while earning wages and profits along the way.

BEFORE YOU BECOME A FRANCHISEE When I first got into franchising, someone told me to “just follow the system”. At the time I thought this sounded a little dry and too simple, but after 30 years of seeing franchises rise and fall, I now understand why this advice is so important. A strong franchise network has highly defined and proven systems of turning products and services into profit. This gives predictability to future sales and profitability and reduces the risk of failure. Quite simply, franchising is a science, not an art.

WHY BECOME A FRANCHISEE? Buying into the franchisor’s proven and profitable business systems, processes, products, supply chain, brand and marketing coupled with their induction, training and ongoing support provides substantial mitigation against the risk of failure compared with going into business alone. Good franchise systems provide not only the brand and business system but a complete process for running a successful business. -4-

What is franchising?

There is a large range of businesses to choose from at every price point, risk profile and return on invested capital (ROI). Industry revenue has increased by a modest average of four per cent per annum over the last few years but still outstripping the growth in inflation. The more successful franchised brands are growing much faster than the economy with some enjoying double digit growth in sales and/or profitability. Successful franchisees can also build larger business ‘empires’ within the franchisor’s network through multi-unit ownership, area development licenses and master franchises. Many have built significant wealth operating multimillion dollar enterprises under the franchise structure. And finally when franchisees look to sell their franchise, profitable franchises in thriving networks are easier to sell and command a higher price than independent businesses, as incoming candidates perceive the value of the established brand. They too look to reduce risk by buying into the franchisor’s proven systems, initial training and ongoing support, all of which translates into better valuation multiples and increased ‘goodwill’ value to the vendor franchisee.

DO YOUR HOMEWORK Buying a franchise is a big decision. Franchisees invest around seven years and a significant sum of money - much of it often borrowed - in a particular franchise system. With 1200 - 1400 different franchise offerings to choose from in Australia, how will you choose the right one for you? There are a range of commercial considerations in deciding first what kind of business you should buy and then later, whether the business you want to purchase meets your criteria.

Are they financially viable? The most important consideration is whether the business is a sound financial proposition. Ask yourself, does the financial data you’ve been given make sense? You will need some kind of business plan that includes a financial model, preferably a profit and loss statement (P&L) based on other franchisees’ and/or corporate store actual performance. Break the numbers down so that you know how many products or services you need to sell and how many clients you need to service per day and what would they have to spend on average to break even, after meeting all your overheads. If you don’t have the information, ask the franchisor for the average ticket price (ATP) or the number of clients they service each day. Also ask for the average unit volume (AUV) or turnover of a range of businesses in the -5-

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franchise network. This will allow you to see if the financial assumptions being put forward add up, and also whether the franchisor has a good understanding of their own business. It will also assist you to determine whether a site will generate enough revenue. If you are considering locating your franchise business in a retail shopping strip or shopping centre, you should visit at various times during the week as Thursday night’s activity would be very different to Sunday morning’s. Even the best franchise business concept won’t work if there is not enough passing foot traffic to make sufficient sales. This may mean sitting in a shopping centre and literally counting the number of people that walk past your intended site at different times of the day and on different days of the week. You will want to get a good understanding about the operating costs of the franchise as well. As a rule of thumb, rent should not be more than 10 to 15 per cent of sales depending on the type of business and retail location. Labour costs are a big factor in any business so if the cost of employment starts to exceed 30 per cent of sales and cost of goods sold pushes past 50 per cent of sales you can see that profits are going to be squeezed especially after the payment of a royalty.

WHEN FRANCHISEES FLOURISH Successful franchisees are those that understand that they are responsible for making a business profitable, not the franchisor. They are self-reliant and committed to the community they live in. They understand the ‘lifetime value’ of customers and are committed to keeping and winning customers for the life of the franchise. Franchisees must also be sufficiently capitalised or have sufficient capital to fully support the franchise that they’ve been granted during its establishment years. When a franchisee has the backing and support of their spouse or partner, they have the help and confidence to drive the business forward. They understand that family and business are inextricably entwined. A franchisee must be ambitious, with a view to building an income and an asset that can provide them with the lifestyle they’re looking for. Moreover, they understand that owning a business is hard work and will take long hours to ensure success.

NEVER ASSUME If you assume a franchise system will make you money, you’re unlikely to succeed. It’s the responsibility of the franchisee to follow the system of the -6-

What is franchising?

franchisor and faithfully apply process and procedures that have proven to be successful. Always remember that you or the franchisor may fail and you’ve got to be prepared to risk the assets that you’ve committed to the business. Every person that goes into business will be exposed to risk but being granted a franchise by a proven franchisor will lower the risk of failure in comparison to that of going into business independently. While a franchise will reduce the risk of failure, never assume a franchise will eliminate the risk of failure.

A FRANCHISE WILL CHANGE YOUR LIFE… AND YOUR LIFESTYLE Being your own boss has many attractions and the franchise business model can form the foundation of your success. Many prospective franchisees seek a business that has flexibility, requires little capital commitment, is highly profitable and can allow them to have the school holidays off with the family. Sounds too good to be true? It is. Most of these prospective franchisees are still searching. However, prospective franchisees who are prepared to commit their capital and assets to a franchise venture and who understand that the next three to five years requires a total change in the way they and their family live and work, have the best chance of success. They know that taking a medium term view to building wealth will result in a lifestyle in which they achieve their business goals first and then enjoy the fruits of their labour.

IT TAKES FAMILY COMMITMENT Do not be misled by franchise opportunities that promote lifestyle first. They seldom, if ever, prove to be profitable ventures and can turn your dream of independence into a self-employed nightmare. Going into business is a serious undertaking and requires hard work and long hours to ensure success. If you and your family are not prepared to make sacrifices then franchising is not for you. Many good franchises are both labour and capital intensive and the franchisee and his or her family need to understand that only a total commitment to the business will ensure success. Let’s consider the lifestyle decisions a typical family faces when they become a franchisee. A family that commits all their capital and assets to the business may have to put off the purchase of a new car, cancel the family holiday or delay plans to renovate the home. -7-

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I have seen many families sell their family home after deciding to go into business to ensure they have the capital to put equity into their franchise and be debt free. Some rent a home during the establishment period and some even move in with their parents to keep overheads down and enjoy the benefits of their parents as babysitters and carers. You can imagine how these commitments and pressures place demands on the whole extended family. Are you and your family up for the challenge? Most new businesses have a ramp up period where profits are low or nonexistent while the business slowly builds a customer base. This means the family may need to live on its savings and have no income from the business. This can put stress on a marriage and the whole family. Are your family behind you 110 per cent? Do they understand they will need to make sacrifices to support you in this new endeavour? If you have dependent children you need to consider the childcare and / or supervision options and how they will be juggled with the demands of a business which often has long hours over seven days. After school hours, late night shopping and weekends are often the most lucrative trading hours for a retail or food business. Increasingly, service businesses are required to meet customer needs outside standard nine to five working hours.

WARNING SIGNS Prospective franchisees should recognise a bad franchise system when they see one. Spend some time in the franchise you’re considering and ask yourself these questions: What’s the customer service like? What’s the staff experience like? Can you see yourself spending a significant part of your time there? How does the business perform operationally against peers in the same franchise network? What is the feedback from existing franchisees, do they enthusiastically endorse the franchise system and the support team? Or do they offer to sell you their franchise when you tell them that you are considering buying a franchise in their network? If the answers to any of these questions raise concerns, you need to keep searching.

WHEN FRANCHISEES FAIL Franchisees that fail are often found to have gone into business undercapitalised. They cut corners in following the franchisor system and have poor relationships with the franchisor or franchise support team. They’ve not been prepared to ask for advice or worse, they’re not prepared to take advice and have often changed or ignored the franchisor’s business format and system. These toxic -8-

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attitudes can lead to a situation in which a franchisee is in denial of their failings. They believe others are to blame for their poor performance and don’t take responsibility for how the business operates. Franchisees that fail to read customer preferences and opportunities to improve their offering, will struggle to compete with those that do. Though franchisors can provide overarching marketing support and technical innovation, it is important franchisees request and suggest improvements to their franchise support team. Many of the best innovations made at McDonald’s such as the fillet-o-fish, the playground and even Ronald McDonald himself, have come from franchisee feedback. The demise of the Eagle Boys pizza franchise highlights a failure of both franchisee and franchisor to keep their brand fresh and adapt their service to changing customer preferences. While their competitors like Domino’s and Crust have experienced steady profit gains through clever use of technology and strategic marketing, Eagle Boys oversaw a massive 61 per cent drop in patronage between 2012 and 2016. Why? They didn’t read customer sentiment and adapt their product and services to improve the customer experience. While Domino’s were championing new healthier ingredients, the Eagle Boys menu barely changed. While Domino’s customers were tracking their delivery driver’s progress on their phone, Eagle Boys customers waited in the dark. Franchisees must ensure the lines of communication to their franchise support team are open and productive to avoid stagnating profits.

TRENDING Franchising can be seen as a mirror of wider business growth and development. As business trends develop, franchising too has reflected the same trends with more businesses offering healthier food choices, health, fitness and beauty services and services for an aging population. Another trend is the rise in the use of technology, big data and digital systems being applied in franchising today more than ever before. Right now, we’re seeing growth in lifestyle and service businesses. People are eating out more, so quick service restaurants are reaping the rewards of catering to this growing market of discretionary spenders. Service industries, from cleaning and repairs through to professional services such as optometry, dentistry, physiotherapy and aged care will continue to grow with an aging, increasingly time-poor population. These growth franchises are following the geographic and demographic trends of the community. Successful franchisors will develop businesses that surf the waves of new markets that will develop to satisfy consumers of the future. -9-

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While it’s important to foresee and capitalise on market trends, it’s important from a franchisee perspective to be wary of new or unique business concepts. These businesses aren’t necessarily the next best thing. The real power of franchising can only be harnessed after proof of concept and acceptance in the marketplace has been clearly established. Business fads will emerge as markets are disrupted and some of them will be great ideas that will go on to become tomorrow’s big brands. But you have to ask yourself; “Is the concept truly proven?” Because if it is not, the core element that makes franchising a relatively low risk way of getting into business is lost and your risk is the same as any new startup. Think scoop sweet shops or cupcake stores!

FINAL WORD Buying a franchise is not a passive investment. It requires a hands-on franchisee putting in long hours. The success of franchising is the combination of a proven and profitable business system with good products, services, branding and marketing and a motivated and committed owner-operator who just follows the system. From this solid foundation, a franchisee becomes a brand ambassador in his or her local community, hiring, training and nurturing local employees and winning and keeping new consumers every day.

Rod Young Chairman DC Strategy Group 02 8220 8711 www.dcstrategy.com

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Chapter 2

Are you suited to Franchising? Peter Fiasco CFE | Franchise Development Manager Hairhouse Warehouse

About the Author Peter has more than 20 yearsâ&#x20AC;&#x2122; experience in franchising and has worked at both franchisor and franchisee level. He has worked in several senior management positions with several brands in Australia both within franchising and in corporate brands. He is often asked to contribute franchise articles in the business media, and is asked to present on franchising at business expos and at industry conferences. He is also a long standing franchisor representative on the Victorian chapter of the Franchise Council of Australia, contributing to the improvement of membership participation in the industry and industry engagement. Peter has completed several studies, including the Diploma of Business (Franchising) and has recently completed overseas studies to become a member of the Institute of Certified Franchise Executives, an international body recognising the professionalism of franchising specialists.

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10 Key Questions to Ask Yourself... Visit almost any place in Australia today and on many streets you will find franchised businesses. One of the reasons that many franchises have been so successful is that, in franchising, a business synergy is created. Franchisees that are brought together under one trademark can achieve things that as individual business people, they could not do. Group advertising, buying power, a common purpose, and the sharing of ideas are some examples of what can happen. I remember sitting in a café a couple of years ago overhearing a conversation that two couples were having. The first couple were talking, telling the other that he had been made redundant from his work. When he was asked by the other couple what was he thinking of doing, the response came quickly, “Thinking I might buy a franchise business. At least it will guarantee me to make money!” Of course, my ears pricked up and it was a real life example to me of the misconception that people have of owning a franchise business. While there are many examples of successful franchises, buying a franchise is no guarantee of success. Statistically, there is a higher rate of success in a franchise than a start-up business. However, before buying a franchise, there are 10 important questions you need to carefully and thoughtfully answer:

1 Are you willing and able to take on the responsibilities of managing your own business?

Some very careful self-analysis is important before buying a franchise. Indeed, your personal house should be in good order. One of the myths that has been perpetuated is that franchise ownership is easy. This is just simply not true! While the franchise system will give the start-up training and offer ongoing support, you, the franchisee, must be prepared to manage the business. This is your business after all. While some franchises may lend themselves to absentee ownership, most are best run by hands-on management. You must be willing to work harder than you have perhaps ever worked before. Forty-hour weeks are also a myth, particularly in the start-up phase of the business. It is more like 60-to-70-hour weeks. You must also be willing to mop floors, empty trash, fire as well as hire employees and deal with upset customers. The buck stops with you.

2 Will you enjoy the franchise?

Sometimes people buy a franchise they think will make them a lot of money, only to find later they do not enjoy the business. The adage, “know thyself” certainly applies here. You should buy a franchise that centres in - 12 -

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an area that you will enjoy for the next 10-15 years. Sometimes having a particular skill, does not mean that you will run a successful business in that field. For example, if you are a hairdresser that enjoys cutting hair it may not mean that buying a hairdressing franchise is right for you. As a business owner, you will be expected to operate your business in a handson way, however, more importantly is how you lead and coach the team around you to achieve results.

Determine your interests and types of businesses you might really enjoy.

3 Are you willing to completely follow the franchise system?

The very key to franchising success is the consistency of product and service customers find from one franchise to another. When you display the sign and logo of a franchise, you are indicating to customers that you follow a particular system. People who are extremely entrepreneurial - in the sense that they do not like to conform to a predetermined formula should be very careful about buying a franchise. Having an entrepreneurial spirit is great, however, you have to be willing to follow the system that you have bought into, even if sometimes you may not like it.

4 Do you have a history of success in dealing and interacting with people?

Many franchised businesses are based on people relations. Your ability to interact well with your franchisor, other franchisees, your employees and your customers cannot be emphasised enough. A negative, critical franchise owner can be a detriment to the entire franchise system. You must have a track record of good relationships with employers, supervisors and fellow employees. This will put you in a good position to lead a team and to build good relationships with all key stakeholders.

5 Can you afford the franchise?

One of the major causes of business failure is under capitalisation. While the franchisor will be able to give you a good idea of the start-up costs, sometimes these will vary due to leasehold improvement needs and other valuables. You will need enough money to not only open your franchise, but to run it until such a time as it is profitable. For some franchises, that may take a year. Remember, it is better to start out with more money than you think you will need rather than less.

You should not expect the business to be profitable from day one. If this occurs however, it is a bonus. - 13 -

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6 Are you open to learning? Are you willing to learn new things?

A franchise system will train you in the way to operate the business. Ask yourself, are you willing to re-learn what you may have learnt in previous roles and experience? What this means is are you willing to leave behind your predetermined perceptions and learn new ways to do things, even if you have known the methods from previous experience. It is important that your previous experience does not get in the way of learning how to operate the franchisor’s business under their system.

Previous experience is extremely valuable, but not when it blocks you from using the franchisor’s system to its maximum possibility to operate a successful business. So it’s important to be able to unlearn what you may have learnt to become a best possible franchise operator in your system/ brand.

7 Are you open to change, innovation and evolving with the business model?

Generally, franchisors will always be looking at ways to improve the franchise model. This is often a positive thing for franchisees. In fact, this is one of the reasons to join a franchise system in the first place. However, franchisees can be closed to change and this can cause tension between a franchisee and the franchisor, as well as possibly having a negative impact on the business of the franchisee. It’s important to understand that the franchisor will evolve the brand for the collective good, and it’s important that you look at how this change has the ability to improve your business.

Do you have the ability to take on new initiatives and continuously evolve your business as required to keep growing your business within the franchise model?

8 Are you going to be open, transparent and willingly take on the advice provided by the franchisor staff who are there to support you?

Franchise systems will have a support system structured around assisting franchisees grow their business. Are you truly open to receiving that support? Are you open to taking on their suggestions? Are you comfortable with openly sharing your business information with the support team of the franchisor and really implementing improvement suggestions? Are you open to being self-critical in analysing the performance of your business?

If you think you will be closed off to this, you may find that a franchise - 14 -

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system may not suit you. In a franchise business, it is critical to be open and transparent with your financials and the performance of the business, and just as importantly, being able to look inward in your business with the support team to really find where those opportunities are to improve your business, no matter how small the opportunity for improvement is.

9 Do you like the franchisor’s staff — those people with whom you will be working?

One of the most important elements of a franchise is the ongoing support and contact you will have with the franchisor. For this reason, you should feel comfortable with the people you will interact with for a number of years.

The people that work for the franchisor is also a reflection of the culture within the franchise. Does this culture fit in with you?

When you are meeting with any team from the franchisor, get a feel of the people that you meet. You can tell a lot about the culture from this interaction. Do you see yourself working with these people into the future and see that they will be able to support you and your business?

10 Do you have a support system?

Managing a franchise is a full time job. It requires great sacrifices of personal and family time. For this reason, your friends and family should understand that you will have tremendous demands on your time. Look around you. Do you have that support around you? Does your spouse/ partner understand what it will take of you to make this business successful and are they supportive of this? What happens if you can’t pick up the kids because you’re caught up in the business? Studies have shown that people that have a strong family structure are more likely to operate a successful business than those people that don’t. Therefore, think about what you may have to give up, particularly in the early stages of running your business to ensure that you succeed, and determine if you are ready for it and set up for it. Support around you is extremely important to the success of your business.

Summary Owning a business is not for everyone, and owning a franchise business in particular is less suitable to some people. Having a business puts a huge amount of constraints on you as well as the pressure to perform, particularly in the early stages of the business. A good operator that is able to answer these questions - 15 -

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will be far more likely to succeed. When you look at franchising, it is often misunderstood and there is a misconception that it is a sure thing to succeed. It is not. It still takes hard work and dedication, but the advantage you have with franchising, is that you have a brand behind you and a team from the franchisor to support you in the building and ongoing success of your business.

Peter Fiasco CFE Franchise Development Manager Hairhouse Warehouse 03 9234 2200 peterf@hairhousewarehouse.com.au www.hairhousefranchising.com.au

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Chapter 3

What does Due Diligence really mean? Elizabeth Gillam MBA | Founder Franchisee Success

About the Author Award winning business owner, mentor and author, Elizabeth Gillam MBA, is the founder of Franchisee Success. Elizabeth is known as the franchise growth coach and specialises in creating high performance franchisees. Given her experience running three award winning, multi-branded franchised businesses, Boost Juice, Healthy Habits and Bucking Bull, she knows that there are three common problems that face franchisees. Little time, little money and a clueless team that just does not do what you want. She also knows that all these problems are avoidable if the franchisee undertakes extensive due diligence prior to entering the franchise agreement. Elizabeth is a regular commentator on franchising from the franchisees perspective; she bats for the franchisee and is their avid cheerleader to all stakeholders in the franchising industry. Elizabeth has written this chapter to help the future franchisee take the first tentative steps into the â&#x20AC;&#x2DC;Due Diligenceâ&#x20AC;&#x2122; process.

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nder the Franchising Code of Conduct, it is a requirement that the potential new franchisee be given 14 days to conduct due diligence. All too often I see franchisees in turmoil and 99 times out of 100 it is because either they did not do enough due diligence or they waived their right to do any due diligence at all. They took all the sizzle sold to them by either the franchisor or the franchise broker as gospel and entered the agreement in good faith - expecting the franchisor to look after them. Recent research conducted by Professor Lorelle Frazer of the Asia Pacific Centre for Franchising Excellence housed at Griffith University showed that two-thirds of all franchisees did not consult a Lawyer, Accountant or Business advisor before signing their franchise agreement. Please do not be this person. Further research showed that the success of the franchisee was directly related to the amount of due diligence they undertook before signing the franchise agreement. Please be this person. As a cheerleader for the franchisee and with 16 years in the franchise industry, 11 of those as a franchisee, I have developed a nine step method that each and every potential franchisee should do before they sign the dotted line.

But before we beginâ&#x20AC;Ś.What is Due Diligence? According to Google it is â&#x20AC;&#x153;a comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.â&#x20AC;? Sounds easy enough, but how does this relate to franchising? The trick to doing due diligence in franchising is that there are three main areas you have to complete due diligence on: 1. Yourself 2. The franchisor 3. The business unit on offer. Traditionally in small business there are only two, the business and yourself. People often buy a franchise thinking there is security in buying a proven business model with franchisor support, but sometimes this is their very first mistake.

Due Diligence in the Franchise world Understand the buying timeline As franchising is under the Franchising Code of Conduct administered by the ACCC there is a strict process and timeline that the franchisor must follow. - 18 -

What Does Due Diligence Really Mean?

As a potential franchisee it is imperative that you know and understand this process. Basically there are four steps, but I have added an extra step for the franchisee. Step 1 â&#x20AC;&#x201C; Make a serious enquiry and receive an information pack. There are many franchise systems that you may already be interested in or you have found that are about to open in your area. You want to be sure that you get the right opportunity for you. It is recommended that you apply to many of these franchises because each has a different model; each has a different profitability level; each has different set up and branding; and each franchisor will be prepared to make a different deal. You want to find the best opportunity for you! Where do you find these opportunities? Simple! Start your search on the web. Open Google and search for What franchise opportunities are there in (your town/area). Without a doubt you will have pages of opportunities in front of you. There is just not your local broker. Once you find an opportunity that excites you, make a serious enquiry to both the broker and the franchisor and receive an information pack. Step 2 â&#x20AC;&#x201C; Apply to the franchisor; pay a fully refundable deposit and sign a confidentiality contract to receive detailed information so that you can commence your Due Diligence. Once you have applied you should expect to receive: 1. The current Disclosure Document from the franchisor; 2. A draft Franchise Agreement in the format that your Franchise Agreement will be in; 3. The ACCC Code of Conduct; 4. A Franchise Information Statement (if you have not already received this); and 5. You may also receive either:a. A letter of offer outlining lease details etc if this is a new opportunity; OR b. A compendium of information from the broker if the opportunity is an existing store or business. Step 3 â&#x20AC;&#x201C; Due Diligence. You now have a 14 day minimum period to conduct your Due Diligence. You can take far longer than 14 days and I recommend that you do. You need to - 19 -

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seek advice in this period from your Lawyer and Accountant. You need to prepare business plans and budgets. You may even have an experience day in store with the franchisor during this period to be sure that you like working in the system. You need to ask questions of your franchisor and existing and past franchisees of the system. Step 4 â&#x20AC;&#x201C; Negotiate, negotiate, negotiate. This is your very last chance to refine the agreement you are entering into. You will have prepared budgets etc therefore you will know the profitability to expect; negotiate any areas you are unsure of. Once you have signed the agreements it is too late. Be sure that the business case on offer to you meets your needs, if not, negotiate until it does. Step 5 - Sign the franchise agreement and pay a non-refundable deposit. You now have a further 7-day cooling off period before the agreement becomes binding. Make the most of this time to be absolutely sure that you have made the right decision. So as you can see this chapter is really only about step three in the whole buying process, so lets get started

Due Diligence Step 1 â&#x20AC;&#x201C; You It takes quite a unique person to be a franchisee; you have to be both a leader and a follower. Whilst you are required to operate and lead your own business unit and lead a team of employees, you also have to be a follower of systems and processes that your franchisor has put in place. Theoretically you have to be both an Entrepreneur and an Employee (of the franchisor). This is where you have to ask yourself a list of questions to ascertain if you can indeed be a franchisee:1. Are you okay with being told what to do and how to do it? Can you follow instruction? Do you stick to the rules? 2. Do you think you have, or can establish, a good relationship with the franchisor? Remember that your success is their success, so developing a good working relationship with the franchisor is beneficial for both of you. 3. Do you need any particular skill or license to run this franchise? Are you confident that you can obtain this skill or license? 4. Will you enjoy the work? Ask to have an experience day at a company store. Are there any expectations that the franchisor has of you that you feel uncomfortable with? E.g. networking or marketing. - 20 -

What Does Due Diligence Really Mean?

5. Do you have the knowledge on how to own and operate a business? Sure, the franchisor will offer training but this is generally in the operation of the business, their systems and processes. The franchisor will expect you to have general business skills. Do a brief skills audit on yourself so that you know what skills you need to outsource and what you are capable of handling yourself. 6. What hours do you want to work in the business? Will this suit the opportunity you are purchasing? The number one complaint of franchisees is that they are spending too much time in their business. Ascertain how many hours you will be required to work in this business.

7. Are there any restrictions in the Franchise Agreement about you operating any other businesses, either now or in the future, and are you okay with this? 8. Do you have a support group of family, friends and colleagues – there will be times when you will have to rely on them if you are in business. Step 2 – The Franchisor It is imperative that you are happy with your franchisor. You are entering a long term agreement with them and regardless of whether the relationship is running smoothly or not you are required, by law, to stick to the franchise agreement you will eventually sign. Therefore you must have an in-depth knowledge of your franchisor and how they operate. Again I will give you ten quick questions to consider and ultimately ask your franchisor. It is also a must that at this point you speak with other franchisees in the system you are considering so that you know that what the franchisor says he does is in fact a reality of the relationship. • Day to Day operations

The success of any franchise system is in the actual system - how detailed is it and does it cover all operations? This is where the majority of franchisee disappointment comes from. Ask: How detailed is the operations manual? Ask both the franchisor and franchisees in the system. • Training

As you purchase your franchise there will be an incoming training programme, Ask: How much does it cost, how long is it, what does it cover and where do you have to go to undertake the training? Does the training continue throughout the term of the franchise agreement and if so how is it delivered? • Experience Day

The closest you will ever get to completing an in-depth inspection of the business model is when you are working in it. A minority of franchisors suggest you do an experience day in-store. This is so they can get an idea - 21 -

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if you are a fit for their brand. I recommend that you ask any franchisor that you are considering working with - Can I have an experience day working in store? • Point of Sale

There are many point of sale systems in the market, some can help your business and some can hinder its operation. Ask: What Point of Sale system do you operate? How easy is it to operate and what reporting does it offer? • Intellectual Property

Be sure that the system you are buying into cannot be copied or reproduced leaving you with an undervalued asset. Ask: What trademarks and patents does this franchise hold? • Sites and territories

Be sure that you have a secure territory to operate in; you do not want another franchisee setting up in competition with you close by. Ask the franchisor: What territory and/or sites am I allowed to operate and expand within? • Disclosure Document

The disclosure document holds information that will affect the success of your business. Be sure you know all of the contents and areas in this document that could affect how you operate your business unit. Ask your Lawyer to thoroughly research this document and advise of any areas that may cause you undue stress, such as store fitouts due to rebranding and/or new equipment requirements due to a product refresh. • Equipment

Know what you have to purchase and what is needed to run your business. Does the purchase price accurately reflect the cost of these items? Ask: Can I have a fully costed equipment listing? • Fees

Compare what you have to pay for running the system. Ask: What are the royalties, franchise fees, system fees and any other regular monthly contract costs e.g.: online training system, Point of Sale maintenance fees and technology contract fees? • Profitability

The most important reason to be considering a franchise or any business for that matter is for the profit. Ask: What are the expected profit margins? There will be expected costings detailed in the disclosure document but they will be very broad. Perhaps this question is better asked of an existing franchisee in the system. - 22 -

What Does Due Diligence Really Mean?

So really there are more than ten questions here, but remember the only silly question is the one you don’t ask. You can never be too informed when buying into a franchise system. Step 3 – The business unit on offer This step is often the only one that potential franchisees do. It is important that you take your time doing this step.

The money questions I asked many questions of the franchisor when I started my first franchised business but if I had my time all over again I would definitely ask these four money questions to ensure that my first year wasn’t so stressful. 1. What operating capital will I need until the profit starts to roll in?

I had prepared my initial budget that covered fit-out and equipment and all fees including the franchise fee, design fee and the rental guarantee. I had incorporated money for the opening marketing spend and wages for the training of staff. What I hadn’t budgeted for was the expense of the marketing redemptions, the cost of goods for the product and the extra staff required to make the product. I had budgeted for a wage for myself, but really could not pay this from day one because there were so many other expenses to pay; the upfront payments for stock, insurances, IT support, gas and electricity bonds, local government licences and bank set up fees for example. There were extra staff uniforms and small plant and equipment to buy that were not included in the initial start up pack. I thought I had budgeted for everything but in reality I had not. Ask other franchisees in the system about their cashflow in the first few months. 2. How long until the business should be breaking even?

I naively thought that as from day one I would be banking money so therefore I would be profitable. Not so, whilst I was operating within the franchise guidelines I was at the higher end of the guidelines. It took me six months to refine and lower my key performance indicators to a profitable level. After all, you are learning a whole new business and training staff in a whole new process; starting a greenfield business comes with a lot of required training and training costs money. Now when I open a business I know the exact amount of sales I have to make from the very first day to break even. 3. How much extra cash will I need until the store breaks even?

This is probably a question for your Accountant or Business Advisor. Do an accurate analysis of how much it is costing you to live each month. Include school fees; car payments; the rent payments; entertainment; the lot. Work out your monthly spend and how much you will need until your store breaks - 23 -

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even. Add a few extra months than you think you need to be safe. This will reduce the stress of meeting your day-to-day living expenses whilst you are focussing on making your business profitable. 4. What financing options exist and how much money do I have access to? There are four main ways that people fund the purchase of their franchise. • Cash • Equity in assets • Access to franchisors accredited lenders • Or a combination of all of the above. Now you should be able to go away and prepare your budget and business plan for your first year in business. It is also important that you know your breakeven point and have a listing of your actual purchase cost which is more than the stated purchase price as it includes your upfront costs such as insurance, security deposits, legal banking and accounting set up fees, start up stock and cash floats.

Staffing Requirements Employee management is one of the most frustrating and time-consuming parts of your franchised business. Being an employer requires you to adhere to workplace legislation. It is quite in-depth and the onus is always on the employer to get it right. The penalties are staggering. Here are ten ways that the franchisor helps you, the franchisee, to be an employer. During your due diligence be sure that your franchisor has these processes in place and that you are able to implement them in your business. 1. Employee Induction Process – Inducting employees into your business is a process that is very detailed and required by law. Current workplace legislation clearly defines what must happen when you induct an employee. Your franchisor will have this process all systemised for you. All you have to do is implement it – Gold! 2. Position Descriptions – The franchisor has taken the time to prepare all necessary position descriptions so that all you have to do is use them. 3. Employee Handbook – An important part of an induction process is the Employee Handbook. This handbook contains all the information that any employee has to know. It will also cover all legislative requirements and your franchisor will update it regularly to ensure it complies with legislation. - 24 -

What Does Due Diligence Really Mean?

4. Online Training – Training your employees is a very time consuming and essential part of a franchisee’s job. In this day and age there are many online programs that franchisors use. It may even be their very own You Tube channel that you have access to. Perhaps there is a monthly fee but believe me it is cheaper than implementing your very own training system that records all your employees training. 5. Team Leadership Training – Most franchised businesses use a leadership team to manage the business. Your franchisor will run regular programs to train these team leaders. They may even have their own in-house RTO that will give your team leaders recognised qualifications. 6. HR Lawyer – Access to a HR Lawyer is a perk of being in a franchise system. Not all, but most franchise systems have an in-house HR lawyer. If they don’t, they will almost certainly have a partnership agreement with an authority such as the National Retailers Association. Either way, as a franchisee, you should be able to access some form of HR advice quickly and easily. 7. OH & S Policy – This is a basic policy but a very necessary policy that every employer must have. This policy should be referred to in the Employee Handbook. This policy does have to be personalised to your particular site with your contact numbers and site details but at least you don’t have to create this policy from scratch. 8. Uniform Policy – Again this policy will be referred to in the Employee Handbook. All you will have to do is implement and monitor it. 9. Employee Resources – Most franchise systems require the franchisee and their employees to wear a recognised uniform and perhaps safety gear. Therefore all you, as a franchisee, have to do is order it. All the selection and manufacture of these uniforms are handled by your franchisor and boy oh boy does this save you some time. 10. Rostering – Every system that I have worked in will have a base roster template that you can use. It should be able to cost out your labour expense; identify your sales per labour hour; productivity KPI and show you the ideal staff placement to cover your ‘hours of power’. It is even better if your franchisor has invested in an online programme that does all this for you.

The Questions for the Professionals Once you have your budget and business plan incorporating your break even and staffing costs, it is off to the professionals to get their take on this business you are purchasing. I cannot stress enough here how important it is to use professionals who have real franchise experience, particularly experience in - 25 -

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working with franchisees. I have seen many deals that have gone through that shouldnâ&#x20AC;&#x2122;t have because the professionals used did not fully understand the intricate details of franchising. Lawyer

The most important reason for consulting your lawyer is to be sure that both the Disclosure Document and the Franchise Agreement are a true representation of what has been told to you. Your lawyer will go through both documents and draw your attention to areas that may cause your business unit distress. Your lawyer will also go through the lease, license to operate and suggest the best way to set up your companies to protect yourself and your assets. Accountant

Your accountant is the person who will go over your budget and business plan in depth to reassure you that the business is profitable and a wise investment. You should also discuss your personal skills audit with your accountant and they may be able to recommend someone to be in your support team like a bookkeeper, finance broker and a business coach, they may even offer these services in-house. Your accountant will set up your companies if your lawyer hasnâ&#x20AC;&#x2122;t already done so. Finance Broker

After you have visited both your accountant and lawyer you will know if this franchise purchase is for you. Using a broker, particularly a franchise broker, will ensure that you get the best lending package for your particular business. This broker will deal with any pre-approved lenders, but have your best interests at heart. Before you visit this broker you need to have done a full analysis on what this franchise is going to really cost you, not just the purchase price. So now you know what Due Diligence is and how to do it. Research shows that your success is dependent upon doing it right. Enjoy the process. Ask many questions, after all, the only silly question is the one you donâ&#x20AC;&#x2122;t ask. You are risking much when you enter a franchise agreement, be sure your investment is a wise one.

Elizabeth Gillam Founder Franchisee Success 1300 159 117 elizabeth@franchiseesuccess.com.au www.franchiseesuccess.com.au

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Chapter 4

FUNDING YOUR FRANCHISE Ian Watt | Senior Business Development Manager - Franchising Westpac Banking Corporation

About the Author Ian Watt is the NSW Business Development Manager for Franchising at Westpac. With over 25 yearsâ&#x20AC;&#x2122; experience in Banking & Finance in Retail and Commercial Banking, Ian holds a Bachelor of Business and Diploma in Franchising, with over 10 yearsâ&#x20AC;&#x2122; experience working in industry specialisation and the franchising sector. Westpac Franchising works with over 50 national franchise brands and their state based franchise specialists drive local strategy as well as manage the training and development of their specialist local bankers. Ian is also responsible for monitoring the Bankâ&#x20AC;&#x2122;s franchise banking portfolio and the ongoing approval and reviews of accreditation requests. Westpac is well regarded in the franchise sector and has built a solid reputation through its support and commitment to franchise brands over many years. Supported by the National Industry Head of Franchising, spread across their network nationally is a team of Specialist Franchise Relationship Managers who take up the responsibility of the day to day management and support of their franchise partners.

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WHAT YOU SHOULD PREPARE BEFORE YOU ASK FOR A LOAN Going to a bank and making a loan application for finance to purchase or set up a business can be very daunting. Some say this is one of the most stressful things you will do in your life. This doesn’t need to be the case as this stress can be reduced by some pre meeting preparation and research.

RESEARCH YOUR BANK Choose a bank which has expertise in your industry and will provide the range of financial products and services you will require. Do they have specialists in your business segment, such as franchise finance? Do they have a banker you can meet face to face or will you be directed to a call centre? Your application and the quality of advice you receive will be improved by some preparation. They say in real estate, ‘Location, Location, Location’. In business, this mantra can be replaced by, ‘Prepare, Prepare, Prepare’. This view is true irrespective of the amount of money you are looking to invest in the business purchase. Mobile businesses, for example, while at the lower end of the cost spectrum, still have the potential of losing a lot of money if the purchaser gets it wrong. Potentially you can lose not only your initial investment but you will also be liable for any losses you may accumulate. Before making that all important appointment to see your banker spend some time to prepare.

UNDERSTAND YOUR FINANCIAL CAPACITY Your banker will need to assess your financial capacity. Write down a list of all your assets (what you own) and your liabilities (what you owe). Don’t forget balances in your superannuation funds and limits on your credit cards. Also include a list of your income and fixed outgoings (loan repayments, credit card payments, private school fees). You should include dividends from shares, rent from investment properties and external income from part-time work. Bring a copy of your personal tax returns for the past three years and bank statements for your bank accounts. The banker will look towards securing your loans against your house or other property and in some cases the business itself. This may require a re-finance of loans if they are with another lender. - 28 -

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PREPARE A BUSINESS PLAN One of the main reasons many businesses (including franchises) fail is because they either do not undertake enough planning before they start or they do not maintain a solid planning-review process as their business grows and matures. It is vital for the survival of your franchise to take the time to develop your business plan. This should outline your goals, your strategies, your prospects and also the method by which you will achieve these. Each business should have its own unique plan. While it’s good (and often much easier) to work from a template, start out the right way by making sure that you delete any headings which do not specifically apply to your individual business. Don’t consider this as homework but instead as a serious analysis of how your franchise business will work. Your plan will not only help you test your ideas, but decide on strategies to reach your goals. It’s all about quality. Your business plan doesn’t need to be as long as War and Peace. In fact, the more concise but straight to the point it is the better it is likely to be. A five page document can be sufficient if it’s five pages of solid content and strategy. You do need to make sure that you cover all areas of your business and that your plan is manageable and contains enough flexibility to be revised as conditions in and around your business change. Your plan should reflect your business life cycle - whether you are starting up, supporting a business loan application or providing ongoing management. A business plan prepared to accompany a bank loan application should show the loan requirements, describe how the borrowed money will be used, list what collateral will be provided and propose the repayment plan. Your business plan is your roadmap to success. It needs to be fluid and flexible and it needs to be reviewed and revised at regular intervals throughout the business year. If at any time you are forced to diverge from your strategy, your business plan will help you find your way back to more familiar ground.

SUGGESTED STRUCTURE FOR YOUR BUSINESS PLAN The Executive Summary: This should be a summary of the highlights and main points of your plan. Write this last.

About the Business: This section should include detail about the location you will be operating from, the history of the franchise systems, facilities and equipment you will be - 29 -

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using; as well as the legal structure, set-up costs, funding and insurances you will choose. This section paints a picture of your business and describes the legal entity and ownership structure, as well as giving an overview of start-up costs and initial funding.

Industry and Market Analysis: Here you want to describe the products or services you offer. Make sure you emphasise why buyers will purchase those things, and what benefits they will receive by doing so. Show how much it costs to deliver what youâ&#x20AC;&#x2122;re selling. You should also review current trends in the wider industry or sector, and assess your competition.

Strategies: Here you need to document your overall mission strategy, objectives and milestones. You can also include your marketing strategy, outlining any plans for advertising and promotions as well as a sales forecast and the cost of sales. Itâ&#x20AC;&#x2122;s a good idea to also detail your distribution method/s and plans for growth. You should also describe the target market and segment you will be focusing on, including market demographics, market growth, trends and forecast. Finally, describe the nature of your industry and sector as well as your competition, and refine your milestones with dates, budgets and specific responsibilities.

Management Structure: Outline staff positions, costs, facilities, and also include an organisation chart. You should identify and describe the key members of your team, list management-team gaps (if any) and show how they will be addressed.

Financials: Here you must include a financial plan and needs summary. Other components of this section should include sales forecasts, assumptions, annual income expenditure, a profit-and-loss statement (P&L), a cash flow statement and a balance sheet.

Information Systems and Controls: This is a summary outlining the operational aspects of your business. Here you should define the systems, processes and controls which have (or will be) put in place. Also, identify any gaps and plans for the future.

SWOT analysis: This helps you define your strengths (for example reputation, latest technology, good location), your weaknesses (lack of experience; difficulty finding staff, - 30 -

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high overheads), any opportunities (local market growing fast, an unfilled niche in market, the possibility of a joint venture) and threats (a competitor opening up, over-reliant on one supplier, raw-material costs rising).

Exit Strategy: Knowing how and when to exit your business is as important as knowing how to start it. Many owners build their business to sell when the time is right. If this is your strategy, make sure that you understand how to do this. There are many books available which explain the details; alternatively you can speak with your accountant, solicitor or bank.

GET ADVICE Speak to your business advisors, business accountant and lawyer. These advisors are able to recommend business structures, tax planning, GST obligations and book keeping. They can also assess leases and agreements, etc. Time and money spent at this stage will ensure the proper processes are put in place and legal obligations are understood. Most state governments provide a free or low cost service to assist people get into business. There may be some training programs available. Look at any weaknesses you may have and put a plan in place to develop yourself. Few people will have all of the required skills up front. Learning is a continuous process for all business owners. When speaking to family and friends, ensure you are getting a balanced view. Like with all things in life others will have their own opinions and bias when giving their views.

Prepare cash flow projections Of all the reasons as to why businesses fail, insufficient cash flow is one of the most common. Often this is not due to the lack of actual business or the amount of sales being made but the mismanagement of the funds available. Every business has its differences, but the core principles are the same. Cash is the lifeblood of your business. Without proper cash flow management and planning your business will die.

The difference between profit and cash It is important to understand that profit and cash flow are two different things. Many operators will tell you that it is possible for a business to generate strong profits but collapse because they have run out of cash. The easiest way to explain this is to imagine a business whose profit and loss statement showed that last year they made a profit of $50,000. What the profit and loss statement - 31 -

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doesn’t show is that for the first eleven months of the year this business was strapped for cash and nearly went under as they only made enough sales to cover their costs. In the last month of the year they made a couple of large sales and this is what resulted in the annual profit of $50,000. Profit is the result of trade over a given period; cash flow is required to keep the business in operation by covering day to day expenses. This is why it is important to manage and understand how cash flows through your business.

What is a cash flow budget? A cash flow budget simply records the amount of money that you expect to flow in and out of your business over a given time frame. It is a financial tool that will help predict the availability of cash in a business at any given time. Income and expenses are calculated monthly to help plan for any future short falls in cash.

How to construct a cash flow budget A cash flow budget is based around a series of assumptions about the expected performance of the business in the future. These assumptions need to be realistic and supported by the most accurate data you have available. If you have access to previous trading results then the best place to start is last year’s sales and expense records. Allocate these results into similar months that they occurred last year unless you know they will change in the future. You may want to increase sales to account for more growth or you may know that you made an unexpected sale/expense in a particular month last year that was a one off. You could be looking at introducing a new product line or service, looking to buy a new piece of equipment or employ another person. These will all have an impact on the cash flow budget and are the type of things you should account for so that you can forecast as accurate a picture as possible. If you plan to use the information on your profit and loss statement understand that these have been prepared for tax purposes and will account for non-cash payments such as depreciation. This shouldn’t be included in a cash flow budget as you don’t physically make a payment for these things. If the business is new, then you will need to base your assumptions on research, market expectations, contracts held, known expenses such as rent, or compare with other similar business results. The more information you can build into the picture the stronger the tool will be. Some will say it is a good idea to have three cash flow budgets that account for the best, most likely and worst case scenario. Computer spreadsheets allow you to quickly adjust scenarios and as you receive your actual figures for each month it is important that you fill these in so that you have an up to date - 32 -

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position of the business. This will allow you to react as quickly as possible to any changes that may be required. Based on this, the cash flow forecast should be a living document and not filed away and forgotten about. Used properly it is one of the most important business indicators and planning tools you can have. Many people in business will have their accountant prepare their cash flow budget for them. There is nothing wrong with doing this as long as you, the business owner, understand the information that your accountant has prepared. If you don’t understand the assumptions that your accountant has put into the cash flow budget, then you won’t be able to use it as an effective tool. Why would you pay to have it done if you are not going use it and just file it away?

RESEARCH THE OPPORTUNITY As outlined in this article, research will assist you to understand the business you are looking at purchasing. Spend time with the vendor, and in the case of a franchise, speak to as many other franchisees as possible, including some who have left the system. This process will provide a well-rounded and realistic view of the business. There is no such thing as a perfect business. Involve the franchisor at an early stage. Franchising is like a marriage and all parties need to build a sound professional relationship. Look at the industry and how it is being impacted. Many industries have been impacted by such things as changes in consumer behaviour and legislation. These issues may be different from state to state and region to region. We have all seen the rise and fall of the video rental industry and the environmental impact on the car detailing industry. Look at what the competition is doing. Ask questions such as: • Will there be a price war? • What is your business’ point of difference in the market? • How easy is it for others to enter the market? • What are the barriers to others entering the market, including cost, expertise, access to product, location, etc? If buying an existing business, find out about your customers: • Who are your customers? • Will they stay with you as the new owner? • How hard would they be to replace if they went elsewhere? - 33 -

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CONSIDER WHAT YOU NEED What are you looking for from your bank? Business loan, overdraft facility, transaction accounts, internet banking, equipment finance, landlord guarantee, business credit cards, merchant facilities, personal and business insurances, etc. The list is extensive so your banker will help you through this. However, some thought on your part will ensure all your business and personal financial needs are covered. Provide a breakdown of the finance you will need. Include purchase price (or detailed set up costs if new), working capital, legal and accounting costs, stamp duties etc. Detail your cash contribution and financial reserves.

Support of family Family support is critical to the success of any business. Buying a business can be an added strain, at least initially, so itâ&#x20AC;&#x2122;s important that you consider how this will impact on you and your family. Who will work in the business and on what basis? How will they be paid? Will employment outside of the business continue? Communication channels need to remain open to ensure any hiccups donâ&#x20AC;&#x2122;t get blown out of proportion. Buying a business is an exciting time. Time spent before meeting with your bank will be worthwhile as it will reduce the stress for you and the time taken by the bank to come to a decision on your loan and other services your bank may be able to provide.

Ian Watt Senior Business Development Manager - Franchising Westpac Banking Corporation (AUS) 0419 271 995 ianwatt@westpac.com.au www.westpac.com.au/business-banking/franchising/

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Chapter 5

UNDERSTANDING THE DOCUMENTATION Bianca Sevastos | Partner Marwan Kojok | Managing Partner Baybridge Lawyers

About the Authors Bianca Sevastos is Partner at Baybridge Lawyers where she specialises in franchising and licensing. Bianca advises on all aspects of franchising industry compliance with the Code, dayto-day management of franchise systems and relationships with suppliers and franchisees. Bianca has extensive experience and advises on a range of national and international transactions, industry master and area development rights and advises both franchisors and franchisees in dispute, obligations under the Franchising Code of Conduct and the Competition and Consumer Act. Marwan Kojok is Managing Partner of premier franchise firm Baybridge Lawyers. Over the past 16 years he has worked with emerging and mature franchise systems, supporting their day-today activities along with establishing some of Australiaâ&#x20AC;&#x2122;s most successful brands. Marwan has consistently been recognised as International Whoâ&#x20AC;&#x2122;s Who of Franchise Lawyers working closely with many international brands and firms across the globe. Viewed by his clients as a trusted advisor, insisting that the brands he works with continue to grow and succeed. Baybridge Lawyers continue to develop superior quality brands through their expertise and commitment to the highest level of serviceability.

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ranchising, as a business model, has proven to be enormously successful across the globe and particularly in Australia. With an estimated 79,000 franchise units, an annual turnover in the order of $144 billion dollars and employing more than 460,000 people there is no doubt that franchising makes up a significant portion of Australia’s economy.* Some might argue that one of the factors for the continuing success of franchising in Australia is the enactment of specific and compulsory legislation that governs the relationship between Franchisors and Franchisees. In Australia, franchising is governed by the Franchising Code of Conduct (Code). Under this legislation, a franchisor must give certain documentation to a prospective franchisee to provide all the information required to make a reasonably informed decision to purchase the franchise business. Inevitably, this means that franchisees are provided with rafts of documents prior to entering into the franchise relationship. While the volume of the documentation can be daunting, it is manageable with the right specialist advice to help you understand the documents and the process.

What are the essential documents a franchisor must give a franchisee? The Code stipulates that franchisors must provide the following documents to any prospective franchisee to effect proper disclosure: • Its current Disclosure Document; • The Franchise Agreement in the form it is to be signed; • A copy of the Code; and • Any other document pertaining to the franchise business. The above documents must be given to the prospective franchisee at least 14 days before the Franchise Agreement is signed. This is a mandatory disclosure period prescribed by the Code to give the franchisee sufficient time to complete its due diligence on the franchisor and to satisfy itself as to the viability of the franchise business.

What is a Disclosure Document? A Disclosure Document is essentially a snapshot of the franchise network and is designed to give the prospective franchisee key information about the franchise system and the running of the franchise. The Code sets out the format of the Disclosure Document and the information that is required, including: • Details of the directors of the franchisor; - 36 -

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• Details of any legal proceedings against the franchisor or its directors; • Details pertaining to the territory granted to the franchisee, including whether the franchisee is provided with any exclusivity in relation to the franchise business; • Contact details of current as well as former franchisees; • The costs to establish and operate the franchised business and any other payments or fees that the franchisee may be required to make; and • Franchisor’s financial statements.

What is a Franchise Agreement? The Franchise Agreement is the agreement that governs the relationship between the franchisor and franchisee. It is the legal document that grants the franchisee the right to operate the franchise business and sets out the rights and responsibilities of each party. Once the Franchise Agreement has been signed the parties are legally bound by its terms and conditions, subject to a seven day cooling off period. If the franchisee decides not to proceed with the franchise opportunity during the cooling off period, the franchisor is required to refund all monies paid by the franchisee less the franchisor’s “reasonable expenses”.

What is the Code? The Code is a mandatory industry code that applies to all parties to a Franchise Agreement. The Code is law and is binding on the parties. The Code was first introduced in 1998 with the purpose of “regulat[ing] the conduct of participants in franchising towards other participants in franchising”. The Code has undergone several revisions since that time and a new Code was enacted in 2015 in an effort to rebalance the power between franchisors and franchisees. It is important that you engage a franchise specialist lawyer to review the Disclosure Document and Franchise Agreement to ensure that the documentation complies with the Code.

What are the key terms usually found in a Franchise Agreement? Before entering into a Franchise Agreement, it is imperative that you understand all of your rights and obligations under the agreement. It is here that you will find all of the commercial terms relevant to your relationship as well as your legal obligations for the term of the franchise and beyond. - 37 -

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Term The “term” of the Franchise Agreement refers to length of time that the franchisee is permitted to operate its business utilising the franchisor’s name, brand and system. Most, but not all, Franchise Agreements also contain a renewal term which can be exercised at the franchisee’s option. The critical point to understand here is that you are being granted a specific and defined term, there is no entitlement for the licence to continue in perpetuity.

Financial Obligations The Franchise Agreement and Disclosure Document should set out all payments required to enter and exit the franchise, as well as any recurring payments required over the life of the franchise. Such payments will likely include a royalty fee and a marketing fee, either expressed as a percentage of the franchisee’s sales or as a flat fee, payable on a weekly or monthly basis. Additionally, there may be a requirement to upgrade the premises at your cost, pay a renewal fee at the beginning of any renewal term of the franchise, and attend any ongoing training and annual conferences. All of these fees add up to your cost of doing business and need to be factored into your business forecasting at inception. Many franchisors do not provide any financial information or data as to the expected turnover of a particular franchise. The exclusion of any such information will mean that you will need to prepare your own cash flow projections and budget based on your own information and research. While, for franchisees, there is a certain element of comfort provided within the framework of the franchise model, it is important to remember that franchising does not provide a silver bullet to success. Just as in any business, there is a risk that the business may not succeed and you will need to ensure you can financially survive in the event the business fails.

Marketing Fund Many franchisors operate a marketing fund whereby they collect a prescribed percentage of the franchisee’s sales, or a flat fee amount, to market and promote the franchise network at large. You should be aware that most franchisors are not obligated to spend the marketing fund monies to benefit your particular franchise. The use of the marketing fund monies can be a much contested issue among franchisees and is one of the major reasons for disputes between the parties. Franchisees often feel as though the monies generated through the marketing fund are better spent elsewhere and that it only serves to benefit the franchisor in their efforts to sell franchises. - 38 -

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That being said, under the Code there are very strict rules and regulations in respect to the governance of the marketing fund to keep the franchisor accountable. Within four months after the end of each financial year, the franchisor must prepare an annual financial statement detailing all of the fund’s receipts and expenses for the past financial year. The financial statement must then be audited by a registered company auditor, unless 75 per cent of the franchisees in Australia who contribute to the fund vote otherwise.

Local Marketing In addition to your contribution to the marketing fund, the franchisor may also require its franchisees to conduct their own local marketing to promote the sale of the products and services sold by the franchise business. Some Franchise Agreements will stipulate that a certain percentage of the franchisee’s sales must be spent on local marketing and while the franchisor does not collect the monies and spend it on behalf of the franchisee, you may need to prove to the franchisor that you have spent the allocated amount on local advertising and complied with the obligation.

Minimum Performance Criteria Many Franchise Agreements stipulate that the franchisee must achieve a certain set of minimum performance requirements which will either be articulated in the Franchise Agreement itself or in the Operations Manual. Such requirements may be as basic as “the franchisee must complete the store opening training program during the first year of operation” or be financial in nature such as “the franchisee must achieve gross sales of at least 95 per cent of the previous year”. It is important that you carefully consider whether the minimum performance criteria are reasonable and achievable. Failure to meet the minimum performance criteria can result in further training costs and, in a worst case scenario, termination of the Franchise Agreement. If the minimum performance criteria are contained in the Operations Manual and not the Franchise Agreement, you should request to see the Operations Manual before you enter into Franchise Agreement to ensure you are comfortable with its provisions.

Supply of Goods and Services Most franchisors require their franchisees to purchase the goods and services sold in the business from the franchisor or a nominated supplier to ensure consistency of supply and quality throughout the network. Such arrangement will also provide the franchisor, and the network at large, with greater economies of scale or “buying power” which will result in a lower cost of goods and - 39 -

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services to the franchisees and a higher profit margin. In turn, this arrangement may allow the franchisor to clip the ticket on the supply of goods and services down to the franchisee or to receive rebates from nominated suppliers. Under the Code, any rebates received by the franchisor must be disclosed in the Disclosure Document.

Operations Manual Many of the franchisorâ&#x20AC;&#x2122;s systems and policies for the day to day running of the franchise will be set out in the Operations Manual. The manual is developed by the franchisor to set a minimum standard for franchisees and to provide a consistency of operations throughout the network. It is important that you understand that the Operations Manual is a living document which can be updated at any time by the franchisor and that a breach of the operations manual may also be considered a breach of the Franchise Agreement.

Records and Audits Most franchisors will require its franchisees to provide them with the records of the business including profit and loss statements and balance sheets on a monthly basis. Such records may also include any reports, sales information, invoices or bank statements as required by the franchisor. The franchiseeâ&#x20AC;&#x2122;s obligation to provide these records is often a source of tension between the franchisor and franchisee. The franchisee may view the requirement to provide such information as a breach of their privacy while the franchisor will want to assess the performance of the business and identify any areas for improvement. If the franchisor suspects that the records are not a true reflection of the sales of the business the franchisor will most likely have the right to inspect the records and have them audited by an independent auditor. You should be aware that if there is a reasonable discrepancy in the records the costs of such audit will be passed on to you as the franchisee.

Confidential Information In essence, a Franchise Agreement grants the franchisee a licence to use the brand, trademarks, systems and any other intellectual property of the franchisor for the operation of the business for the term of the franchise. Franchisors are very protective of their intellectual property and will require its franchisees and any key personnel of the business to hold any such information in strict confidence which obligation survives the termination of the Franchise Agreement. - 40 -

UNDERSTANDING THE DOCUMENTATION

Default and Termination In certain circumstances, the franchisor may terminate the Franchise Agreement automatically and without notice to you. Such circumstances are prescribed by the Code and apply only where the franchisee: • No longer holds a licence that the franchisee must hold to carry on the franchised business; or • Becomes bankrupt, insolvent under administration or an externallyadministered body corporate; or • Becomes deregistered by the Australian Securities and Investments Commission; or • Voluntarily abandons the business or the franchise relationship; or • Is convicted or a serious offence; or • Operates the business in a way that endangers public health or safety; or • Acts fraudulently in connections with the operations of the business; or • Mutually agrees with the franchisor to the termination of the agreement. In all other circumstances, if you are in default or breach of your obligations under the Franchise Agreement the franchisor must provide you with written notice that you are in default, set out the nature of the default and what you must do to rectify the default within a reasonable period of time. If the franchisor provides you with such written notice and you fail to rectify the default within the allotted time, the franchisor may have the right to terminate your Franchise Agreement.

Sale or Transfer of your Business If you wish to sell your franchise during the term, the Franchise Agreement will set out the procedure that must be followed which will include seeking the franchisor’s consent. It is likely that the franchisor will have the right of first refusal to purchase the business which means that you must first offer to sell the business to the franchisor. Under the Code, the franchisor is taken to have given consent to the transfer if the franchisor does not, within 42 days after the request was made, give to the franchisee written notice that consent is withheld and setting out why consent is withheld. In accordance with the Code, the franchisor may not unreasonably withhold consent to you transferring or selling your business. Notwithstanding, there are certain circumstances where the franchisor may withhold its consent which includes where the purchaser is unlikely to meet the financial obligations of the Franchise Agreement, or such transfer will have a significantly adverse - 41 -

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effect on the franchise system, or the franchisee is in breach of the Franchise Agreement among others.

Non-Compete Most Franchise Agreements contain provisions that will preclude franchisees from setting up, operating or holding any interest in any competing business during the term of the franchise and for a period of time following the end of the franchise relationship. As the franchisee, you will have the benefit of the franchisor’s intellectual property, systems and know-how and the franchisor will want to be sure that you or any of its franchisees do not use such information to set up a business in competition with the franchise network. The “non-compete” or restraint of trade provisions within a Franchise Agreement are often confusing to franchisees. Several options may be provided in respect to the period of time (eg, twenty four months – twelve months – six months) and in respect to the geographical area (eg, 5km radius – 3km radius – 1km radius) in which you may not operate, or hold an interest in, a competing business following termination of the Franchise Agreement. Clauses drafted in this manner are called “cascading provisions” or “ladder clauses”. The purpose of such drafting is so that if a court determines that the period of time or geographical area stipulated in the restraint of trade provisions are unreasonable, the provisions can be read down so that the lesser period of time and smaller geographical area can be enforced. The enforceability of non-compete clauses is a bit of a grey area in the law. On the face of it, they are considered anti-competitive and therefore unenforceable. Notwithstanding, a court will enforce the provisions where it considers protection of a franchisor’s goodwill is necessary. Unfortunately, the only way to determine whether the restraint provisions provided in your Franchise Agreement are enforceable is to test it in a court of law.

Disputes Many disputes between franchisors and franchisees occur due to the lack of communication between the parties or differing expectations. Where franchise problems or conflict occurs, it is advisable that the parties first seek to resolve the dispute among themselves and if able have a lawyer or trusted advisor available to guide you through the process. Where disputes cannot be resolved informally between the parties, the Code provides that parties to a Franchise Agreement are required to first trigger mediation before going to court over the dispute. The dispute resolution provisions of the Code clearly set out the procedure - 42 -

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which must be followed including formal written notice outlining the nature of the dispute, the desired outcome of the dispute, and a timeframe within which it should occur. Should the dispute progress to a point where mediation is required, it is advisable to then engage a specialist franchising solicitor to assist in your preparations for mediation or to enter into direct negotiations with the franchisor to settle the dispute. Figures from the Office of the Franchising Mediation Adviser indicate that up to 75 per cent of mediations result in a settlement, which means that both parties are satisfied with the result and in many cases are prepared to continue the franchise relationship. If the dispute is not resolved through the mediation process, the parties may then need to consider taking further action through the court system.

Additional Documents a franchisor should provide to a franchise buyer (if applicable) Franchisors must provide prospective franchisees with all of the documents relevant to the franchise business. Some of these documents might be: • Copy of lease and any licence agreement (including details of any incentive or financial benefit that the franchisor, or its related entity, may be entitled to as a result of that agreement); • Information statement in the form specified by the Code outlining the risks and rewards of franchising; • A lease or hire purchase agreement for goods; • A security agreement, including a guarantee, mortgage, security deposit, indemnity, loan agreement or obligation to provide a bank guarantee to a third party; and • A confidentiality agreement. The above documents must be provided to the prospective franchisee at least 14 days before the signing the Franchise Agreement or as soon as they become available. A copy of the lease must be given within one month after the lease or agreement to lease is signed by all parties.

Daunting but manageable For many franchisees the decision to buy a franchise business will be one of the biggest decisions that they make in life. No doubt, the reams of documentation required to enter the network will seem intimidating and difficult to navigate. The right specialist advice will help you to understand the documents and the process of buying a franchise business. As with any business, it is important - 43 -

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that you undertake proper due diligence to ensure that you are comfortable with your obligations once you sign the documentation and are satisfied that the franchisor and the network will assist you in achieving your business goals and aspirations. *Statistics from Griffith Universityâ&#x20AC;&#x2122;s Asia-Pacific Centre for Franchising Excellence biennial report â&#x20AC;&#x201C; Franchising Australia 2014.

Bianca Sevastos Partner Baybridge Lawyers 02 9232 3511 bianca.sevastos@baybridge.com.au www.baybridge.com.au

Marwan Kojok Managing Partner Baybridge Lawyers 02 9232 3511 marwan.kojok@baybridge.com.au www.baybridge.com.au

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Chapter 6

What you need to know before you buy Michael Purcell | Managing Partner MSI Taylor Business Services

About the Author Michael Purcell is the Managing Partner of MSI Taylor Business Services. He heads a team of franchising experts who have a deep understanding of the industry and will partner with both franchisors and franchisees to develop strategies to help their business grow. Michael has worked as an accountant for over 30 years and is a member of the Institute of Chartered Accountants, a Chartered Tax Adviser with the Taxation Institute of Australia and a registered Tax Agent. He’s known for his ability to explain the “how and why” of business strategies and taxation planning. Having focused on the franchise industry for many years, he has become proficient in all the technical requirements of the industry and has a deep understanding of the needs of both franchisors and franchisees.

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Read this before buying a franchise Lots of people dream of owning their own business and buying a franchise can be a very secure way of doing this. You not only get access to an established brand and product or service, you are buying into something that already has the operational procedures in place and offers ongoing training and support to improve your chances of success. Before buying a franchise, there are some important factors to take into consideration such as cost vs. benefits, appropriate structures, where the money will come from, can you afford it, and many others. This article provides an overview of things to consider before buying a franchise; a self assessment to identify whether you are ready to be a franchisee, pros and cons of buying a franchise and things to be aware of such as your obligations under the Franchising Code of Conduct.

Advantages and disadvantages of buying a franchise First things first, when you are thinking of buying a franchise, it is important to know what exactly you are getting into and to make sure you feel comfortable with what will be required.

Advantages: Added security – you get to own your own business with the benefit of a larger business network and system.

Ongoing support – the franchisor may provide assistance with advertising, operating procedures, training, management, site selection, lease negotiation and business set-up. Easier to secure finance – it may cost less to buy a franchise than to start your own business of the same type.

Reduced business venture risks – because you are buying into an established reputation and image with proven management and established work practices and systems. Be your own boss (to some extent) – a franchise offers the opportunity to run your own business even if you are lacking in capital and business experience.

Profit from brand recognition – franchises already have a strong presence in the market place, saving you both time and money to get your business established.

Disadvantages: Little room for creativity – it is required to enter into a formal agreement when buying a franchise which dictates how you run the business. You may also be - 46 -

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tied to the terms of the agreement in regards to such things as a requirement to upgrade premises and fit-out periodically, acquire goods or services from an approved supplier, and restrictions to responding independently to market fluctuations and changes to market dynamics. Profit sharing – ongoing sharing of profit with the franchisor.

Risk of reputation and profitability – your reputation and profitability can be damaged due to bad performances by other franchisees. Limited term of franchise agreement – the franchisor does not need to renew your agreement at the end of the term meaning all of your hard work may be in vain. Losing your franchise – risk of losing your franchise should the franchisor decide to terminate your agreement due to a breach. Ongoing costs – paying royalties and advertising fees ongoing in addition to your original capital investment, having to acquire goods or services from an approved supplier, etc. There are no right or wrong choices. It is all about weighing up your options and choosing the one you feel most comfortable with. For some people, giving up a little control is completely out of the question. Others may like the fact that someone will be lending a helping hand (even if it does cost a little more). Buying a franchise is not a guarantee of success. The same principals of good business management such as informed decision-making, hard work, time management and servicing your customer well, still apply.

Are you ready to become a franchisee?

Following are some questions to ask yourself to see if you are ready to own a franchise: • Are you committed and have the ability and personality to run your own business? • Will you be able to work within the limits of a franchise?

• Can you afford it? Are you willing to go into debt to buy a franchise? Do you have adequate borrowing capacity to fully set up the franchise? • Are you committed and willing to work long hours and make sacrifices to your personal life to make your business a success? • Do you have the support of family? Are you prepared to have family and lifestyle commitments be affected by owning your own franchise?

If you feel ready to commit to a franchise business, you will need something that suits YOU. You may want to consider the suitability of your education, skills, personal experience and temperament to the nature of the business before choosing a specific franchise. - 47 -

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Outlined below are the three main franchise types:

Business Format Franchise – this is the model that most people commonly think of as a franchise. As the franchisee, you would be given rights to use the franchisor’s intellectual property in your own business. An example of this model is a fast food outlet. Product Franchise – this is where the franchisee sells the franchisor’s product from a wholesale or retail outlet. As the franchisee, you would be given exclusive rights to sell the product within a specific area. An example of this model is a motor vehicle dealership. Processing or Manufacturing Franchise – in this model, the franchisee produces the product. The franchisor provides an essential ingredient or ‘knowhow’ to the franchisee. An example of this model is the soft-drink industry.

Ready to buy a franchise? What to do before you sign So, you’ve considered your options and, for you at least, the advantages have outweighed the disadvantages; you have passed the self-assessment of becoming a franchisee and you have worked out which model type you will be buying into. You have done your research and have identified a franchise you would like to buy. Before going any further, it is important to carefully consider all the legal, financial and business implications of your decision. Knowing the right questions and where to find the right information quickly and easily, can be the difference between success and failure. Following is a checklist you can use as a starting point to ensure you have considered all the areas before make the big commitment.

• Is this particular franchise the right opportunity for you? Assess your strengths and weaknesses, skill and experience thoroughly before deciding on buying a specific franchise. • Is it a feasible business?

• Assess the market. It is important to consider the short and long term sustainability of the product or service by looking at whether it is: ° New or seasonal ° Easily substituted

° Based upon a trademark or symbol ° In a market that is declining or expanding

° In an already competitive environment ° Able to be modified or replaced in line with changing market demands ° A ‘fad’ or trend that may go out of fashion. - 48 -

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• Are there any risks in the products/services that you will provide? • Do you know who your competitors are? • Obtain as much information about financial details of the business as possible. Carefully analyse the profit and loss statements and annual reports. Your accountant or business adviser can assist with this. • Read the disclosure document and franchise agreement carefully. Do not sign anything until you understand it all. Seek independent advice before signing. • Insist on written representations from the franchisor. • Ensure you understand all fees payable under the agreement, including what they are for, how they are calculated and when they are due. • Ask the franchisor for a list of current and previous franchisees. You should speak to each franchisee about the franchise earnings and profitability, franchisor support and daily operations. In particular, it is important to ask previous franchisees why they are no longer part of the system. • Find out what specific requirements are needed to operate the business, i.e. what skills do you need for both financial and non-financial functions? • Check the level of training and support that is available from the franchisor. Does the franchisor provide a: ° Business plan ° Marketing plan

° Risk management plan ° Succession plan.

• If there is a lease involved in the transaction, make sure you understand the terms of and your rights and obligations under the lease agreement. • Find out whether there are company-owned as well as franchised stores, as there may be potential for the company to effectively compete directly against its franchisees. • Is the franchise granted for a specific time? Will you have any options for renewal or extension? If the franchisor decides not to renew the agreement, find out: ° Who will own the goodwill of the business? ° Will you get an exit payment?

° Will you have the right to sell the business?

° What will happen to your equipment and unsold stock? - 49 -

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• Ensure you have an exit strategy should the franchise agreement not be renewed. • If the deal is not acceptable, try to negotiate a better offer or find a better deal. Remember, there will be plenty of other opportunities if your first choice doesn’t work out. • Get professional advice from an accountant, lawyer or other business expert who has experience in franchising. Other things you might consider: • Do you understand your employer and OH&S obligations? • Do you have the financial capacity? • Do you know how to obtain finance? • Have you considered/researched/selected the appropriate business structure? • How will you protect your income? • Have you arranged your insurance? • Do you know how to manage the cash flow of your business? • Have you sought independent business and legal advice? • Does the franchisor provide guidance on business registrations such as GST, PAYG, TFN, Business Name, licences/permits, WorkCover, payroll tax, FBT, interstate taxes, etc.? Very occasionally, you may come across a franchise opportunity that seems too good to be true. Provided you do sufficient research into a potential opportunity, you shouldn’t be caught out by a scam. Some of the things to look out for include: • Claims you can make large amounts of money quickly and with little effort i.e. ‘get rich quick’ schemes. • A reluctance to give details of the other franchisees. • Franchisors or master franchisees are reluctant to provide any written information before you sign up. • A requirement that payment be made up front before any information is released. • Provision of inconsistent financial information about the business’ profitability. • A franchise advertisement with only a post office box as identification. - 50 -

What you need to know before you buy

Where to from here A good place to start is to review the Franchising Code of Conduct. The Code covers the following three areas: • It regulates the conduct of participants in franchising and ensures that prospective franchisees are fully informed prior to purchasing. • It provides cost effective dispute resolution processes. • It provides a process for termination of the franchise agreement and requires a franchisor to provide a franchisee with certain rights in relation to the franchise agreement. For more information see the Australian Competition and Consumer Commission (ACCC) Overview of the Franchising Code of Conduct Fact Sheet via the ACCC website www.accc.gov.au. You should also seek professional advice as early as possible in the process. A lawyer, accountant or other business adviser with experience in franchising will be able to help you assess your options. It’s also important to take your time and to not rush your decision. You are potentially putting hundreds of thousands of dollars on the line, along with you and your family’s future, so make sure you are completely happy with your decision. You should also ensure you conduct a thorough due diligence to ensure you know exactly what you are getting into and that you will achieve the desired return on investment. After all, most people purchase a franchise to attain their financial and lifestyle goals so you need to make sure this is possible. Most important of all, you need to appreciate that this whole process can take some time so take a deep breath and be patient. The work you put in before you purchase a franchise will pay off in the long run.

Michael Purcell Managing Partner MSI Taylor Business Services 07 3512 8888 (Toowong Qld) 07 5593 3611 (Robina Qld) www.msitaylor.com.au

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Chapter 7

What a franchisee can expect from their franchisor Gavin Culmsee | General Manager Bedshed Franchising

About the Author Gavin Culmsee is the General Manager of Bedshed Franchising, a position he has held for more than eight years. With over 20 years of retail experience under his belt, Gavin is an expert in franchising operations management, strategy development and supply chain management. Bedshed is a national bedding and bedroom furniture specialist with a long history of satisfied customers and successful franchisees. Bedshed is currently looking for franchisees on the east coast of Australia as the company continues to expand.

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Introduction It’s a brave decision to start your own business. It requires a leap of faith that sees you become responsible for bringing in customers, managing stock, hiring and firing staff and doing the books – many of which are tasks you may never have done in your former life as an employee. And while it can be a scary time full of uncertainty, starting a business may well be the best thing you ever do for your career, family lifestyle and financial wellbeing. If you’re reading this guide, it probably means you’re considering starting a franchise rather than your own independent business. Buying a franchise is one way to put guardrails around your new business venture. Instead of having to navigate the trials and tribulations alone, you have the support and guidance of an experienced franchisor as well as a network of franchisees who’ve been there before you and have a vested interest in your success. How do you know whether you’re suited to franchising? Ask yourself these three questions: 1. Are you looking for the lifestyle and financial benefits that come from being your own boss, with less risk than starting your own independent business? It is estimated that a third of Australian small businesses fail in the first year, half by the end of year two and three quarters by the fifth year. They’re scary numbers and may well have put you off going out on your own previously. Starting a franchise takes a lot of the risk out of the equation because you’re using a proven formula and have the backing of a successful business. 2. Do you want to change the world? If you’re the person who scribbles business ideas on a coaster at the pub and has an excel spreadsheet with hundreds of big ideas, franchising may not be for you. Franchising is about replicating a successful business in multiple locations, and depending on the franchise, there may not be as much room for creativity and new ideas to meet your expectations. 3. Are you looking for a career or just an investment? It depends on the franchise, but often the most successful franchises are those where the owner works in the business or is at least close to it rather than being a hands-off investor. If you’re just looking for an investment, franchising may not be for you. Once you’ve made the decision to jump in head first, it’s important to consider the responsibilities of each party to make the franchise relationship work. At Bedshed, we often say a franchise agreement is like a marriage. You need to commit completely, be open and honest with your franchisor and expect the same in return. Following is a summary of what you should expect from your franchisor. - 54 -

What a franchisee can expect from their franchisor

THE FIRST THREE MONTHS You’ve signed on the dotted line. What next? You can expect your franchisor to be there every step of the way for the first three months (and beyond). Of course, it varies depending on the type of franchise you buy. If you’ve bought a small franchise like a coffee cart, the support may be significantly less than if you buy a medium or large size retail franchise – however you can always expect a level of support. That’s part of what you’re paying for with your franchise fee.

Vendor Finance Some franchisors will be able to help you out with finance if you don’t have the required capital and can’t access a bank loan. Franchisors are comfortable taking on the risk of a loan (where a bank might not be) because they are confident that the right candidate will be capable of paying back the money once they are in the franchise. Watch out: Just like a bank loan, you need to check the terms and conditions very carefully for vendor finance, and have your financial adviser or lawyer check the offer to see how it compares to other lenders.

Selecting a Location and Purchasing Stock You can absolutely expect your franchisor to help you select a location for your new business. They know what types of locations the franchise does well in and they should have data on foot traffic and expected clientele in each of the areas being considered. You can also talk to other franchisees about their experience – what they like about their location and what isn’t as good. If you’ve bought into a product-based franchise rather than a service offering, you’ll need to buy stock before you open your doors. Lean heavily on your franchisor and other franchisees in the network as you determine which products to buy and how much of each. If you’re opening a food franchise this is particularly important as wastage can be a significant problem. Watch out: Be very wary of going against your franchisor’s advice here. They likely have years of experience selecting sites and probably have a network plan and site selection model to help you make an informed decision. Likewise, the franchisor is well placed to guide you on choosing the right stock for a particular location.

Hiring Staff Depending on your background and experience, you may never have hired anyone before. Your franchisor should be able to provide you with template - 55 -

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job advertisements and job descriptions as well as a guide to interviewing candidates. Some franchisors may even be able to sit in on key interviews with you (e.g. for management roles) if you’d like additional support. Watch out: Look for people who have the skills you lack when hiring staff for a new franchise. For example, if finance isn’t your strong suit, look for a manager who’s done the books in a previous role.

Initial Training All franchises provide training to new franchisees. The level and extent of this training depends on the franchise and it’s always advisable to ask about the level of training and support when you’re considering buying a franchise. The initial training will usually consist of a program tailored to suit your experience and competencies, and should focus on the core elements of how to run the business. This will include, but should not be limited to, business systems, IT, sales and product knowledge. Watch out: Make sure the initial program addresses all the areas you believe you need training in to be able to operate and run a successful business.

Supplier Relationships Unlike in an independent business, your franchisor will connect you with the relevant suppliers for your business. These already established relationships are invaluable and some franchisors even provide sales and product training with suppliers so franchisees can benefit from their expertise. Watch out: Franchisors have spent years developing and nurturing supplier relationships to ensure you receive the best possible price, quality and product innovation – look at other options at your own risk.

MONTH FOUR AND BEYOND One of the best things about franchising is the ongoing support and training provided by the franchisor. Some franchise networks have an annual or biannual conference where all franchisees get together for training and learning opportunities. Others bring in third party experts for regular sessions on everything from sales training to performance management and product training. In most cases, franchisees will receive ongoing training on systems and processes, new initiatives or products run by retail managers or suppliers. Some of the larger franchises offer franchisees help with managing the business if they start to run into trouble. This could be anything from guidance on reducing overheads and increasing sales to practical support on managing the books. It’s the franchisor’s responsibility to do everything they can to help - 56 -

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you keep your business successful, but by the same token, it’s your job to be open with them about how you’re tracking. The worst thing to do if you start to run into trouble is to keep it quiet. The franchisor has likely seen this situation before and can be a major help in turning things around if you bring them in early enough.

Innovation The business landscape is shifting rapidly and these days businesses that stand still are at risk of being disrupted by newer, more nimble competitors. To keep pace, it’s critical that businesses are forward-looking and constantly innovating their offering. That’s not easy to do as the owner of a small business – you have your hands full working in the business. One of the major benefits of being part of a franchise is that innovation and future-proofing is taken care of by the franchisor, letting you focus on growing your business at a local level. At Bedshed, we’ve worked hard to drive innovation. We developed a new ‘evolution’ store fitout, launched a ‘click and collect’ offer to help our franchisees tap into the fast growing e-commerce market and conduct sophisticated analysis of store traffic and sales conversions to assess marketing effectiveness. That’s just a couple of examples, but innovation can take many forms and it’s something you should expect from your franchisor. Watch out: Be sure to ask any franchisors you’re considering to provide details on their future-proofing strategy.

INTANGIBLE In addition to all the specific tangible things you can expect from your franchisor, there are a number of other things to consider.

Honesty, Openness and Integrity As mentioned earlier, a franchise agreement is a little bit like a marriage and there are certain qualities you look for in a partner that you should also expect from any franchisor. While the vast majority of franchisors do the right thing by franchisees, that’s not always the case. A good franchisor will include you in key business decisions and inform you in a timely manner of any business information you reasonably have a right to know. Talk to other franchisees in the network to get a sense of whether the franchisor is above-board. If most people are satisfied with the behaviour of the management team, that’s a good indication everything is on track. Watch out: When talking to other franchisees, make sure you get a good crosssection of those who’ve been in the franchise a long time vs a short time, people - 57 -

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in different geographical locations and people with different sized-businesses to ensure you’re not getting just the views of a vocal minority.

Social One thing we often hear from franchisees is how much they value the social benefits of being part of a franchise. Owning your own business can be incredibly isolating if you don’t have a solid network of support around you. Even then, it’s rare to have a group of other business owners who regularly experience the same highs and lows that you do. Your franchisor should facilitate frequent opportunities for franchisees to get together and share learnings and insights on their business. In addition to the obvious business benefit of these networking sessions, many franchisees make lifelong friends among the network. Watch out: Remember that your franchise is still unique and what works for one may not always work for another. Critically evaluate advice other franchisees give you to consider whether it is applicable in your situation.

CONCLUSION As you can see, there’s a lot you can expect from your franchisor as a prospective franchisee. Every business is different, but the core benefits of training, support, innovation and integrity should be present no matter what franchise network you join. Our best advice for prospective franchisees is to talk to lots of people and ask lots of questions. We wish you the very best of luck on your franchise journey.

Gavin Culmsee General Manager Bedshed Franchising 08 9445 1055 gculmsee@bedshed.com.au www.bedshed.com.au/franchising

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Chapter 8

where should i locate my business? Peter Buckingham, CMC, CFE, FIMC | Managing Director Spectrum Analysis Australia Pty Ltd

About the Author Peter Buckingham is the Managing Director of Spectrum Analysis Australia Pty Ltd, the leading Geodemographic, Strategic Network Planning and Retail Sales Modelling Company in Australia. Spectrum assists many retailers and franchisors in better understanding the retail market from a site and area selection view. Peter spent 20 years with Caltex Australia Ltd in a previous life, including roles in most states of Australia, one year overseas and has spent around four years in property development. Education is something Peter cares about, and he runs a series of workshops in conjunction with Franchise Advisory Centre, titled â&#x20AC;&#x153;Franchise Site Selection and Territory Planning.â&#x20AC;? He also lectures for the Diploma of Franchising, as sponsored by the FCA. Peter is a Certified Franchise Executive (CFE), Fellow and a Victorian Chapter President and Federal Director of the Institute of Management Consultants and a Certified Management Consultant (CMC). Peter is a regular speaker at the National Franchise Convention, FCA State Conferences, and has spoken internationally at conferences including in New Zealand (FANZ) and in Singapore (FLA) in recent years.

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oving into the world of franchising probably leads you to an encounter with the fickle world of site selection and site analysis? You are about to invest much of your hard earned money into your new venture, and you must be asking “Where should I open my first, second, third store?” – and it doesn’t get any easier. Whilst your franchisor should assist you, there will be a degree of responsibility you will have to shoulder, and this probably means thinking as a retailer. You have all heard the adage that the most important thing in real estate is ‘location, location, location’, and retail site selection is definitely a subset of real estate. You can have the greatest products, best fit out, fantastic look and still fail miserably, if you have not given site selection some really hard consideration. It continually amazes me how much effort some clients put into selecting a new store without addressing the biggest issue – WHAT $’s (OR REVENUE) DO I THINK THIS SITE WILL SELL? Before signing a lease for any store – you must have done a forecast Profit and Loss? This can be broken down into six lines:

Sales (Gross Revenue) Less • Cost of Goods Sold • Rent • Labour • Other = Profit <or Loss> If we ask ourselves how accurate we can be with the various factors, it should look something like: Sales – NEED HELP TO HAVE A CLEAR UNDERSTANDING OF WHAT $’s THIS LOCATION WILL SELL. Naturally the real estate agent or the shopping centre leasing executive will have put a positive spin on how good it will be, but they are not the ones putting in their money! Cost of Goods Sold – easier – should be a percentage of sales (or a range) Rent – we know that from the lease in front of us Labour – we should have a good idea of staffing requirements - 60 -

where should i locate my business?

Other – we should have a fair idea – petty cash, telephone, uniforms etc etc. The point that is the biggest source of error that will make or break this profit projection, will be that line called SALES or Gross Revenue. This chapter is partly what to think about, as far as the site is concerned, to make the SALES as high as possible.

What should I expect from my franchisor? Franchisors will normally not tell you their sales forecasts for a store (mainly for legal reasons). They should offer you information about the area – maybe demographics, maps of where the competition is located, information about the shopping centres etc. However, they will tell you that it is your responsibility to make the call on your own future sales. Most franchise systems will offer to give you the names/contact points of other franchisees, so I recommend you take them up on that, and try and make contact. The simplest method of sales prediction is what we call the ANALOGUE model. This means you find like stores, see what they are selling, and then make your judgment from that. If I am planning to open a kiosk for a particular brand in Southland (super regional shopping centre in Melbourne), then the analogues I would be looking for are what sales other kiosks are selling in the likes of Chadstone, Fountain Gate, Knox City, Highpoint, Chatswood, Warringah Mall and other super regional sized shopping centres around Australia. What is NOT relevant would be the sales in strips or the CBD or small shopping centres. Maybe you can also take into account which shopping centres are most like Southland in size, demographics, position you are being offered etc, and this will help to decide which of the comparative sites are most relevant. Once we have some comparisons, you should be able to at least have a feel for a range of sales the store should achieve.

What areas should we consider for our products? Before we settle on a shopping centre, strip or the CBD, we need to think of the best areas for what we plan to sell. We like to imagine that there is one person living in each area (be it a postcode, census collection district, council area or whatever), and what is the likelihood of that person wanting your goods or services? - 61 -

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If we imagine that the person is worth one unit of demand on average (or $1.00 sales), then if the fit is good for the area, then the one person may be worth 1.5 units of demand ($1.50), and if the fit is poor, the person may be worth only 0.5 units of demand ($0.50). For example, I may have a pool store, and following some research I have done with my customers, I have concluded that my typical customers are: • high income people (because they can afford to have me do it) as they are ‘time poor’, • older people 50 plus. If I look at the demographics, then my best customer will come from a high income, older area, and my least ideal customers will come from the opposite, probably a low income, young family area. A person from an area like Toorak (in Melbourne) or Double Bay or Mosman (in Sydney) probably has twice the chance of using a pool cleaning service (from my store) than a person in ‘average Australia’. Therefore, in these areas our person is worth two points. By contrast, a low income, family area such as Sunshine, Caboolture, or Mt Druitt or many others probably only have half the chance of using my service than ‘average Australia’. In this scenario we can become more conscious of at least which areas to start looking in.

Can we quantify this demand? If I now want to estimate the demand for my service, it becomes the unit of demand for each area multiplied by the population of the area. In Mosman, I have decided each person is worth two units of demand, and if the population is 10,000, then I have 20,000 units of demand in that area. In Mt Druitt, where we have concluded each person is worth 0.5 units of demand, and there are 25,000 people, then I have 12,500 units of demand in that area. I can then see which areas are best for my product or service, so if I was going to open an up-market pool shop and specialise in servicing the local pools, Mosman would offer a better opportunity than Mt Druitt.

Available information for good decision making At at 3rd September 2016, the most recent figures available are the 2011 Census of Population and Housing, which was released in June 2012. - 62 -

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The Census is available on the Australian Bureau of Statistics website, and I suggest you may want to try the following to experiment with what information is readily available for free: Go to www.abs.gov.au Go to Census Data Go down to the box called Quickstats Put in on the right hand side the area you want â&#x20AC;&#x201C; suburb, postcode etc You can now see much of the relevant information for that area, and you can scroll down, comparing it to the State and National averages. Business data on how many businesses are in an area is not that simple, but at the time of writing, we have this data as per the numbers, type and size of businesses at 30th June 2011, this information will be updated upon completion of the 2016 Census. For most business decisions, these are the most relevant data sources to describe the area you are looking in to.

Target Market Index The ratings of areas from above can be then shown on a map, so we can see which area has the best probability of a person using our service. This is done using mapping software (we use Pitney Bowes MapInfo software) and Census data, so you can combine two variables to create a value for each area and then show that on a map. On a smaller area this may be used for finding a specific area within a territory, or on a large scale, which suburbs across Melbourne or Sydney best suit our concept. See an example of a Target Market Index map on page 70. If we have undertaken a TMI map, we can then hot list the areas we feel that are most appropriate for our goods or services and begin the next step of looking for actual locations.

Mapping â&#x20AC;&#x201C; a developing science Mapping from the pastâ&#x20AC;Ś Most retail or service franchisors seek to have some mapping to understand their distribution network, be that their stores or territories. Over the years mapping has evolved from a printed wall map (originally from UBD or Melways) with texta markings or coloured pins to more sophisticated computerised mapping. - 63 -

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The “Beer and Pizza” map has traditionally been done with a black texta on a large map, strongly influenced by some early entry, self-centered franchisees drinking beer (or red wine) and eating pizza at the franchisor’s expense. See an example of a Beer and Pizza map on page 70. But wait – it can be done far better…

1. Using Google Earth The first new way is using that fantastic free service called Google Earth. My view is why try and invent a new wheel when the one you have rolls very well anyway! Google Earth is a great way to visualise all sorts of things from the satellite level (including the photo-images) of viewing all of Melbourne, Sydney or even Australia at the same time, down to the very low level of a particular shopping strip or territory, or even their ‘street view’ to have a look at a particular shop front. There is some issue about the currency of the satellite photography, however even though this may be a few years old, roads and buildings do not change all that often. Google Earth, like Excel or Word, is a program or an ‘environment’ to run information files in. When you open Excel, you normally then open an Excel file, usually with the suffix .xls. In Google Earth, you can have your own specific files that open within the Google Earth program, with the suffix .kml. A .kml file may contain the location of all your stores, mapping layers of all your territories, or special layers you or an expert consultant may have created. These could be showing your customers, special demographic layers, or your competitors. One development allows you to click on any store in your network, and open a bubble that may contain all of the store’s relevant information. This could be the address, manager’s name and contact details, floor space, rent, any sales data you wish to have… Anything at all. The beauty of a .kml file is that it is YOUR file. While everyone may have free access to Google Earth, only you can open your files within it, similar to you having your own files to open in Excel. See example of Google Earth file on page 71.

2. Using layered pdf maps A pdf map is usually a fixed image showing all the features you wanted, similar to a photo. - 64 -

where should i locate my business?

However, we now have the ability to create what we call a ‘layered pdf’ which is a map where you (the operator with Adobe on your computer), can use to look extremely professional. I best describe it like “the old days” where in a presentation someone would have an easel or flip chart, and then from behind they would flip over some transparencies that were aligned to appear as if they had added the next section they wanted to show you. Or using Powerpoint where you follow one slide by the next and it appears you have added just some specific points. A map you see may have 20 – 50 layers on it, and when you see a hard copy, or a normal pdf, these have all been locked together. The layered pdf allows the user to unlock these. A key (not unlike the folder control in Windows Explorer) sits on the side, and you can turn on and off the various layers as you choose. In creating layered pdf’s for clients, we find it is best to start the mapping with minimal details showing, and then let the client turn on and off the features they wish to see. A typical scenario may be the Network Development Manager presenting to the CEO, and she wants to look at a particular market and show: • Where potential sites are (shown as a number in the map below) • How major competitors are positioned • Where shopping centres are • Where shopping strips are • Show where the commercial or industrial areas are etc. Once set up, all this becomes a ‘piece of cake’, and can be learned in just a few minutes. Recently one of our clients had to do a presentation to Telstra Management, and used a layered pdf to show their deep and intrinsic knowledge of the Melbourne area. Being from Perth, this mapping assisted greatly! See example of layered pdf map on page 71.

Should I be looking in shopping centres or strips? Many businesses have a preference to go into big shopping centres (or malls) whilst others believe shopping strips are the way to go. Shopping centres definitely have higher attraction power for the customers as the volume of traffic is normally higher (as is the rent). In Australia we can gather the basic statistics on shopping centres from the Property Council of Australia, who produce books giving a page of details for nearly every - 65 -

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shopping centre in Australia, unless the owner is not a member of the Property Council of Australia and does not wish to be included. The Property Council data tells us the owner, manager and their contact details. It then tells us the Gross Leasable Area Retail (GLAR) and Moving Annual Turnover (MAT) of the centre. It also gives details on the major tenants and their area, number of car parks, who many of the specialty stores are, estimated pedestrian traffic and details on major refurbishments of the centre. Different owners may collect data in different ways, so we are at the mercy of the details supplied to the Property Council. In the case of strips, there is no formal collection procedure or body that acts like the Property Council. We use a product called Strip Locator which is a method of comparing one strip to another as an indication of the strength of the strip. The comparisons as we see it are: Shopping Centre

Strip Centre

Traffic

Normally higher and measurable

Lower and unpredictable

Product mix (competitors)

Some governance in depending on the owners as they can limit the competition if they wish

No protection from your competition acting any way they wish

Rents

Normally much higher with little long term protection

Greater chance of a lower rental

Long term renewals

Currently most will give only a five year lease with no options, so you are at their mercy at time of re leasing

More likely to be able to negotiate longer tenure, including options for lease renewals

Are we best near our competitors â&#x20AC;&#x201C; or as far away as possible? Have you noticed that many fast food restaurants appear to group together, or that in most cases the Telco stores are in a line or in very close proximity? Our research over the years has shown for most concepts that there is a definite advantage to be in a common locality. Our view is that if a cluster of fast food restaurants is built together, if the total business each could have expected was $20,000 per week, then four in a grouping will not generate a total of $80,000, but more like $100,000 per week. - 66 -

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Our view is that given choices, more people will come to the area to buy than the total of the individual sites would attract. Have you ever wanted fast food, and the best way to solve the family’s needs was to go to a cluster so the kids could have McDonalds, and you could have KFC or Pizza Hut? Our view has been that in general, working in a cluster has been a ‘friend’ where as being one or two kilometres from a cluster of like goods acts as a ‘foe’, as the power of the cluster attracts more business away from you. A good deal of retail development at the moment is in building new ‘homemaker centres’, where similar stores congregate, and attract people to the area with common needs of purchasing for their house. Many new homemaker centres are exceeding what both we and our clients expected to sell in the initial opening period. The only exceptions (or where we have felt it diminishes) are where you are by far the strongest in the market, and you may be bringing competition to you, so that they are running off your coat tails. The case we have felt this occurring is Telstra stores where Optus, Vodafone, 3 etc. benefit from the power that Telstra has due to its market share and presence.

The reality of selecting a commercial site The first thing you learn is all real estate agents are optimists. The reality is they will advise you that the site you are seeking will be hard to find, and that they have the perfect opportunity (normally if you sign up quickly). The reality is that out of about 20 stores you will see, probably only one or two will truly meet your requirements. I normally recommend you write a ‘property guideline’ that you can show agents and others what you are seeking. At Caltex, we would be offered about three or four ‘opportunities’ a week. The oil industry works to some reasonably clear parameters, and it was just a matter of filtering real opportunities from time wasting ones. My property guidelines address the following types of issues: • Size – we were looking for mid blocks of around 80m long x 40m wide. If a corner block, then around 60m x 60m. • Physical characteristics – our preference was a flat block, or if possible slightly above the road rather than below. We would prefer to be on a flat section or slightly uphill section of the road, definitely not a steep decline. • Side of road – we would prefer to be on the ‘going home’ side of the road, or the ‘neutral’ direction. Inbound was not so good. - 67 -

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• Competition – we obviously did not want to be on the same traffic flow as any of our other sites. Even better if few or no other competitors were servicing the area. • Road type – traffic flow was important, and the more, the better in general. You can now go to www.zenithtraffic.com.au to buy data relating to traffic estimates for any capital city area. • Visibility – we would want good visibility for our signage. The best was on the outside of a right hand curve in a road, so our signage was directly ahead of the traffic. • Access – you had to be able to come in and out easily. Not much good if you could not come in off the main road. • Demographics – in Australia, probably the highest fuel users are medium income people, living in outer suburbs of the capital cities. • Suburbs or areas – we would nominate suburbs or specific areas we were actively seeking new sites in, and not be afraid to mention areas we were not looking at, either because we were well serviced in the area, or we knew the land cost would be prohibitive. Once this was all formed in the property guideline, it was willingly sent to all agents, developers and other interested parties we knew. If you are looking for a store in a shopping centre or a strip, you can make out your own list of what you are seeking, and then I suggest you be strong, and stick to it until you find the suitable site for your business.

Summary There is no magic formula to selecting a commercial site, rather a process you need to follow and a line of thinking to make sure the site you finally select meets all the criteria that YOU feel is essential for your new business venture. I cannot tell you to look at the left hand side compared to the right hand side of the road, or look for the busiest, most expensive store in a shopping centre compared to the $2 discount store at the back. What I can tell you is think about what your business is about and try to match, as best you can, the commercial sites being offered to yours and your customer’s needs. There will always be the attraction of a better/bigger site – at more rent, and you have to evaluate that to your real needs, not the sales pressure being placed on you by a leasing agent. Good Luck Grasshopper!

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where should i locate my business?

Appendix – Terms used GLAR – Gross Leasable Area Retail Shopping centre term for how large a Centre is based on the total area that is leased to retailers. MAT – Moving Annual Turnover Twelve month figure telling us the total dollars have been sold by all the retailers in a Centre. Both the figures above are available through the Property Council of Australia in books they print and sell. The input for these comes from the shopping centre owners, who are normally members of the Property Council of Australia. MAT figures are normally derived from the individual retailer’s figures as they normally have to disclose their sales to their Lessors as part of the lease conditions.

Peter Buckingham CFE Managing Director Spectrum Analysis Australia Pty Ltd (AUS) 03 9830 0077 peterb@spectrumanalysis.com.au www.spectrumanalysis.com.au

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Below is an example of a Target Market Index map

Below is an example of a Beer and Pizza map

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where should we locate our business?

Below is an example of a Google Earth file

Google Earth file with a background of demographics, and information on a specific store. Note the transparency bar allows you to fade the background layer down to zero to see the roads underneath.

Below is an example of a Layered pdf map

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Chapter 9

Marketing & Social Media for Franchisees Katherine Grace | Director Elemental Solutions Marketing

About the Author A former CEO for the Jimâ&#x20AC;&#x2122;s Group, Katherine has over 19 yearsâ&#x20AC;&#x2122; experience in franchising. She has worked with many brands, been a successful ActionCOACH franchisee (#14 in the world) and was runner-up Franchise Woman of the Year in 2010. Amongst other things she is the current Marketing Coordinator for a household name brand in Australia & New Zealand. Elemental Solutions is a marketing company specialising in lowcost and local area marketing. They offer one main service, which is creating a user-friendly six month marketing plan for small business, franchisees or entire brands.

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ne of the main reasons that franchises work is the team effort that is brought to marketing the business. Today’s marketing is all about harnessing the dual powers of people and technology, and the digital age creates the perfect environment for franchising, because it allows us to be both macro and micro in our approach. • Macro (usually via the Franchisor) – reaching wide: creating a nation or world-wide brand that is seen by everyone using a computer, tablet or phone, and making it easy for those people to interact with your company via your website. • Micro (usually by the Franchisee) – going deep: connecting with lots of people in your local area or who are specifically interested in what you do, building a human reputation via technological means.

Macro – How Your Franchisor Markets Your Brand For a small fraction of what it would cost on your own, most franchisees are able to have their brand exposed through main stream media and by professional advertising agencies, both of which are well out of reach for the standard SME business owner. Most franchisors are excellent at two things – brand exposure and promotions. Combined with some efforts on your behalf at the local level, the end result is an ‘attack from all angles’ where potential customers will know you from branding marketing, trust you from local marketing and then be inspired to buy from you due to a ‘call to action’ or special offer. The first and biggest responsibility of the franchisor’s marketing is to increase awareness (and fondness) for your brand. This is usually (but doesn’t have to be) done via mass media such as television, print advertising such as newspapers or magazines, radio, billboards, online and social media advertising and the group’s website. These mediums are ‘one-to-many’ – that is, one message is seen by many people regardless of whether they fall into your target market or not (though many invariably will, especially if you are in fast food or general retail). Mass media advertising is a big benefit to you as a franchisee – in normal small business there would be no way you could afford to promote yourself via any of it, so the team factor is a big help in getting your name out there. Generally it is thought that customers need to ‘see’ you at least six times before buying, so this exposure greatly increases your chances of more direct local marketing bringing people in. The other big advantage of being part of a franchise is what is called best - 74 -

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practice – that because there are so many people essentially running the same business, it is easier than normal to figure out the best possible way of doing everything (think of your business being run in slightly different ways in multiple parallel universes and you get the idea – one will be best at sales, one best at managing their team, etc). In this way everyone benefits from the others. Franchisors may take best practice and use it to share promotional offers amongst the group, that have been known to work in the past or for other franchisees. Again this removes your need to try and try again to get it right – you can simply put a great offer out there and reap the rewards with new business.

About the Marketing Fund Since marketing on behalf of the franchisees is one of the biggest responsibilities your franchisor has, the Franchising Code regulates this by having a set portion of your franchise fees (called the Marketing Fee, Advertising Levy or similar in your Franchise Agreement) go into an audited Marketing Fund that must only be spent in the promotion of the brand. You will see any marketing fees as a separate entry on your franchisee fees invoice each month. However it is important to note that the franchisor is not obliged to spend your marketing contributing in promoting your specific business in your area – only that they need to promote the franchise group’s business as a whole. You will be able to see a statement of the Marketing Fund for the last financial year in your Disclosure Document (which you will receive alongside your franchise agreement). Section 12 of the Disclosure Document will also outline a few key points about the marketing fund, such as whether the franchisor has to contribute if they own a ‘company-store’, what sort of things the fund is used for, and if anyone such as suppliers contributes to the fund. There will also be an independent Auditor’s Report verifying the fund’s statement has been audited, unless more than 75 per cent of the franchisees that contribute vote to not bother with the audit (this usually indicates trust on behalf of the franchisees as to what their marketing money is spent on, and/ or a desire to see marketing funds only go to advertising and not on auditor’s fees). You should absolutely note that just because you are paying a marketing fee to your franchisor, this does not mean that all your marketing will just ‘be taken care of’. You have a big responsibility to spend time and money on top of this - 75 -

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fee in promoting your business locally if you really want to do well.

Micro – How Franchisees Can Market Themselves Often, the biggest frustration that franchisors have is that their franchisees aren’t doing much in the way of local area marketing - that is, building up the business name close to home in support of the brand promotion done on a wider scale. At the end of the day, a franchise is a small business with the added bonus of a brand and support system to give you everything you need to succeed. However it is still your business (and probably your family’s business) and with so much on the line it is important that you do everything you can to have people lining up at your door. Local Area Marketing, sometimes called Self Promotion, is anything you as the franchisee can do to help bring new customers into your business. Usually, it involves working at a local level or with the community, as these things are specific to your business site as opposed to the whole franchise group. Where mass media is ‘one-to-many’, local area marketing can be closely targeted to only your ideal clients and is ‘one-to-a-few’. Some examples of types of low cost local marketing that are usually allowed within a franchise system (noting you should always get franchisor approval) include: 1. Networking with local businesses and people. 2. ‘Giving back’ or sponsoring local schools, kinders, sporting clubs or community groups. 3. Appearing at fetes, festivals, markets, council events, home shows or trade expos. 4. Joining your local BNI chapter, rotary group, chamber of commerce, etc. 5. Leaving business cards for your services in other businesses, on bulletin boards, etc. 6. Advertising your services within key employers in your area (such as council, hospitals, large manufacturers etc). 7. Running promotions or sales specific to your outlet and distributing (franchisor approved) flyers to letterboxes. 8. Thank you letters to customers for using your services or to the top ten referrers in your client base. 9. Host beneficiaries with other local businesses such as gift vouchers or free trials for their clients. - 76 -

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10. Appearing in local directories, school newsletters or discount booklets (NB: advertising copy must always be approved by the franchisor first). 11. Offering your team (and customers) incentives for referrals. 12. Going to the bank, post office and school pick up wearing your uniform. 13. Working with the franchisor in their social media campaigns

Why Social Media is Important Usually from personal experience, we all know the daily influence that Google has on people’s lives. And lucky for us, Google loves connecting people with the best, most local small business that can help the customer get what they need. Over the years they have geared their set up to support businesses that offer genuinely helpful information, are local and look after their clients. Franchises are inherently local, small and family-owned businesses. They just have the added backing of a franchisor. Today’s marketing is about harnessing the power of word of mouth and the local community. But that this word of mouth is massively amplified by the power of digital and social media. Searching for a business online is no longer a one way street – customers won’t just look at your brand’s website and decide if they like you. They’ll be immediately presented with the actual experiences of past clients via online reviews, testimonials, social media and even website forums dedicated to this task. People are gathering in tribes via social media and forums, by the area they live in, interests, passions, what food they eat, their kids, their pets and where they shop. Look up ‘Buy Swap Sell’ groups for your suburb on Facebook and you will see what I mean. Often these groups have well over 20,000 members, all right in your target market. It’s so much more than a central website now. What’s happening in the real world is being captured and amplified via the internet, and reaching new people who for whatever reason (they’re considering using your business, for instance) care about those happenings. And this is where you, as the franchisee, comes in.

How Franchisees Contribute to Social Media Firstly, be a team player. You’ve joined a franchise system which has team principles at its centre. Love your brand. Be proud of it. If you or your staff wear your uniform with disdain or embarrassment, you are damaging the very thing that makes your business succeed (or not). Your chosen system may have - 77 -

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its flaws, but if you don’t focus on and spruik its benefits…. customers won’t come. Once you love the brand and want it to do well, then you can start to help your team. The most important job of franchisees in relation to social media is to service customers so well they want to tell others. Raving Fans by Kenneth Blanchard is an excellent book to explain how to deliver just that one per cent more. In this day and age they won’t just tell a friend, they’ll leave a glowing review for you online where hundreds of people they don’t even know will see it. You should actually say to clients who are happy “Hey thanks for the feedback, I’d love it if you left a review for us on Google or (insert name of your industry’s most popular review site)”. This will help your brand as a whole but will also directly impact new customers into your individual store. Your franchisor’s social media team will notice too, and you’ll be getting pats on the back from them very soon. The second most important thing you can do – that your franchisor really, really needs you to do – is provide content. Lots of content. Lots of valuable, interesting, engaging and relevant content. To gain followers and keep them on board, social media needs to give these followers information that helps them in their daily lives, without constantly pushing your product or service. Franchisees are 200 per cent the best people to provide this as they have the insight and opportunity to get this stuff together every single day. To give you some examples, I’ve looked at what the most popular types of content are in both social media and online newsletters for my clients, some of whom are national brands with 250,000 subscribers (making it really easy to see slight changes in interaction depending on the type of content). Here are some ideas of what types of things most people would find valuable;

• Home hints & tips – anything related to your business that gives away enough to be of value but not all your trade secrets. How to clean something, fix something, repurpose something, care for something etc. • Advice – design advice, family advice, health advice, etc. • Recipes (people literally cannot get enough of these).

• Five minute things – workout, brain training, meditation, etc.

• Translating your topic for the layperson – explaining how the financial system works, what’s going on with your computer, the new spam laws – anything you know that they don’t. - 78 -

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• ‘Good news stories’ or testimonials from clients.

• Photos of work that you’ve done that is awesome or interesting. • Photos of interesting places you’re working.

• Pictures and news about community or charity events that your business is a part of. • Stories and pictures of your team, especially helping clients.

• Industry news – repost an article from any bodies or suppliers that support your industry. To provide content to your franchisor, send them an email with some words and at least one photo (a video is even better).

The Franchising Team Belonging to a franchise is a great way to leverage off some expensive brand exposure being done on your behalf, and to partner with a company that has a proven history of marketing themselves. Remember though that no amount of money or brand exposure can replace local marketing. What we are looking for is a powerful combination of the macro and the micro – mass media and the local engagement working simultaneously to give you the most impact both from brand exposure and on-the-ground word of mouth. Marketing is all about being in control of your own business and how busy you are. This responsibility is yours – it doesn’t go away just because you belong to a franchise system, but it does get much easier thanks to the power of a team. Online version of the Franchising Code of Conduct http://www.comlaw.gov.au/Details/F2010C00457

KATHERINE GRACE Director Elemental Solutions Marketing 0400 865 277 katherine@elementalsolutions.com.au www.elementalsolutions.com.au

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Chapter 10

HR COMPLIANCE: What you need to know HR Central

About the Author HR Central is an Australia-wide provider of HR solutions and services to Franchisors, Franchisees and Managers, to support Best Practice HR. Offering cloud based software, an HR Help Desk, and HR Specialist advice, HR Central covers all aspects of the employment life cycle, in an affordable and practical way. From Recruitment to Workplace Investigations, we can guide and advise you on any matter; small, medium or large. Our experienced HR Specialists are available to discuss any HR questions or concerns you may have.

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INTRODUCTION Starting a new business venture can exciting and overwhelming all at the same time. Generally the amount of information can be in large volume and the legal obligations in Australia can be extremely complex and quite often overlooked. Employers have requirements when engaging with employees and they can sometimes be misunderstood. This article has been designed to provide franchisees with a general summary of information that they should be aware of when dealing with employees. It will cover mandatory requirements (as per the Fair Work Act and Work Health & Safety legislation) as well as best practice advice around human resource management.

MANDATORY REQUIREMENTS National Employment Standards As part of the Fair Work Act 2009, employers are required to provide employees with a minimum number of entitlements (only certain entitlements apply to casual employees), regardless of whether they are covered by a Modern Award or/and Enterprise Agreement. These are known as the National Employment Standards. 1. Maximum weekly hours of work

Employers are not permitted to work employees in excess of 38 hours per week, unless the employee is duly compensated for the additional hours.

2. Requests for flexible working arrangements

Employees who have worked for an employer for greater than 12 months are able to request a change to the working arrangements due to being a parent of a school aged (or younger) child, a carer, having a disability, aged 55 years or over, experiencing family or domestic violence or caring for an immediate family experiencing family or domestic violence. Request can only be refused on reasonable business grounds.

3. Parental Leave

Employees (including casuals) who have completed a minimum of twelve months service with the same employer, are entitled to twelve months unpaid parental leave, with the option of an additional twelve months unpaid leave if requested.

4. Annual Leave

Employees (excluding casuals) are entitled to four weeks paid leave per annum based on their ordinary hours. Shift workers may be entitled to an additional week of paid leave. - 82 -

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5. Personal/carerâ&#x20AC;&#x2122;s leave and compassionate leave

Employees (excluding) are entitled to ten days of paid leave per annum, based on their ordinary hours, for the purpose of being ill, caring responsibilities for an immediate family member or family emergencies. Two days unpaid leave can be taken if all personal leave entitlements have been used. Employees are also entitled to two days paid leave (casual is unpaid), based on their ordinary hours, when an immediate family or household member has a life threatening situation or dies.

6. Community service leave

Employees (including casuals) may take unpaid leave for the purpose of participating in activities such as voluntary emergency management activities or jury duty. There is no limit to the amount of community service leave an employee can take, but they must notify the employer of the leave and expected duration.

7. Long service leave

Employees (including casuals in some states) are entitled to long service leave after working for one employer for a designated continuous period of time. The length of service can vary dependant on the state the employee resides.

8. Public holidays

Employees are entitled to be paid of designated public holidays depending on the state in which they reside and not where they are working on the day of the public holiday.

9. Notice of termination and redundancy pay

Employers must not terminate the employment of an employee without providing them with the required notice of the termination. The amount of notice is governed by the NES and will vary dependant on the length of service, but may also be determined by an award or enterprise agreement.

An employee may become redundant when their role is no longer required to be completed by anyone or an employer becomes insolvent/bankrupt. The amount of redundancy pay will depend on the length of service with the employer, but is not payable to an employee with less than twelve months service or an employer with less than 15 employees.

10. Fair Work Information Statement

The Fair Work Information Statement provides employees with information regarding their terms and conditions and must be provided to all new employees before or as soon as possible after commencement of employment. - 83 -

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For detailed information on all of the above mentioned entitlements, please access the following link:

www.fairwork.gov.au/employee-entitlements/national-employmentstandards

Award Coverage verses Enterprise Agreement Modern Awards are comprehensive and a majority of employees in Australia will be covered by their relevant award. A list of modern awards can be located on the Fair Work Commission website. Investigation should be undertaken to determine which modern award is most suitable dependant on the nature of work being completed. Should an Enterprise Agreement already be in existence, a modern award will already have been determined and will underpin the Enterprise Agreement.

Employment Types Employers can engage employees via a number of different employment types: Full Time – 38 hours per week, permanent ongoing employment. Part Time – predetermined and predictable hours (less than 38 hours per week), permanent ongoing employment. Casual – engaged on an irregular or flexible basis, often to meet a fluctuating demand for work. Work is paid by the hour. Fixed Term – engaged on a Full Time or Part Time bases, but for a specific predetermined period of time, after which the employment relationship will cease. Contractor – has own ABN, engaged to perform a specific task, has a high level of control over how work is done, generally decides what hours to work to complete the task, performs work for more than one party and invoices for work completed.

Work Health & Safety As a business owner you have responsibilities regarding health and safety in your workplace. You need to ensure that your business doesn’t create health and safety problems for your employees, customers or the public. Under WHS legislation you are obliged to provide: • safe premises; - 84 -

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• safe machinery and materials; • safe systems of work; • information, instruction, training and supervision; • a suitable working environment and facilities; and • insurance and workers compensation for your employees. Please note that legal obligations of employers vary according to circumstances. You may wish to seek independent legal advice on what is applicable to your business. For further information on your WHS obligations, please visit: https://www. business.gov.au/info/run/workplace-health-and-safety

Employee Pay Slips As an employer, you are required to provide employees with a Pay Slip at the conclusion of each and every pay period (within two days from the end of the pay period) and must contain specific information relating to that period. Items that must be included are: • Employer’s and Employee’s name; • Employer’s ABN (if applicable); • Pay period dates; • Gross (before tax) and net pay amounts; • Date of payment; • The employee’s hourly rate of pay (include annual salary if applicable); • Total number of hours worked during the pay period, including any leave taken; • Any loadings, allowances, penalty rates, bonuses or other paid entitlements outside of the employee’s base hourly rate; • Any deductions from the employee’s pay (include the deduction amount and identification details of who the deduction relates to); and • Any superannuation contributions paid on behalf of the employee (include the amount and name of the fund to contributions were paid to) For further information on your Pay Slip obligations, please visit: www.fairwork.gov.au/pay/pay-slips-and-record-keeping/pay-slips - 85 -

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Record Keeping Employers are required to keep information relating to their employees for designated periods of time. This will generally be for a period of seven (7) years from the date of termination, but can vary dependant of the type of information. Failure to keep the required information, or if the information is incorrect, employers can incur fines from the Fair Work Commission and if the employer shows a repetitive and wilful disregard for this requirement, they made be taken to court. For further information on the types of information that is required to be kept, please visit: https://www.fairwork.gov.au/pay/pay-slips-and-record-keeping/ record-keeping

Workplace Policies and Procedures One of the core elements of employing and managing employees, is having Workplace Policies and Procedures. These documents (if developed properly) will set the expectations of both the employer and employee, relating to conduct and behaviour. They can also assist the employer when addressing employee performance and disciplinary issues and addressing/defending claims lodged by employees. There are many different types of workplace policies, some of which will be determined by different industries, but dependant on the size of your business not all may be required. As a minimum, it is recommended that businesses should have at least the following policies in place: • Bullying and Harassment; • Code of Conduct; • Disciplinary; • Discrimination; • Social Media; and • Work Health & Safety. A human resource consultant or a workplace lawyer are able to assist in developing a workplace policy. They can be tailored specifically for the needs of your business. Some franchisors may have specific policies that they require the franchisee to adopt or they may have a suite of policies that you can use with no mandatory requirement. - 86 -

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RECRUITMENT Recruiting employees is a crucial aspect of running a successful business. Getting it wrong can be very expensive, both from a financial and emotional perspective. There are a number of factors to consider before engaging a new employee: What does your business need? – this is looking at where the gaps are in your business. Do you need someone to help you generate business or do you need someone to process the paperwork and administration? What is it that you want the person to do? What will you need to pay them? – once you have identified the type of employee, you need to determine what their rate of pay will be. This can be determined by a modern award (the modern award will depend on the industry and type of work being completed) or an Enterprise Agreement (if one is already in place). How many employees do you need? – based on the amount of work that is required to be completed and the hourly rate for the employees to complete that work, how many employees can you afford? What employment type do you need? – determining if you employ someone as part time as opposed to casual is crucial. As is full time over part time. Analysis needs to be done, based off the amount of work that needs to be completed. Develop a Position Description – a position description will allow you to properly assess the work that the employee will complete as part of their role and confirms your expectation of them. It can also be used to manage the performance of the employee. How will you source candidates? – with the increase in technology today, there are many different ways to reach potential candidates and choosing the wrong method can be costly. You need to analyse the role you are recruiting for, determine who is the best fit for this role (target market) and what sourcing method would appeal to them best (e.g. online job boards, social media, recruitment agencies, newspapers). Structured Interviews – once you have identified who you are going to interview, ensure that you go through a structured interview process. This entails developing a set of questions that will allow you to assess if they are going to be suitable for the role. The same set of questions should be asked of each person that is interviewed. Reference checks should also be conducted for the candidate of your choice. - 87 -

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To ensure that you comply with Equal Employment Opportunity (EEO) legislation, when selecting candidates to interview or appoint to a position, base your decisions on merit so as to remove any bias or discrimination. Discrimination can occur if you base a decision on a person’s age, gender, race, religion, sexual orientation, marital status, disability, pregnancy, carer responsibilities or physical features. Onboarding for success – onboarding a new employee will ensure that they feel welcomed and valued. The onboarding process should include: • Issuing an employment contract; • Collecting all employee documentation; • Introduction to existing staff on first day; • Tour of office/work site; • Send a welcome email (if applicable); and • Read and accept any workplace policy/procedure.

ENGAGEMENT/MOTIVATION A common cause of employees leaving a workplace, can be attributed to a lack of engagement from their direct manager. Ensuring that your employees feel supported, valued and respected is essential. Ways in which to achieve this can include: • Regular catch-ups (weekly/fortnightly/monthly); • Team meetings, where everyone has the opportunity to contribute; • Celebration of birthdays; • Providing opportunities for professional development; • Acknowledging successes and good work; and • Conducting Engagement/Culture surveys, allowing employees to express their thoughts and feelings on the organisation.

PERFORMANCE APPRAISALS/REVIEWS A formal performance appraisal, should be conducted on an annual basis (at a minimum) and provides both the employee and employer to discuss both past and future performance. The process needs to review the performance of the employee since the last appraisal, but should focus heavily on setting targets/goals for the next 12 months and identify any resources or professional development that may be required to be able to achieve these results. - 88 -

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There should not be any surprises to the employee in the appraisal - i.e. you should not discuss any performance issues with the employee if they have not been discussed prior. These issues need to be addressed at the time of occurrence and not saved up for a once a year discussion. One key aspect of the Performance Appraisal, is not to link the process to the employee’s salary. Use the process to focus on their performance and goal setting. A separate process should be undertaken to review salaries.

PERFORMANCE MANAGEMENT During the course of employment, you may be required to address the performance, conduct and/or behaviour of an employee. This should be addressed as soon as possible after becoming aware of the issue and should follow a structured process. To address concerns on an employee’s performance, conduct and/or behaviour, you should use the following steps: • Invite the employee (in writing) to a meeting to discuss your concerns, outlining what your concerns are. Allow a reasonable amount of time between advising of the meeting and conducting it and allow the employee to bring a support person. • During the meeting, discuss only what was indicated on your letter. Do not introduce new items they have not been advised of. • Allow the employee an opportunity to respond to your concerns. • Schedule a further meeting to deliver the outcome. Do not make a decision on the next course of action without taking the time to consider their responses. • If a formal written warning is to be issued (meaning termination of employment is not involved), advise the employee of this warning in writing, outlining your expectations, provide strategies for them to meet your expectations, allowing a reasonable timeframe to achieve this. The number of warnings that can be issued to an employee can vary, depending on the severity, nature and length of time between issues.

TERMINATION OF EMPLOYMENT The reason to terminate someone’s employment, must be linked to a valid reason. This may include resignation, shortage of work, redundancy, poor performance, conduct or behaviour and/or summary dismissal. Failure to link the decision to valid and defendable reason may result in the employee lodging an unfair dismissal or adverse action (discrimination) claim. - 89 -

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The amount of notice that is required to be provided by the employer can vary and is dependent on whether the employee is covered by a modern award, enterprise agreement or a separate employment agreement. The minimum notice required (as per the NES) is: Period of continuous service

Minimum notice period

1 year or less

1 week

More than 1 year – 3 years

2 weeks

More than 3 years – 5 years

3 weeks

More than 5 years

4 weeks

* Employees aged over 45 years, with 2 years’ service with their employer are entitled to an additional 1 weeks’ notice.

Employers Obligations When an employee’s employment is terminated, the employer must: • Advise the employee in writing of the decision to terminate; • Allow the employee to work through the notice period (except in the case of summary dismissal); • Provide the employee with a final payslip including the following information: ° Wages earnt up to and including the date of termination;

° Payment of notice period (time worked or in lieu of) except in the case of summary dismissal; ° Unused accrued Annual Leave;

° Unused accrued Long Service Leave; and

° Any other entitlement that is stipulated in either an applicable award, enterprise agreement or employment contract. • On request by the employee, provide an Employment Separation Certificate (www.humanservices.gov.au/customer/forms/su001) and/or a Statement of Service.

Summary Dismissal An employer has the right to summarily dismiss an employee (without notice) for serious misconduct. Some examples of serious misconduct can include: • wilful or deliberate behaviour inconsistent with the employment contract; - 90 -

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• conduct causing imminent and serious risk to a person’s health or safety or the employer’s reputation, viability or profitability; • theft; • fraud; • assault; • intoxication at work; and • refusal to follow lawful and reasonable instructions.

Redundancy When the role being performed by an employee is no longer required to be performed by anyone within the business, the employer has the right to terminate the employee’s employment, providing the required notice of terminate and severance pay (for details on severance pay, please visit www.fairwork.gov.au/ ending-employment/redundancy/redundancy-pay-and-entitlements). Before making an employee’s role redundant, the employer must assess a number of key elements: 1. Are the duties able to be performed by another employee? 2. Can the employee be redeployed to another role within the business? 3. The employer must consult with the employee and advise them of the decision to make their role redundant. Failure to comply with these areas, may result in the employee lodging claim for unfair dismissal.

Small Business Fair Dismissal Code Certain exemptions are available to Small Businesses (employers with fewer than 15 employees) when terminating employees. Unfair Dismissal – employees must have completed 12 months of service with an employer before qualifying to lodge an unfair dismissal claim. Redundancy – employers are not obligated to pay redundancy payments. For further details on the Small Business Fair Dismissal Code, please visit www.fwc.gov.au/about-us/legislation-regulations/small-business-fairdismissal-code

SUMMARY The information provided in this article, is an overall summary of the requirements of employers and a guide to best practice human resources. - 91 -

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Understanding the requirements of employers with it comes to human resources can be extremely complex and it is recommended that independent advice is sought before make decisions on employee related decisions. Further advice can be obtained from the Human Resource team at HR Central.

HR Central 1300 717 721 info@hrcentral.com.au www.hrcentral.com.au

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Chapter 11

growing the franchise Tania Allen | Founder Vision Alliance

About the Author Tania Allen is known as the ultimate catalyst for change and transformation in business and in life. Passionate about helping business owners maximise their potential, Tania Allen is the Founder and Head Consultant | Coach at Vision Alliance, a business growth and franchise consulting company dedicated to helping business owners grow, leverage and franchise, make more money and create a business and life they love. With more than two decades business experience and formal qualifications in business development, sales and marketing, franchising and transformational leadership coaching, Tania has influenced the growth, development and success of hundreds of businesses and individuals around the world. Owning and operating her own successful businesses, Tania has celebrated many successes and has also experienced the many challenges that business and life has thrown her way. She truly understands what it takes to be a successful business owner. With a passion and a vision to make a difference to the lives of business owners, worldwide, Tania is commited to passing on her experience, and her knowledge to those who truly want to achieve higher levels of success and create a business and life they love.

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here was a young entrepreneur and he was eager to learn the secret to success. He knew that if he could do what others before him had done and do it better and faster, then perhaps he had more of a chance at achieving the level of success he desired. He believed if he knew that secret to success he could achieve everything he wanted to achieve in the shortest time possible. He knew if he could find the golden key to success he would have a head start and be well on his way to achieving the dreams and goals he had set for himself. The young entrepreneur knew he would benefit from working with a mentor so decided to research business mentors in his chosen industry. After many hours upon hours of research the young entrepreneur found the answers he was looking for to take his business to the next level and build long lasting momentum. So what did he discover and how can you apply those golden principles to your business so that you too can get the answers and solutions you need to grow the business you want? Successful business people all tend to have one thing in common: they think and act in a certain way. Following just some of these insights will help you make shifts in your business faster and grow your business more easily and effortlessly.

Know what you want Regardless of whether you are in a service based or retail franchise it’s important you know what you want to achieve. If you’re just beginning in your franchise then it’s a good Idea to set some clear goals of where you want to be in 1 year, 3 years and 5 years from now. If your franchise term is 5 years, it’s important you know exactly what you want to achieve in that time. Look beyond just the revenues and profits though. It’s important to have a balanced focus on all key areas of business. Take some time to write down what you want to achieve in both financial and non-financial areas. What do your revenues and profits look like? How many staff do you have? How many leisure days and holidays do you have throughout the year? What about your ideal customer? What do they look like? Who are they? And more importantly how do you reach them and engage with them so you can thrive in business and not just survive?

Know where you are and identify your GAP If you don’t know where you are, how are you ever going to know what actions need to be taken in order to get to where you want to be? Regardless of whether you have been in business for a while or just starting out, it is important to take some time to prepare your own gap analysis. A gap analysis defines your present and future objectives in both financial and - 94 -

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non-financial terms. The difference between the two is your gap and becomes your starting point for building your business to the next level. A gap analysis need not just be about money but it’s usually where most people start. Your non-financial considerations could include the number of team members, your product or service offering to the marketplace and the number of satisfied customers. Other areas could also include the number of hours you work, the number of recreation days, family days and the holidays you take. To create your own gap analysis, simply list the goals that are most important to you and your business. List where you are today, with each of those measurables, using a number scale system e.g. on a scale of 1-10, 1 representing little results are being achieved right now and 10 being the ultimate place where you want to be. Write down a number for each goal that represents where you are and then write down a number that represents where you want to be, let’s say in one year’s time. The distance between those two sets of numbers is your gap. Now you can start working on closing the gap. Once you define the gap that exists in all areas relevant to your business, you can then create a Revenue Plan that will map out the exact process required so you can eliminate that Gap, reach every one of your goals and objectives, and do so within a very specific time frame.

Creating your revenue plan Your revenue plan need not be too complicated. It is an outline of how you intend to close the gap between where you are and where you want to be. Your Revenue Plan actually begins the process of generating leads for your business by defining specifically the product and/or service your business will sell, the number you want to sell... the price you will charge, and when you project these sales will take place. Once these objectives are clearly and specifically defined, you will have an excellent idea of the number of leads your business needs to generate in order to accomplish every one of those objectives. Putting together your revenue plan is relatively simple. Start by listing on a piece of paper all the products and services your business provides. Your next step is to then multiply each product or service by the prices you charge and then multiply that by how many units you expect to sell for the specific period (quarter, six month or one year period). Setting your revenue plan out in a simple table is all you need. What’s important is you set your plan in stone, so that you can get to work moving closer to your desired outcome. If the results on your revenue plan do not match the objectives on your gap analysis then simply make adjustments until they do. This may mean increasing - 95 -

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your prices, increasing the number of times a customer buys from you, or it may mean increasing the average amount a customer spends with you at any one time. It’s a simple road map for reaching your targets, so if you haven’t yet drafted an outline of a revenue plan, get started today and see the difference it makes in such a short period of time. When working with franchisees, it amazes me how many do not follow an actual sales process in order to make things happen. Your sales process includes choosing the most appropriate channels for getting your message directly to your ideal customers, choosing the right marketing strategies and so on. I see this especially in retail, when usually the business owner relies on the most obvious channel - foot traffic. They hope for the best, that the customer chooses them today. It’s like playing a game of chance. You have an equal chance that you won’t win, and an equal chance of not winning the customer. Put simply, it is essential you understand your sales process. If your franchisor hasn’t a solid sales process in place, create your own. Remember your success is dependent on you, not your franchisor.

So what should your sales process consist of? Typically your sale process should include these steps: • Identify your ideal customer • Generate leads

• Qualify your prospects

• Present your product or service to your prospect • Convert your prospect into a customer

• Service your customers including following up • Up sell

• If you prospect wasn’t converted into a customer then place them in your lead nurturing program.

Target your ideal clients to produce results No matter what stage of development your business is presently in, all small business owners want more revenue. That is always priority number one, and to be honest, it should always be. Without sales and marketing, you would have no business at all. It would therefore be fair to say, that sales and marketing are both the lifeblood of every business. As Peter Druker once said Business has only two functions, marketing and innovation. The key to dramatically increasing your sales and marketing results is very dependent on your ability to attract not just more clients, but more ideal clients. Your ideal client is the one who not only buys your product or service, your - 96 -

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ideal client is one who buys your product or service and raves about it again and again. They literally share your passion for what you do. These are the clients who really want what you have to offer, instead of just needing what you offer. They don’t just use your product or service, they love your product or service and they love you. So how does this affect your business in the long term? Well, it has a huge impact on any future products or services you develop, and any future sales and marketing activities you implement. Because you want to deal with more of your ideal clients, you will find yourself developing more products and services that your ideal clients want. You will develop sales and marketing processes that will attract more of those ideal clients rather than just any client. In fact this is an important point to review right now. Is your current marketing targeting just anyone with a pulse that may just buy your product and service, or are you truly aiming to reach not only your target market but also the ideal client within that target group? If you can get this right, you will be setting your sails in the right direction. In fact, it is this sales and marketing component that I have discovered is the major reason for the tremendously high failure rate of small businesses today. Businesses are simply targeting the wrong type of clients. They are working harder, not smarter. Here’s the challenge. Small business owners I come across want to immediately develop their marketing program, so that they can increase sales and profits as soon as possible. When I speak with them, they are already putting together various pieces of marketing collateral such as postcards, brochures, flyers, pay per click ads, social media ads and of course, optimising their website. Unfortunately, when I assess their business and compare their product or service with their ‘ideal client profile’, in the majority of cases, the marketing they are planning to use or are currently using will never reach the clients they are truly trying to reach. Defining your ideal client is the first step to attracting the kind of people you want to do business with and will greatly increase your revenues. Knowing your ideal client will:

• Help you define your niche market.

• Make your ideal client easier to find.

• Make it easier to sell your products and services.

• Result in a greater return on your marketing dollar. • Increase the overall lifetime value.

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ideal customers will have an impact on the products or services you create, the level of service you provide, what type of service you provide, and where and how you market your products and services. The process of identifying your ideal customer is important. Creating your ideal customer profile is therefore the next step you need to take in your business today. Your ideal customer profile is something your staff, your partners, everyone for that matter who works in your business knows and understands. Not knowing this could result in loss of business and potentially even failure. Wouldn’t you rather know who your ideal customer is, spend money to attract them and sell them what they want and then bring them back time and time again because they are an absolute pleasure to deal with? This is what I call good business sense. Business should be fun, so why are we putting up with C and D grade customers? Identify your ideal client and you will be jumping out of bed looking forward to your day at work. Ok so let’s start with a simple question, ask yourself this: “Who is my ideal customer/client?” Take some time now to write your thoughts down. Let your thoughts flow, don’t stop, just write down exactly what comes to mind. What does your ideal customer look like? Your answer does not have to be long. A couple of short sentences or a handful of bullet points is all you need. Just as long as you take the time to start to clarify and get a good picture about what your ideal client looks like.

Ask yourself these questions: Describe the type of customer you want to do business with. Describe the type of customer who you believe will give you the greatest return on your marketing investment. Looking at your current business, which customers do you believe right now are the easiest to find, easiest to sell to and require the least amount of time spent on them? Describe the type of customer who will stay with you the longest and spend the most with you. Once you have created your ideal client profile, compare it with the clients you regularly deal with every day. Are they the same, or is there room for improvement. If there is a gap, it’s time to keep the A and B customers and sack the C’s and D’s. You know the ones I’m talking about, the ones who don’t pay you on time, are forever asking for a discount or worse still they want your time or products for free. For these D grade customers, nothing is ever good enough, and you just can’t get rid of them because you feel like your business relies on them and the business they do bring in. Well let me tell you something, you are holding your business back with this level of thinking. - 98 -

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Sack your C and D clients today. Life’s too short to be dealing with the wrong type of clients. Most businesses put a significant amount of time and money into attracting more customers. Serving the right customers and not just more of any customer is what’s critical to your success. When you bring more of the right customers to your business, your business will double, triple and quadruple almost overnight as they will become raving fans, advocates and ambassadors of your brand and business. Knowing who your ideal customers are and what they want, it’s time to explore how to best reach those ideal customers by creating the ideal marketing plan and marketing message for your business.

Know how to effectively communicate with your customer Marketing is all about finding the best way to effectively communicate and engage with your ideal customer. It’s about getting the right message out in the marketplace, which speaks directly to your ideal customer and then finding the right distribution channel to support that message. Once you’ve decided on your marketing strategy, it’s time to craft a compelling and laser focused message to ensure you reach your prospect with enough impact to lead him or her to take a particular action. That action may be to pick up the phone, walk into the store, or go to the website and start engaging with your business. The biggest challenge business owners face when it comes to marketing however is: Your prospects are literally being bombarded by marketing messages from the moment we wake up to the moment we go to bed, that they are becoming immune to many marketing messages. It’s what I have termed as Consumer Immunity™. With marketing messages filling up our minds from TV to radio, breakfast cereal boxes, magazines and billboards just to name a few, it’s no wonder most are in a state of overwhelm and are completely blind to the many marketing messages out there. I’m very confident to say this problem is only going to grow into a bigger issue. This also means your prospects are overwhelmed with those same marketing messages everyone else is throwing into the marketplace, so how do you stand out of the crowd and be seen in what is already an overcrowded marketplace when it comes to marketing messages? The first thing you want to do is market where your customers hang out not just where you think they will be. Once you know where they are you want to be sure your message will speak directly to them, in other words your marketing must speak directly to your prospects challenges, concerns and frustrations. It’s what we call their ‘hot buttons’. - 99 -

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It is essential your marketing copy grabs and engages the readers’ attention. It then must enable the prospect to gain interest and build desire for the product and or service you are promoting. It should also provide enough information and lead the prospect into taking some form of action. That easy low risk next step could be visit a website, fill out a form to get something, walk into a store or phone the business. Whatever it is, you want to lead the prospect easily and effortlessly into taking an active step towards your business. So when creating your marketing messages I always turn to a great little marketing formula, which will increase the effectiveness of the campaign. The bottom line is, your marketing should be producing results. If it’s not, tweak it, change it, or get rid of it.

The marketing formula Every marketing piece you use to attract prospects to your business should follow this acronym. Attention - Does the ad or marketing piece (namely the headline) grab your attention?

Build Interest & Engage - Does the ad or marketing piece generate the readers’ interest? Inform, Educate & Build Desire - Does the ad or marketing piece build desire for your product or service?

Credibility - If the marketing piece calls for it, have testimonials or some form of proof in the promotional piece. Action - Does the ad or marketing piece prompt the reader to take action?

WIIFM - This acronym stands for What’s in it for me? Your marketing material should speak to the prospect and communicate the benefits, not tell a big story that’s related to how long you have been in business or how good you are. Put yourself in your prospects shoes and your marketing will produce better results. By following these key points, you will turn your marketing costs from an expense into an investment. It’s a simple formula that will definitely support you when you are planning and rolling out your next marketing campaign or promotion.

Know your customers lifetime value I see many business owners both in infant and mature stages of growth making ill-informed marketing decisions. If you don’t want to second-guess things creating a plan is absolutely essential. - 100 -

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When I ask business owners if they know exactly how much they can afford to invest on their marketing and acquiring a customer, most wouldn’t have a clue. It’s all well and good to launch a marketing campaign and hope for the best and that’s what most business owners do to be honest. What you need to do is in the planning phase, it’s important to weigh its costs against its estimated benefits. In order to accurately assess those benefits, you need one critical piece of information: your customer’s lifetime value.

It’s all about the profit The purpose of every business is to acquire profitable customers, and retain them. It’s that simple. You have to admit as a business owner more revenue is great, but honestly it’s more profit we all want more of. After all this is the reason we are in business isn’t it? What’s the point waking up every day working our butts off just to make a bottom line loss? The crazy thing is, so many business owners do just that, and so many accept that it is the way it is. Your aim should be to aim for bottom profits. When it comes to profit, it’s almost impossible to get more of it on it’s own. What you can get, is more coming in from your current customers by having them spend more. This will put more money in your pocket especially if they are buying items with larger profit margins. This is what I refer to as wallet share. If you are looking for more money in your pocket everyday, you have to sell more, it’s that simple. It won’t appear by wishing for it to happen. With this in mind, it’s important to focus on making sales and more importantly profitable sales. Now this doesn’t mean all you need to do is go out and get a handful of new customers to affect your bottom line. More customers are just part of it. Profit is about getting your customers to buy more from you and buy products or services that have higher profit margins, so you are simply making more per spend. Same effort, more per spend.

Manage your time – increase your effectiveness I’m going to finish off this chapter by speaking briefly about the importance of managing your time. We all have the same 24 hours in the day yet some of us choose to use it very unwisely. How do you spend your time? Is it in procrastination mode, or is it being directed to the highest income and highest impact generative activities? Just by focusing on your highest income and highest impact activities they will generate 16 times more revenues for you, that’s it. It’s that simple. To build - 101 -

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a great business you must have a great team. To build a great team, you must overcome the typical entrepreneurial thinking that you have to do everything yourself. More importantly, you need to stop working in the business and start working on it. Just to clarify it for you, a high income-producing activity would be making a sale or something that leads directly to a sale. A high impact activity would be something like producing a great website or making sure that your ad copy is properly written to make sales for you. These activities donâ&#x20AC;&#x2122;t directly make a sale, but they play an important role in generating revenue.

What activities should you be doing? For the small business owner, the highest income-producing activity, bar none, is generating revenue. Every day, your primary focus should be on how your company will generate more revenue. If youâ&#x20AC;&#x2122;re not spending a minimum of 60 - 80 per cent of your time on income - generating activities, your business will struggle to grow and increase revenues. But what about financing, HR, operations and all those other activities you just identified as crucial to your business? Hereâ&#x20AC;&#x2122;s the challenge: For a small business, generating revenue must come first and management second. Otherwise, your business will never grow to the point where management becomes as important as sales. The ultimate formula to your success is People, Product or Service Sales and Process and Systems to streamline for growth. If your personal strengths lie in sales and marketing, then you need to spend a minimum of 60 - 80 per cent of your time performing these activities. However, if your personal strengths lie elsewhere, hire an expert to do the sales and marketing for you and focus your time and energy on those high-impact activities that match your personal strengths. Remember, the secret to growing revenues and building a successful business is to focus only on what you do best, and hire or outsource everything else. Be sure you take consistent daily action towards what it is you want and commit today to continuous improvement and excellence.

Tania Allen Founder Vision Alliance (AUS) 1300 76 49 20 tania@vision-alliance.com www.visionalliance.com.au

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Chapter 12

franchising in AUSTRALIA Franchise Council of Australia

About the Author The Franchise Council of Australia Limited (FCA) is the peak body for the $171 billion franchise sector in Australia, representing franchisees, franchisors and service providers to the sector. Membership of the FCA is voluntary, and open to any organisation or individual involved in the franchise sector, including franchisors, franchisees, and suppliers to the sector. The FCA strives to add value to the businesses of its members by providing advocacy, education, information and networking services and opportunities that support a prosperous and growing franchise sector which represent good value. The FCA recognises that its members have different needs, and that different types of members should co-exist harmoniously. Whether we are offering advice on best practice franchising, contributing to government policies, promoting franchising in the media or providing educational and professional development services to our members, the FCA does its part to make the sector a sustainable place to work.

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he Franchise Council of Australia Limited (FCA) is the peak body for the $171 billion franchise sector in Australia, representing franchisors, franchisees, service providers and advisors to the sector. The FCA is a nationally incorporated not-for-profit association with a national head office based in Melbourne, Victoria. The FCA’s main aim is to help people get into franchising and ensure the sector they are joining is as vibrant, prosperous and supportive as it can be. This means promoting best practice in the sector and providing the education and other services necessary to ensure a healthy sector constantly striving to lift its own standards. The FCA assists stakeholders in the Australian franchise sector in a variety of ways, to ensure the sector is an attractive and rewarding place to do business. Membership of the FCA is voluntary, and is open to any individual or organisation involved in the franchising sector, including; franchisees, franchisors, lawyers, accountants, banks, consultants, academics, publishers and many more. Whether offering advice on best practice franchising, educating government on policies affecting the sector, promoting franchising in the media or providing professional development services to its members, the FCA does its part to make the sector a positive, sustainable place to earn a living. The FCA is closely affiliated with franchising associations around the world, and is a founding member of the Asia Pacific Franchise Confederation (APFC). It is also a member of the World Franchise Council (WFC) and for 1999 and 2000 was its secretariat.

Membership Benefits Credibility – maintained through the FCA member standards and the Franchising Code of Conduct; Professional support & development – networking opportunities and regular events;

through education programs,

Information – shared insights and experiences about what is happening in the sector, what sector leaders are thinking and doing, and new initiatives and opportunities that can help grow businesses; and Representation – ensuring members’ voices are heard by governments, regulators, opinion-leaders and other important groups and individuals. Members of the Franchise Council of Australia are part of a unique association where business lessons, experience and information are shared freely. Just as - 104 -

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franchising in being in your own business but not on your own, membership of the FCA broadens the support frameworks and networks. FCA members belong to an association where their peers work together for the betterment of the sector; a shared purpose and common foundation for doing business; brought together by shared goals and regulatory setting applied to very different and individual businesses. For this reason, franchisors, franchisees and suppliers can freely exchange ideas without fear of losing their competitive edge. Industry peers and colleagues can be the best pathfinder for addressing business challenges and embracing opportunities, a source of inspiration and innovation or simply an experienced different point of view. All members have equal voting rights and all members are eligible to become committee members or office bearers of state chapters, as well as direct election to the national board. FCA members have an effective say in the future of franchising in Australia.

Major services and initiatives The FCA recognises that its members have different needs, and that different types of members should co-exist harmoniously. The success of franchising depends on successful franchisors, and this, in turn, depends on profitable, satisfied and happy franchisees. The FCA works constantly to ensure that all activities and services which benefit franchising will benefit the broader community â&#x20AC;&#x201C;including franchisees, franchisors, employees and their local economies andcommunities. As well as commitment to the highest industry standards, the FCA facilitates a number of services and initiatives to assist in promoting and advancing the role of franchising in Australia, as well as supporting its members.

Representation of Franchising Sector Perspectives to Government The FCA represents the interests of the whole franchise sector â&#x20AC;&#x201C; franchisees, franchisors and suppliers. The Franchise Council co-ordinates member feedback for the compilation and representation of submissions to governments on relevant franchising issues. Members save time, energy and money making representation to government by channelling their feedback through the FCA. - 105 -

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Education â&#x20AC;&#x201C; Certified Franchise Executive program The FCA facilitates specialist franchising education through the Certified Franchise Executive (CFE) program, which offers existing and aspiring franchise professionals and entrepreneurs the opportunity to grow professionally and reach a recognised standard of excellence within the local and international franchise community. The FCA, in association with the American-based Institute of Certified Franchise Executives (ICFE), delivers the CFE program in Australia. The CFE is the only internationally recognised professional accreditation program for franchise executives. It is an educational framework designed to enhance the professionalism of franchising by certifying the highest standards of quality training and education. The program offers existing and aspiring franchise professionals and entrepreneurs the opportunity to grow professionally and reach a recognised standard of excellence within the local and international franchise community. Since launching in Australia in 2012, 17 franchise professionals have so far gained CFE accreditation and more than 40 Australian franchise professionals are currently participating in the CFE program, representing more than 35 franchise businesses.

FCA Excellence in Franchising Awards The FCA Excellence in Franchising Awards recognise and reward companiesand individuals within the Australian franchise sector and provide a platform for entrants to showcase their achievements on the national stage. The Awards are open to FCA member companies only and are committed to ensuring that franchisors, franchisees and suppliers to the sector areappropriately represented. Success at the Awards can increase brand recognition, customer enquiries andmedia coverage. It can boost company morale and help attract the best talent to companies. Preparing award nominations can be an excellent business â&#x20AC;&#x2DC;health checkâ&#x20AC;&#x2122; with applicants self-evaluating and thinking about how they can best work on their business, not just in it, as they consider the key business success criteria. The Excellence in Franchising Awards ceremony is held in conjunction with the National Franchise Convention and is the pinnacle of the franchising year. - 106 -

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Past winners include 2015 Australian Established Franchisor of the Year, Boost Juice Bars; 2015 Australian Emerging Franchisor of the Year, Laubman&Pank, and 2015 Multi-unit Franchisee of the Year, Irene and Ian Hughes (Poolwerx); and many more.

Hall of Fame The Australian Franchise Hall of Fame was established in 2003. During its creation, the selection panel searched back to the origins of franchising in Australia and, by a meticulous process of elimination, identified the ground breakers, influencers, quiet achievers, selfless contributors and outstanding performers who endured the trials and laid the foundations of the sector’ssuccess. Now, it is members of the Hall of Fame itself who induct new entrants. The sole criterion is an outstanding contribution to franchising – whether as a franchisor, franchisee, academic, lawyer, consultant, politician, financier –whomever. The 2015 Hall of Fame inductee is Janine Allis, founder of Boost Juice Bars.

The National Franchise Convention The FCA hosts the annual National Franchise Convention (NFC). The NFC provides an invaluable opportunity to gain information and inspiration from industry leaders and keynote speakers. The three-day event also provides ample opportunities to network and visit the bustling trade exhibition, where suppliers to the franchise sector can showcase their products and services. The Convention brings together the Australian franchise community – including successful business people, CEOs, government officials and industry advisors – to enjoy education, networking and business development opportunities. The convention is open not only to those in franchising circles but also to the small business sector generally and it is not necessary to be an FCA member to attend. The 2016 Convention (NFC16) will be held in Canberra in October. For more information contact info@franchise.org.au or visit www.franchise.org.au

Women in Franchising Committee In 2007, the FCA announced the introduction of the Women in Franchising Committee (WIF), dedicated to promoting and advancing the achievements ofwomen in franchising and small business. The aim of the WIF Committee is to increase female participation in franchising. - 107 -

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It aims to be a professional, organised group within the FCA that will provide women inside and outside the sector with information and encouragement, as well as genuine opportunities for contribution, networking and professional development.

FCA Member Standards Members of the FCA receive many benefits which help businesses keep informed and connected with the franchise sector and facilitate education. One of the hallmarks of a reputable sector is a commitment to high standards of personal and professional conduct. This enhances public perceptions of franchising, helps safeguard the investments of franchisors and the businesses of franchisees, protects franchise networks from unfair or unethical attack and provides guidance for those seeking to commence their franchising journey. The FCA encourages its members to maintain standards of conduct worthy of franchise sector professionals. The Member Standards are designed to provide members of the FCA with an authoritative guide on acceptable standards of conduct. The FCA believes the Australian franchise sector to be well regulated with the Franchising Code of Conduct (the Code) allowing for affordable, efficient dispute resolution procedures and disclosure provisions to assist and guide thesector. It also considers that the relationship between the franchisor and the franchisee can be developed even further with best practice guidelines in theform of FCA Member Standards. It is the FCAâ&#x20AC;&#x2122;s view that a member gains significant market benefit in identifying themselves with FCA membership and as such the business practice and activities of members should work towards franchise best practice.

Member Obligations All FCA members are expected to conduct their franchising activities professionally and in accordance with Australian law. They are expected to comply with agreed minimum standards of conduct. The FCA considers the following standards to be relevant to members: â&#x20AC;˘ Members of the FCA shall abide by all relevant State and Federal laws including, in particular, the Franchising Code of Conduct and the Competition and Consumer Act. Within 14 days of a written request by the FCA, a member shall furnish to the FCA a copy of its current disclosure document, franchise agreement and any other documentation or advertising material used in connection with the appointment of a franchise. - 108 -

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• No member shall imitate the trademark, trade name, corporate name, slogan, or other mark of identification of another member of business in any manner or form that would have the tendency or capacity to mislead or deceive. • Members will become familiar with the content of these Member Standards and draw them to the attention of clients as appropriate from time to time. • A member, be they a franchisor, vendor, franchisee, franchise broker, or representative of a franchise system should not sell a franchise if at the time the franchisor or vendor franchisee knew or ought to know that a reasonably competent franchisee would be unlikely to be able to successfully operatethe franchise. • Members are expected to behave professionally and refrain from illegal, unethical or improper dealings or otherwise act contrary to the image of franchising or the FCA. The FCA recognises that its members have different needs, and that different types of members should co-exist harmoniously. The FCA works consistently to ensure all activities directly benefit the membership, while staying true to the main strategic objectives of the Board of Directors – enhancing the public reputation of franchising in the wider business sector, and ensuring Australia remains the most attractive market for both franchisors and franchisees, in which to franchise in the world.

Franchise Council of Australia 1300 669 030 info@franchise.org.au www.franchise.org.au

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Chapter 13

FRANCHISING IN NEW ZEALAND Rory MacDonald | Partner MacDonald Lewis Law â&#x20AC;&#x201C; Franchise Lawyers

About the Author Rory MacDonald has been actively involved in the area of franchising law for about 25 years and has been a member of the Franchise Association of New Zealand since it was formed. He has attended most of the franchise conferences in New Zealand, a number of conferences in Australia as well as conferences in Singapore, USA and a day meeting at Turkey. Rory has given lectures in franchising law and his firm has an active franchise law practice.

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hilst there has not been a recent survey of franchising in New Zealand it is understood that there are over 400 systems operating in New Zealand including a number of off shore systems and the industry is estimated to employ in excess of 100,000 people. There has been recent growth in the home and business to business sector as well as growth in the home building sector. The banks are active lenders in the franchise sector and competition to lend is keen between the banks. The economy is robust with GDP growth around 2.5 per cent per annum and that growth has partly been caused by a surge in migration to New Zealand. That surge is likely to slow but the overall GDP growth is expected to remain around 2.5 per cent. Apart from a big demand for home building (there is a significant shortage of homes in Auckland) there is also strong growth in the tourism sector throughout the country. The National Party (a centre-right party) has been in power for nearly eight years and throughout that time John Key has been the Prime Minister and Bill English has been the Deputy Prime Minister. Franchising is a largely healthy industry in New Zealand. Most systems are well run although there have been some sad stories of closures of franchise sites, partly attributable to poor site selection as well as attributable to franchisors who do not do enough research or put enough effort into supporting their franchisees. Recent legislation called the Health and Safety at Work Act 2015 have toughened the laws relating to health and safety issues in New Zealand and this has meant the revision of many Franchise Agreements. There is a bill called the Commerce (Cartels) Amendment Bill which may have some impact on the way franchising is practised in New Zealand if it ever becomes law. It is a bill that has been deferred for some time.

The Franchise Association of New Zealand If you are looking for a business opportunity or needing advice on franchising, our recommendation is that you don’t sign anything until you have asked the question: “Are you a member of the Franchise Association of New Zealand?” Members of the Franchise Association are the franchise professionals, committed to uphold ‘Best Practice in Franchising’, and the Association works hard to promote the benefits of dealing with members, both for those looking to purchase a franchise and also those who need to gain professional advice. The benefit of FANZ membership for franchisees was recognised in the New - 112 -

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Zealand Prospective Franchisees Survey*. The survey found that 75.7 per cent of prospective franchisees considered membership of the Franchise Association of New Zealand (FANZ) important or very important, when considering a franchise to buy into. As the peak body for the franchise community in New Zealand, the Association makes representations to Government on issues of concern to franchisors and franchisees including such issues as proposed legislation; new business support programmes and business taxation. The Association often conducts email surveys of members on key issues to gain valuable feedback prior to making a submission. Unlike a number of other countries in the world, including Australia, franchising in New Zealand is governed by the same commercial laws as any other business. In 2008 the Ministry of Economic Development called for submissions on the possibility of introducing franchise specific regulations following a high profile fraud case. In 2009, however, the Minister of Commerce concluded that there was no need at that time for the introduction of franchise-specific regulations and went on to say that there was little evidence of widespread problems in the sector. He drew attention to the Franchise Association of New Zealand’s Code of Practice as an area where self regulation was working. Despite the substantial difference in the regulatory environments between New Zealand and Australia, the two 2012 surveys show remarkably similar levels of franchising disputes.

Buying your New Zealand franchise Buying the right franchise can have many benefits over the stand-alone business, not least of which is that you can potentially purchase into a franchise system that has a proven track record and one where you will receive all the help you need to become successful. As a prospective franchisee, an important part of your due diligence should be to establish whether or not the franchise you are considering is a member of FANZ. Don’t be misled by a statement such as, “we are not members but we abide by their Codes”. We have been involved in matters where circumstances have gone badly for franchisees and we have been limited in our ability to assist the relevant franchisees as the franchisors are not members of the FANZ and really have no regard for the Code of Practice of the FANZ. Of course, there are franchise systems such as McDonalds who are currently not in membership but who operate ethically and provide valuable business opportunities for the prospective franchisee. In all cases, however, you should ask the franchisor to explain to you why they are not members. - 113 -

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For a franchisor to gain membership of the Association requires that they submit their documentation for scrutiny to ensure that their Franchise Agreements contain all the elements required under the Association’s Codes and Rules. Some of the key elements that are required are: • Full and proper disclosure of matters important for a prospective franchisee to know and understand; • A seven-day cooling off period before a prospective franchisee is finally committed to the purchase; • A requirement that the prospective franchisee produces a certificate from their solicitor to the effect that they have had the agreement explained to them – or a signed statement that they have declined to take independent legal advice; and • If things go wrong, compulsory mediation by a FANZ appointed experienced franchise mediator as a first step in dealing with the issue. The Association’s independent Scrutineer carries out compliance checks on a biennial basis to ensure that documentation maintains the standards that are required. Carrying out your due diligence on every aspect of your intended franchise system is vitally important. The New Zealand Prospective Franchisees* survey found that over 70 per cent of prospective franchisees met with three or more franchisors before making up their minds and nearly 75 per cent talked to three or more franchisees of their intended franchise system as part of their decision making process. To assist all prospective franchisees make informed decisions, FANZ has developed, in conjunction with Massey University, a five segment free online training course that is available through the FANZ web site www.franchiseassociation.org.nz. A key differentiation factor for a franchisee dealing with a franchisor which is a member of the FANZ is that the FANZ franchisor is bound by the Code of Practice, the Code of Ethics and the Franchise Association Rules. In the event that any of these codes are not adhered to by the franchisor, the franchisee has the ability to make a formal complaint to the Complaints Panel. The Complaints Panel is fully independent of the FANZ. If your complaint is upheld, the franchisor can be required to rectify the situation or face a range of penalties that are contained within the Association’s Code of Practice. If the franchise you are going to purchase is from a member of FANZ, you too will be required to sign up to the Association’s Code of Practice and - 114 -

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Code of Ethics to ensure that as a franchisee you undertake to maintain ‘Best Practice’. In addition to standards and compliance, franchisors, franchisees and service provider members gain much from membership to the Association. Apart from the significant marketing advantage of being able to use the Association’s logo as a sign of credibility, membership also opens up a whole range of opportunities to advance their knowledge and learn from the experience of others. This is a unique advantage not available to non-member franchise systems and is clearly demonstrated at annual conferences where first time attendees regularly comment that they are amazed by the amount of advice and information that was freely exchanged by members. As a Member or the franchisee of a Member you have the opportunity to enter the prestigious annual awards, which culminate in a gala awards dinner in November each year. These awards are based on an internationally recognised business excellence system and not only provide you with the opportunity to showcase your business, but also gain valuable insight into the opportunities to improve your business from the feedback reports provided by the evaluators. There are entry categories for both franchise systems and franchisees and winners regularly use their success in marketing campaigns.

Exporting Your Franchise to New Zealand For an Australian franchisor coming into New Zealand, it is a relatively straight forward process from a legal point of view. Most systems that come into New Zealand from Australia set up a local company both to protect intellectual property in New Zealand as well as to ensure a ‘foothold’ in New Zealand. It is important to get trademarks registered in New Zealand as early as possible. It is not an expensive process but should be considered well before actually arriving in New Zealand. If the Australian franchisor is operating directly in New Zealand then the franchise agreement should be reviewed by a New Zealand lawyer and made subject to New Zealand law and to New Zealand jurisdiction for ease of franchise rights enforcement. Reputable Australian systems that come here ensure that they have a disclosure document that is relevant to New Zealand circumstances as well as a cooling off period etc. A number of Australian systems have made, as a key feature of setting up in New Zealand, an early application to join the FANZ especially as the FANZ requirements for disclosure differ in some ways from those required under the Australian regulations. Proper disclosure documents, cooling off period and mandatory mediation as a dispute resolution process are all part of the voluntary Code of Practice to - 115 -

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which all FANZ members are required to adhere. It certainly enhances the reputation of the system operating in New Zealand. Obviously, if a Master Franchisee is appointed in New Zealand then having that franchisee become a member of the FANZ is likely to be perceived as a system which respects the maintenance of high standards. In spite of a minority of lawyers and accountants seeing franchising as something akin to the Wild West, there are a significant number of lawyers, accountants and business brokers throughout New Zealand who have a reasonable understanding of franchising and the benefits it can bring to franchisees. There are a growing number of lawyers, accountants and business brokers who specialise in franchising. There is still a good deal of education to be undertaken for the public about avoiding doubtful franchise systems, but the trend is for specialised business brokers to promote healthy systems and to steer people away from the moonlight operators. The majority of the banks in New Zealand now have a strong presence in the franchise industry and bear in mind that all the major banks in New Zealand are Australian owned. There are reputable franchise consultants in New Zealand with well-established track records and for anyone who attends the annual FANZ conference, it is manifest to observe that there is a strong and proactive congeniality within the franchise industry in New Zealand. There are a small number of dedicated and respected franchise consultants in New Zealand who can be invaluable in modifying systems coming into this country. Involving their use can considerably diminish the likelihood of a legal claim being brought against a franchisor coming across from Australia. Be aware that employment laws in New Zealand are similar to Australia and dismissing staff is not an easy process. Also New Zealand has an Act called the Resource Management Act which, coupled with the Building Act, means that obtaining building consents for shop fit outs can be slow and expensive. It is vital to stress the need to do plenty of homework. Obtaining sound taxation advice is essential before coming into New Zealand. There is a withholding tax system for payment of royalties and other fees from New Zealand to Australia but there is plenty of advice available from accountants who understand the taxation laws between the two countries. It is important to remember that GST applies to everything in New Zealand (even food items) and the tax structure here is somewhat different from Australia. For a start there is no such thing as stamp duty. The government - 116 -

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Kiwi Saver superannuation scheme requires contributions from employers to be made when employees opt into the scheme. It is also important to know that we have the Personal Properties Securities Act which is a system of an online registration of all charges (e.g. what used to be debentures for companies) against both individuals and companies as security for monies lent and where goods and services are supplied on credit. New Zealand has recently been named as the sixth highest ranking country based on the United Nations Development Programme which has regard to the standard of living of its people, its populationâ&#x20AC;&#x2122;s access to knowledge and its populationâ&#x20AC;&#x2122;s chances of living a long and healthy life. There are many success stories for Australian systems entering into New Zealand. A point to remember, however, is that the disposable income of New Zealanders is not quite the same as that of Australians. Having said that, the lifestyle differences between Australia and New Zealand are not significant and so long as the homework and planning are done carefully then there are good prospects for Australian systems to enter into New Zealand and becoming successful. For more information or to find out more about the work of the Association and the Codes of Practice, visit www.franchiseassociation.org.nz *New Zealand Prospective Franchisees â&#x20AC;&#x201C; Franchize Consultants Ltd and franchisebusiness.co.nz - April 2011

Franchise Association of New Zealand (nz) 09 274 2901 contact@franchise.org.nz www.franchiseassociation.org.nz

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Chapter 14

How To Franchise Your Business Simply Brian Keen | Managing Director Franchise Simply

About the Author Brian Keen, Australia’s most sought after advisor for business owners considering franchising, has worked in the franchise sector for over 30 years and truly understands the leverage franchising could provide for the right business. As a franchisee once himself, opening and operating seven stores in just five years, Brian has first-hand knowledge and experience as to whether a business owner should consider franchising as their core business model for growth and ultimately freedom. Even though Brian has personally consulted with the biggest names in the franchise industry, his true passion is working with business owners who have reached the critical moment in their business by asking: “Should I Franchise My Business?” In Brian’s new book Should I Franchise My Business? he breaks down the ten biggest myths that most business owners believe are true about franchising and tells the truth about how to increase your profits while allowing you to retake control of your life by working fewer hours through a no-hype franchising process. Brian has shown countless business owners how to transform a family-sized firm into a multi-million dollar asset, while saving them tens of thousands of dollars in consultancy fees in the process.

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Franchising – More Than Just Systems? A franchise without a system is like a car without wheels – it’s just not going anywhere. Whether you are just starting up, you currently have 50 franchisees or are somewhere in between, if you are to franchise, you need a clear, simple and well documented system. Just as any well run business does. Which is why we have just added a new part to our business, FranchiseSimplySYSTEM, a fabulous software system for holding your franchise system so it is simple to put together and easy to use. But I have found during my 30 years dealing with every aspect of franchised business for both myself and others, success involves so much more than just systems and a set of documents. Converting to the franchise model will create change in almost all parts of your business. Here are some examples.

BUILDING TWO BUSINESS STRUCTURES You are in fact building at least two very different but linked business structures, one for you as franchisor and one for your partners in business, your franchisees. Your franchisees will take responsibility for dealing with your clients or customers and they bring in the money. Your franchisees will be doing much of the technical work your business now concentrates on. You, as franchisor, and leader of the franchise group, need to make sure everything is working and that you provide support so your franchisees can cover their part of the bargain. You are going to trade franchisee service for the money they pay and as they will be watching your every move to make sure they get value for money, you had better do your part well.

FRANCHISOR SUPPORT So yes, one of your core roles as franchisor is to look after your franchisees. And this will involve different skills with different franchisees as they grow in your partnership. In the early days, you will be inducting them into the franchise. Teaching most of them exactly how you want them to do business. How to make up the burger to meet your customers’ expectations. How to interact with your customers. - 120 -

How To Franchise Your Business Simply

How to make your business look and feel. You will also be teaching many of them the basics of business. All about accounts, advertising, converting leads to sales. As time goes on though, your interaction with this group will change. They know the basics and understand all the technical details. But they will be looking for change and maybe help in growing their franchises. Perhaps by adding more outlets so they, like you, will need to learn how to step out of the business and manage it from the outside. As Tim Wise, founder of the Tap Doctor explained to me, as his franchise matured, he needed to change the way his staff interacted with franchisees and so he needed to adjust the skill-set of the staff he employed in his Support Office to match franchisee needs.

THE MARKET SAYS YES Looking after your brand and marketing is also a central task for any franchisor. Marketing in a franchise, as with any business, involves far more than just advertising. First, and most important, you really need to understand the market that loves your product. Make absolutely sure you have a product which has a sustainable tribe of raving fans. And then work out how big you want the franchise group to be. Marry the two and make sure your product is presented to your tribe in a way which will satisfy their every desire. And remember, it is the characteristics of this tribe of raving fans which will provide the details for you to work out your franchisee territories, which in turn feed into your fee structures. Great fee structures and profit will ultimately determine whether you have happy franchisees or not. Secondly, looking after the brand, to make sure everything looks the same and works the same, so your franchisees have enough leads to keep them (and you) profitable and happy are central roles. You cannot afford to let your franchisees make changes to the brand as they wish. This doesnâ&#x20AC;&#x2122;t mean you cannot make adjustments to meet cultural differences in different localities, but those changes in service, product and the way your business looks and feels need to be carefully considered by you within the context of keeping the heart of the brand consistent. Subway in India, for instance, overcomes local cultural needs by serving from two counters. One a traditional Subway offering and the other with a vegetarian counter to suit religious requirements and cultural tastes. McDonaldâ&#x20AC;&#x2122;s in Australia was the first to introduce the McCafe counter to meet the need we have for espresso - 121 -

Business FranchiSe Guide

coffee on the road. But these changes are made in a carefully considered way. Thirdly, take control of how your franchisees get their customers. In many franchises, responsibility for supplying leads (advertising) to each franchise outlet is also held by the franchisor. Jim Penman from Jimâ&#x20AC;&#x2122;s Mowing, for example, decided right at the beginning of his journey in franchising that he wanted people out in the field to be mowing lawns and bringing in the money. And that meant they should not be spending time doing office work they were simply not suited to doing well. So he decided the franchisor office would take every call for a lawn to be cut. The job was costed there and then allocated to the appropriate franchisee to complete. The balance of how much advertising is undertaken locally will be different with each franchise group.

TWO SIDES OF THE SAME BUSINESS So yes, big or small, the secret is to realise you are building two completely different business structures from your current business and you will be doing business completely differently in the future. In order to tease out how you will organise these two sides of the business so they work together, I have found I need to look at every aspect of your business; not just marketing and support, but also how the money works for both sides of the franchise in the long term, who is going to do what exactly, how product is going to be supplied. The list of questions is endless. To simplify the process I have an uncomplicated four step system, my Franchise Success Path, which covers every aspect. At the outset I have to say, I agree, franchising is not necessarily easy. It is hard work. But I know the process can be made simple. These are some of the things I would be looking for in your business.

Expansion with Choice How big do you need your franchise group to be? Do you have a simple business method which will suit the largest number of potential franchisees or does the complexity in your business restrict the market? How skilled do you need your franchisees to be? In the main, I have discovered people who choose to grow their businesses through franchising are entrepreneurs. They are always looking for something new and so most who come to me have businesses with many layers. The trouble is, people who are attracted to buying franchised outlets are very - 122 -

How To Franchise Your Business Simply

different. They are looking for a clear business idea, one which not only appeals to them but which they can see will work. It is the simplest franchise systems which appeal. I had a client in the wedding industry who provided both the wedding ceremony (usually on a beach) and the wedding celebration afterwards. She found it was difficult, logistically, to organise clearing up after the ceremony and then running to the celebration venue with sand between her toes in time to greet the bridal party. And when she franchised she found the combined business was just too complex for one person to manage. So she split her business into two franchise groups – one to deal with the wedding ceremony and the other to deal with the wedding celebration. What she also then found was that the two franchises attracted very different franchisees, with very different profiles and skillsets. Her story is not unusual. The thing is, these simple franchises appeal to a much wider range of people in the franchisee market, so you get more applicants giving you more choice so you are able to select the best franchisees available and making it easier to expand the group.

Money Makes the World Go Round Absolutely key is understanding the money. As franchisor, you bring no money into the group. Your franchisees make it and pay you for services you bring to them. This simple fact is often at the bottom of disputes and where franchisees are not happy with your service. The bottom line is you want happy franchisees who love you and it is profit – their profit – which will please your franchisees. So, right at the beginning, as you design your franchised business, you need to work out the money. • How much does each franchise outlet need to earn to be profitable enough to support you and them? • How much does your product need to cost and sell for? • How many items do your franchisees need to sell? • Who are the people with the money and love of your product and what are their characteristics? • Where do they live and what are their habits? • What is the fee structure which will support your group as it begins and as it matures? - 123 -

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The list is long… But once you know the answer you will be able to set the structure of fees. You really need to get this right as you will be stuck with it and not easily able to make changes. Training and conferences will need to be accounted for and there may be accounting fees. Think about negotiating the purchase of products with suppliers to give you rebates, but be sure to disclose them to your franchisees so there is no feeling that you are making some extra on the side. What about renewal fees? Goodwill? Fit out? Plant and equipment? There is a lot to think about when setting your fee structure and professional advice is clearly the right avenue to take. Returning to the question of how large you want your group to grow, it’s about sustainability and your critical mass – what’s your tipping point with outlet numbers? Some say any less than 60 outlets and you will not succeed. I do not agree. And neither does the market. The trend in the US is for micro franchise groups to grow, servicing a particular niche or a particular regional area. Certainly I know a number of smaller groups, satisfied with being where they are. A small family owed franchise group of bakers on the NSW Mid North Coast and its hinterland only have about eight outlets but this is enough to give the group what it needs. Others work hard at growing the franchise group to meet the needs of a much wider audience. The thing is, you stand to become successful faster if you work all of this out at the beginning. Then be adaptable and move with the market into the future.

Be Adaptable or Die Remember the video store. First the huge expansion of free-to-air television, then online piracy. Now, with programs re-playable on demand, Netflix has taken over. Any franchise group which has been around for years will not look anything like it did when it began. If you want to have a franchised business which goes the distance, you have to adapt. It’s Darwin’s Theory of Natural Selection all over again: Adapt or Die. I am watching Maccas go through its latest round of adapting in Australia. - 124 -

How To Franchise Your Business Simply

Originally just a burger store offering “chips with that”, they realised in the 90’s that if they were going to get the kids they needed something to attract Mum as well and McCafe and a suite of healthier food happened. Today it is all about choice, they have just introduced a concept, new to them, the flexible burger – you choose what is in there. Shades of one of their biggest fast food competitors – Subway perhaps. We’ve seen the rapid emergence of gourmet pizza with Pizza Capers and Crusty Pizza. And now the third generation of local niche franchises such as New York Slice and Pizzarzzi cater to a new niche of foodies with palates influenced by My Kitchen Rules and Masterchef. And don’t be fooled into thinking this does not apply to you because such changes apply to a lot more than food. Keep an eye on what is going on in the market and adapt to keep up.

ARE YOU FIT TO LEAD? Franchising is not for everybody. You may know everything there is to know about franchising but you have to ask yourself the question, “Is franchising right for your business?” And more importantly, “Is it right for you?” Do you have the business skills, the confidence and personality to make your franchise system work? One of the other deciding factors when analysing whether a business is ripe to franchise, is the personality of the business owner or owners. Is that person a natural leader? Does he or she have the characteristics to lead a franchise chain? However, as Jim Collins so succinctly puts it, leadership can be learned. Some of the most successful leaders in business and politics are just weird. The key is to understand three things. • Be humble and listen to what others are saying to you and be able to respond. When things go wrong be prepared to sit down and discuss the problem. Hear what your franchise partners are saying. • Stand up for your franchise principles and be prepared to take the hard decision when needed. • Understand how different character types and different skillsets fit into your business. Profiling will help ensure the right communication and decision making styles fit into the different levels of the franchise. - 125 -

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And don’t restrict the understanding to others in your team – if you understand how you fit into the scheme of things, you will not only be able to adjust your style to lead different groups of people more effectively, you will realise you really need to employ others to fill the gaps your personality and skillsets show.

DON’T SELL – RECRUIT At last, as you move onto recruiting your franchisees, remember, it is about attracting really good people. As John O’Brien from Poolwerx explains, “Think about it this way, you are not selling franchises, you are selecting franchise business partners and it is important to have that clear difference in mind.” You are looking for people who are driven, who are energetic, who are experienced, and who have the skills and want to see the group succeed. These days a broad range of people are interested in becoming franchisees. A lot of younger people who previously would have gone in to a career are now seeking more exciting opportunities. Perhaps they are uncomfortable in the job market where the hire and fire mentality combines with the vulnerable economy and promotes a sense of insecurity. Owning a business seems a far more stable proposition and franchising is a perfect way to get started in their own business. Franchising also attracts people of middle age. They may have come out of middle management, taken early redundancy and are now looking to invest in their own business. A lot of tremendously successful franchisees have come from those sorts of backgrounds. But take care. There are people who just want to buy a job and that can be a bit risky for the franchisor. It really depends on the sort of franchise they are buying. Be sure that they have the commitment, experience, and right goals in place to succeed in business.” Franchisees can come from anywhere. But make sure you have a good fit for your group.

AND FINALLY – IT’S TRUE – YOU REALLY CAN’T BEAT THE SYSTEM As I said at the beginning, the foundation of any good business, especially a franchised business, is a great system. And the thing is, a systemised business gives you a great exit strategy. This was proved by a client of mine. - 126 -

How To Franchise Your Business Simply

Speedy Lube is a car servicing business. My client was thinking of franchising and I worked with him to systemise the business. We got all the documents in place, uniforms and scripts for each employee to greet and treat customers. Everyone needed to deal with clients in the same way. My client became unwell and decided not to go down the franchising path but to sell the business. The systems and standards meant that the business sold fast and for significantly more than it would have otherwise done. As a standard car servicing business the market would have been restricted to mechanics, not generally a group with easily accessible funds. The purchaser of this business was not a mechanic, he was a professional businessman and car enthusiast with limited mechanical skills who knew that he could slip into Speedy Lube easily because the systems were there and the staff well trained. Which is why we are a modern business and have systemised our processes, introducing our new software, FranchiseSimplySYSTEM to do two things. First, we use it to deliver our four step Franchise Success Path to you. And second, this same SYSTEM is there for you to easily develop your Franchisor and Franchisee Operations Manuals so they are simple for your future franchisees to use and abide by. To conclude, if you are looking to franchise your business, remember you do need to look at how the whole franchise will be structured and to review each aspect of the business to make sure you grow a group of happy, profitable, franchisees. That way you will become happy and profitable too. To Your Success!

Brian Keen Managing Director Franchise Simply 1300 960 136 brian@franchisesimply.com.au www.franchisesimply.com.au

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What is a Franchise?

Franchise Listings categories: Automotive Products & services....................................................... 130 Beauty products & services............................................................... 132 Business Services.................................................................................. 134 Cleaning Services.................................................................................. 135 Clothing Alterations............................................................................ 136 Courier Services.................................................................................... 137 Financial Services................................................................................. 138 Food - Coffee & Cafes............................................................................ 140 Food - restaurants & dining............................................................... 142 Food - takeaway..................................................................................... 146 Furniture & Bedding.............................................................................. 147 Health & Fitness..................................................................................... 148 Retail........................................................................................................ 149

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Automotive Products & services

Rent 2 Own Cars Australia Pty Ltd 203 Brisbane Rd Mooloolaba QLD 4557 Contact: Paul Green | Phone: 0439 628 765 Email: info@rent2owncars.com.au | Web: www.rent2owncars.com.au

BUSINESS DESCRIPTION:

COMPANY DETAILS:

Rent 2 Own Cars is an award winning business model that helps people that do not qualify for mainstream finance purchase a car.

Date of first franchise: 04/12/2010

This opportunity is perfect for dealerships, husband & wife or partnerships. We have a number of car dealerships making massive profits with our system by being able to target a new audience to sell too. For the sole trader this business can be run by 2 people, all sales leads are generated by our webpages and sales are by appointment only, so there is no sitting around waiting for customers. We have a national admin centre if needed for all secretarial work, follow ups, customer relations even marketing management. Our software is cloud based so you can monitor your business from anywhere.

Training provided: Yes Territories available: Australia & New Zealand FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 25 FINANCIAL DETAILS: Initial franchise fee: $77,000 Minimum investment: $140,000 (Incl Franchise Fee) Royalty fee: $300 per sale Financial assistance: TAP Advertising/marketing fee: $300 per month

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What is a Franchise?

Automotive Products & services

Snap-on Tools 80 Holbeche Road, Arndell Park NSW 2148 Contact: Les Coppin | Phone: (AUS) 1800 762 766 Email: sota.franchise@snapon.com| Web: www.snapontools.com.au

BUSINESS DESCRIPTION: Snap-on Tools provides technicians with a high quality range of products and services that make their working life easier. They offer over 22,000 products to customers, including tooling, diagnostics and equipment for vehicle dealerships and repair workshops. Snap-on provides these products through its instantly recognisable fleet of mobile retail stores. COMPANY DETAILS: Date of first franchise: 1988 Membership: FAC, FANZ Training provided: 1 week training provided in the US, plus 2-6 weeks when onroad, plus ongoing training and support provided. Territories available: Territories available across Australia and New Zealand

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FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 175 FINANCIAL DETAILS: Initial franchise fee: $40,000 ex-GST Minimum investment: $50,000 Financial assistance: Snap-on Finance Packages Available

Business FranchiSe Guide

Beauty products & services

Australian Skin Clinics Lvl 1, 87-89 Upton Street, Bundall Qld 4217 Contact: Mark Crapper | Phone: 07 55 090 000 Email: mark@ozskin.com | Web: www.ozskin.com

BUSINESS DESCRIPTION: Established in 1996, Australian Skin Clinics is widely recognised as a leading authority in cosmetic medicine, laser hair removal and rejuvenation. Our medi-aesthetic laser clinic franchise business is expanding rapidly. COMPANY DETAILS: Date of first franchise: 2011 Membership: FCA Training provided: Yes Territories available: Areas throughout Australia

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 50 FINANCIAL DETAILS: Initial franchise fee: $50,000 Minimum investment: $250,000 cash and/or availability equity may qualify you. Royalty fee: 10% Financial assistance: Available to qualified applicants Advertising/marketing fee: 4%

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Beauty products & services

Hairhouse Warehouse Level 1, 605 Doncaster Road, Doncaster Vic 3108 Contact: Peter Fiasco | Phone: (AUS) 0451 370 060 Email: franchising@hairhousewarehouse.com.au | Web: www.hairfranchise.com.au BUSINESS DESCRIPTION:

COMPANY DETAILS:

As a franchisee, no hair or beauty certification is required – just a passion for success.

Date of first franchise: 1998 Membership: FCA, HBIA Training provided: Intensive workshop and in store training, as well as ongoing training and support in-store

With over 20 years of experience in the hair and beauty industry, Hairhouse Warehouse is one of Australia’s leading retail franchise brands.

Territories available: NT/Darwin Metropolitan and Regional NSW Metropolitan and Regional SA/Adelaide Metropolitan and Regional WA/Perth Metropolitan and Regional QLD Metropolitan and Regional

Hairhouse Warehouse’s vision is clear and simple. Offer quality products at a reasonable price, whilst providing exceptional customer service. This mission is clearly on display in each and every one of our locations by simply looking at our franchisees and the teams they work with.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

As Hairhouse Warehouse continues to dominate the hair and beauty industry in Australia, the brand and franchisees are seeing amazing results. To continue our brand domination Hairhouse Warehouse is planning to expand to over 180 stores over the next three years.

Current: 140+ FINANCIAL DETAILS: Initial franchise fee: $66,000 +GST Minimum investment: $250,000 to $350,000 for Greenfield sites Royalty fee: 6% of gross sales +GST Advertising/marketing fee: 3% of gross sales +GST - 133 -

Business Services

INXPRESS 1/26 Flinders Parade, North Lakes QLD 4509 Contact: David Wilkinson | Phone: 0412 692 052 Email: sales.au@inxpress.com | Web: www.inxpress.com

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

BUSINESS DESCRIPTION: As one of DHL’s largest shipping partners, InXpress provide heavily discounted shipping to SME’s by leveraging small orders into large volume discounts.

Current: 36 Nationally and over 300 Globally

With massive global buying power and an international network we’re passionate about our service and our customers. With an expanding National brand, InXpress Franchisees leverage the savings to build a business with long term residual income and lifestyle

FINANCIAL DETAILS: Initial franchise fee: $64,950 + GST Minimum investment: $64,950 + GST Royalty fee: 30% of gross margin

COMPANY DETAILS: Date of first franchise: 2002 Membership: FCA and BFC Training provided: Business development in successful model, with sales training and ongoing support. Territories available: National opportunities across all capital cities and metropolitan areas - contact us for more details.

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Cleaning Services

Chem-Dry Unit 3 / 30 Park Road, Mulgrave NSW 2756 Contact: Alan Biddle | Phone: 1800 243 637 Email: info@chemdry.com.au | Web: www.chemdry.com.au

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

BUSINESS DESCRIPTION: Chem-Dry is the worldâ&#x20AC;&#x2122;s largest carpet cleaning franchise with over 3,500 individual franchises currently operating worldwide. Chem-Dry has been operating in Australia since 1986.

Current: 140 FINANCIAL DETAILS: Initial franchise fee: $14,000 + GST

Our unique, hot-carbonated extraction cleaning method, combined with best in-class products and services make it impossible to find a better carpet and upholstery cleaning business opportunity.

Minimum investment: $39,950 + GST Royalty fee: Fixed Monthly Royalty of $686 + GST per month Financial assistance: Finance packages available to approved purchases Advertising/marketing fee: Nil

COMPANY DETAILS: Date of first franchise: 1986 Membership: IFA Training provided: Franchise partners receive a comprehensive 3 Day training course, plus initial on-road training. ChemDry also provides ongoing training and dedicated 24/7 support. Territories available: Franchises available in all Metropolitan areas and regional centres.

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Clothing Alterations

LOOKSMART ALTERATIONS Level 3, 73-75 Dunmore Street, Wentworthville NSW 2145 Contact: Ray Bryant | Phone: (AUS) 02 9637 8222 Email: contact@looksmartgroup.com | Web: www.looksmartgroup.com

BUSINESS DESCRIPTION:

COMPANY DETAILS:

LookSmart Alterations is The Stylist Tailor in the Australian and New Zealand marketplaces. You don’t need to be a tailor to own a LookSmart Alterations franchise. A LookSmart franchise can be run under complete management.

Date of first franchise: 2000 Membership: FCA Training provided: 2 to 4 weeks in-store training and ongoing support Territories available: All States in Australia and New Zealand

• 54% of franchisees are non-tailors

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

• 49% of franchisees are multi-site owners • 53% of LookSmart franchises are under complete management

Current: Over 120 stores in major shopping centres across Australia and New Zealand

LookSmart Alterations’ loyal customers include one million consumers per annum, Sass and Bide, SABA, Review, Marcs, Specsavers, David Jones, Myer, ACS, Tarocash, YD, Virgin Australia, Roger David, Qantas and Jetstar.

FINANCIAL DETAILS: Initial franchise fee: $25,000

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Courier Services

FASTWAY COURIERS Level 9, 491 Kent Street, Sydney, NSW, 2000 Australia Shed 5, Level 1, Lever Street, Ahuriri, Napier, NZ Contact: (AUS) Fastway FSO or (NZ) Fastway FSO Phone: (AUS) 1300 FASTWAY or (NZ) 06 833 6333 | Email: (AUS) fso@fastway.com.au or (NZ) recruitment@fastway.co.nz | Web: www.fastway.com.au or www.fastway.co.nz BUSINESS DESCRIPTION:

FRANCHISE OUTLETS AUSTRALIA

Established in New Zealand in 1983, Fastway Couriers’ global network includes 63 regional depots and 1,500 Courier Franchisees across Australia, New Zealand, Ireland, Northern Ireland and South Africa.

Current: AUS over 800 Courier Franchisees NZ over 300 Courier Franchisees FINANCIAL DETAILS:

Through its industry-leading franchise system, Fastway Couriers has developed a reputation for providing fast, friendly and cost-effective service to its customers – an achievement which has earned the franchise over 50 industry accolades.

Initial franchise fee: From $25,000 + GST ($AUS) and from $15,000 ($NZ) Minimum investment: From $25,000 + GST ($AUS) and from $15,000 ($NZ) Royalty fee: N/A Financial assistance: N/A Advertising/marketing fee: N/A

COMPANY DETAILS: Date of first franchise: 1984 Membership: FCA and FANZ Training provided: Ongoing training and support is provided to our franchise partners. Territories available: Various territories are available throughout Australia and New Zealand.

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Financial Services

First Class Capital Level 12 50 Margaret Street, Sydney NSW 2000 Phone: (AUS) 1800 307 903 | Email: info@firstclasscapital.com.au Web: www.firstclasscapital.com.au partners AUSTRALIA/ INTERNATIONAL:

BUSINESS DESCRIPTION: First Class Capital came to fruition through the need and demand of small to medium size business owners needing cash flow and working capital solutions that are delivered country wide by a network of Channel and Referral Partners.

Current: 205 FINANCIAL DETAILS: Initial franchise fee: Nil Minimum investment: Nil

By becoming a First Class Capital Partner you’ll benefit by providing “in-demand” solutions in a growth industry, with no initial investment or risk of capital loss.

Royalty fee: Nil Advertising/marketing fee: Nil

COMPANY DETAILS: Date of first partner: 2013 Membership: FCA Training provided: Monthly induction training in each state, quarterly professional development days in each state and state BDM support. Territories available: Australia wide

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Financial Services

The Interface Financial Group â&#x20AC;&#x201C; IFG 50/50 Level 3, 2 Brandon Park Drive, Wheelers Hill, VIC 3150 Contact: David T. Banfield | Phone: (AUS) 1300 957 900 Email: ifg@interfacefinancial.com | Web: www.interfacefinancial.com.au/franchise

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

BUSINESS DESCRIPTION: Interface franchisees provide short-term working capital for expanding businesses through a unique and proven invoice discounting programme.

Current: Australia 6 Canada 7 U.S.A. 50 UK & Ireland 10

COMPANY DETAILS: Date of first franchise: 2014

FINANCIAL DETAILS:

Training provided: Extensive initial training (5 days) covers both theoretical and practical aspects of the business. Ongoing regular training and coaching is also provided.

Initial fee: $34,500

Territories available: Single units are available in all territories.

Advertising/marketing fee: N/A

Minimum investment: Franchise fee+ working capital of $50,000+ Financial assistance: All funding is done together - franchisee and franchisor

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Food - Coffee & Cafes

theobroma 3A Kia Court, Preston VIC 3072 Contact: Ben | Phone: (AUS) +61 431 727 004 Email: Ben@theobroma.com.au | Web: www.theobroma.com.au

• Site selection, fit-out expertise and property leasing experience.

BUSINESS DESCRIPTION: Theobroma is a Total Food and Beverage Concept offering consumers high quality chocolate and chocolate beverages with the added enhancement of a full food menu, with some stores even offering a licensed venue. From handcrafted artisan chocolate jewels using real Belgian Coverture chocolate to hot and cold chocolate beverages, desserts, melted chocolate dips and retail products, there is something for everyone and for every occasion.

A professional team backs the franchise at Theobroma with extensive franchising, marketing and retail experience. COMPANY DETAILS: Date of first franchise: 2007 Training provided: 3 weeks and ongoing support Territories available: Australia, New Zealand and International

Our coffee blend is specially roasted for us by our Italian barista and is rated as one of the best in Australia.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

All this enhances the commercial viability and strength of the business model. The brand has 4 concepts - Lounges, Lounge Bars, Pavilions, Pavilion Bars.

Current: 20 Across Australia, New Zealand and International FINANCIAL DETAILS:

What the Franchise Offers • Innovative and unique concept that includes all of life’s pleasures. Chocolate, Coffee, Food, Alcohol and Retail. • Highest quality chocolate products. • Professional team with a range of skills to assist you. • Easy to manage and full training provided.

Initial franchise fee: $40,000 Minimum investment: $150,000 to $500,000 Royalty fee: 6% Financial assistance: referral available Marketing fee: 3%

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Food - Coffee & Cafes

Xpresso Mobile CafĂŠ PO Box 57, Carina, QLD 4152 Contact: Ryan Nichol | Phone: 1300 655 559 Email: joinus@xpresso.com.au | Web: xpresso.com.au

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

BUSINESS DESCRIPTION: Mobile Coffee Franchise system. Business to Business. Delivery of high quality hot & cold espresso coffee products as well as great food options to satisfy lunch cravings. New and innovative technology powers the equipment with no need for noisy generators and smartphone/beacon technology to connect with customers. Lifetime support from management team who have combined 25 years direct experience in the industry!

Current: 32 FINANCIAL DETAILS: Initial fee: Included in Minimum Investment Minimum investment: $122,500 + GST (includes new Mercedes Van) Royalty fee: Fixed Fee of $159 + GST per week after 6 months

COMPANY DETAILS:

Financial assistance: Yes, subject to approval

Date of first franchise: January 2013

Advertising/marketing fee: None

Membership: FCA, Franchise Registry of Australia Training provided: 3 weeks (online, 1 week in Brisbane, 2 weeks in-territory) Territories available: Multiple

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Food - restaurants & dining

FASTA PASTA PTY LTD Level 1, 137 The Parade (ENT Via Edward Street), Norwood SA 5067 Phone: (AUS) 08 8304 8600 Email: franchise@fastapasta.com.au | Web: www.fastapasta.com.au

BUSINESS DESCRIPTION:

COMPANY DETAILS:

With our authentic Italian background and 30+ years success story, Fasta Pasta is now Australia’s largest, independently owned group of ‘fresh pasta’ Italian restaurants.

Date of first franchise: 1990 Training provided: 12 weeks training in one of our company stores which will cover areas such as front of house, kitchen (all areas), necessary bookwork, Point of Sale, Management Skills.

An innovative ever-changing menu, with more healthy options and commitment to outstanding service, have all contributed to Fasta Pasta being voted Roy Morgan’s ‘Quick Service Restaurant of the Year’ in 2012.

Territories available: Nationally FRANCHISE OUTLETS AUSTRALIA: Current: 21

A Fasta Pasta franchise is a great opportunity to be part of our winning national franchise team of people who are passionate about fresh food and delivering outstanding customer service.

FINANCIAL DETAILS: Initial franchise fee: $50,000 + GST Minimum investment range: $500,000 - $800,000 Royalty fee: 6% of net sales Marketing fee: 3% of net sales

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Food - restaurants & dining

HOG’S BREATH CAFE Level 1, 152 Shore Street, Cleveland QLD 416 Contact: Peter Josefski | Phone: 1800 HOGSTER (AUS) or 0800 HOGSTER (NZ) Email: peterjosefski@hbca.com.au Web: www.hogsbreath.com.au or www.hogsbreath.co.nz Territories available: Nationally and throughout New Zealand

BUSINESS DESCRIPTION: Hoggies set out to be unlike any other restaurant. In a nutshell, it is about providing quality food and beverages in a casual environment with an over-riding friendly, party atmosphere. The diverse menu is centred around our famous 18 hour slow cooked Prime Rib, an unbelievably tender steak that melts in your mouth.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 80+ FINANCIAL DETAILS:

COMPANY DETAILS:

Initial franchise fee: $50,000 AUD (excluding GST)*

Date of first franchise: Established in Airlie Beach in 1989 and opened it’s first franchise store in 1990.

Minimum investment: $750,000 - $950,000 AUD Royalty fee: 5% of Net Sales*

Training provided: The eight-week Franchisee Training Program at Hog’s University covers: Management procedures, Front of House procedures, Back of House procedures, Account management, Introduction to the Support Office Team and Theoretical and practical instruction. We also provide comprehensive Operations, Kitchen and Staff Training manuals. Additional 3 week in-store training for new store opening.

Financial assistance: Accredited with a number of banking institutions Advertising/marketing fee: 2.5% of Net Sales* *Net Sales is Gross Sales less promotions, discounts and merchandise sales

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Food - restaurants & dining

LA PORCHETTA 192 Mahoneys Rd, Thomastown VIC 3074 Contact: Brendan Flanagan | Phone: 03 9460 6700 Email: franchising@laporchetta.com.au | Web: www.laporchetta.com.au

BUSINESS DESCRIPTION:

COMPANY DETAILS:

La Porchetta is the largest Italian Restaurant Chain in Australia and New Zealand, and love serving quality Italian food with fresh ingredients.

Date of first franchise: 1990 Membership: FCA & FANZ Training provided: Full in premise and off premise training provided.

The first La Porchetta Restaurant was opened in Melbourneâ&#x20AC;&#x2122;s Italian hub in 1985, and soon it became renowned as a special place to experience good food, love and a passion for life.

Territories Available: Victoria Metro and Regional, Sydney Metro, Tasmania, Queensland and Western Australia FRANCHISE OUTLETS AUSTRALIA:

La Porchetta is now looking to expand the network of franchisees throughout Australia and New Zealand.

Current: 60

We are looking for passionate food lovers with a strong work ethic and drive to join our family. You bring the dream and La Porchetta will provide the recipe for success.

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Food - restaurants & dining

STEVE COSTI’S FAMOUS FISH 3/346 Main St, Mornington VIC 3931 Contact: Sal El-Houli | Phone: 03 5976 8614 or 0425 786 584 Email: franchising@famousfish.com.au| Web: www.famousfish.com.au

BUSINESS DESCRIPTION:

COMPANY DETAILS:

Set sail in one of Australia’s most successful retail sectors!

Date of first franchise: May 25th 2015

Steve Costi and his family have been in the seafood business since 1958, and after years of success decided to franchise the Famous Fish business.

Training provided: 5 weeks blended theoretical and practical training in one of our company stores covering front of house, all necessary administration, point of sale and management skills.

Facts:

Territories available: NSW & VIC

• Seafood consumption in Australia has increased by 27% per capita since 1997

FRANCHISE OUTLETS AUSTRALIA:

• Of the 30,000+ take-away venues, generating in excess of $7 billion in retail sales, there are no multi-unit, integrated seafood operations

Current: NSW & VIC FINANCIAL DETAILS:

• Fish & Chips remains the #1 take-away food item sold by independent takeaways in Australia

Initial franchise fee: $40,000 + GST

• Consumption of seafood by Australians under 20, increases at double the rate of meat and dairy, annually

Royalty fee: 7%

Minimum investment: $200,000 (Dependent on Site) Advertising/marketing fee: 2.5%

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Food - takeaway

Wokinabox 13A/663 Victoria Street, Abbotsford VIC 3067 Contact: Michael Standley | Phone: 03 8851 4200 Email: guestrelations@arconcepts.com.au | Web: www.wokinabox.com.au

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

BUSINESS DESCRIPTION: At Wokinabox, we love authentic Asian dishes, and we take our inspiration from China to Malaysia and everywhere in between. Our product range comes from all over South East Asia. Our products range from Satay Chicken (the nationâ&#x20AC;&#x2122;s favourite) to seasonal specials.

Current: 33 FINANCIAL DETAILS: Initial franchise fee: $30,000 Minimum investment: $250,000 Royalty fee: 8%

The Wokinabox brand is synonymous with great-tasting Asian cuisine and is built upon a model of fresh food made by our skilled chefs with the highest-quality ingredients.

Advertising/marketing fee: 3%

COMPANY DETAILS: Date of first franchise: 2002

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Furniture & Bedding

snooze 21A Shierlaw Ave, Canterbury VIC 3126 Phone: (AUS) 03 9830 4166 Email: franchising@snooze.com.au | Web: www.snooze.com.au

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL:

BUSINESS DESCRIPTION: As one of Australia’s longest-running, most successful and innovative franchised business, Snooze’s experience in the bedding industry is second to none.

Current: 80+ FINANCIAL DETAILS:

Boasting more than 80 stores across Australia. Snooze offers a great return on investment.

Initial franchise fee: $50,000.00 plus GST Minimum investment: $450,000

Royalty fee: 3.5% Franchise Fee

COMPANY DETAILS:

Financial assistance:

Date of first franchise: June 1977

• Vendor finance options

Membership: FCA members

• NAB & ANZ accreditation

Training provided:

Advertising/marketing fee: 5% + 1%

• Sales and product training • Business management support • A national marketing program • IT Services

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Health & Fitness

Bodiez 24 / 7 Level 1 / 471 South Pine Road, Everton Park QLD 4053 Contact: Ann Longmuir & Stephen Southgate Phone: 0488556631 (Ann) / 0411220086 (Stephen) Email: ann@bodiezfitness.com.au / stephen@bodiezfitness.com.au Web: www.bodiezfitness.com.au BUSINESS DESCRIPTION:

COMPANY DETAILS:

It’s now time to share the experience of Bodiez 24 / 7 Fitness Clubs with all Australians with the launch of the Bodiez 24 / 7 Fitness Club Franchise.

Date of first franchise: First company owned store opened 2010

Our unique wellness system includes a virtual personal trainer which records all of the client’s details and can then customise a workout for them each and every time they come to the gym. Each of the workouts are recorded and so the fitness programs are able to be modified over time to increase the client’s level of fitness. The result is an effective, affordable workout at a time that suits the client. It can also be viewed from anywhere and anytime.

Training provided: Initial and ongoing training

Membership: FCA, Australian Institute of Fitness Corporate partner programme

Territories available: As per website listings FRANCHISE OUTLETS AUSTRALIA: Current: 2 FINANCIAL DETAILS: Initial franchise fee: $35,000

It’s because of this great combination of convenience, affordability and results that has seen Bodiez 24 / 7 first fitness club in Ipswich, which opened in 2010, grow from strength to strength. Today it has more than 700 members and continues to grow.

Minimum investment: $180,000 full turn key operating facility Royalty fee: 10% of gross weekly turnover Financial assistance: Available to approved purchasers Advertising/marketing fee: Included in royalty fee

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retail

7-ELEVEN STORES PTY LTD 357 Ferntree Gully Road, Mount Waverley VIC 3149 Phone: (AUS) 03 9550 0600 - VIC, (AUS) 02 9798 1200 - NSW, (AUS) 07 3291 9400 - QLD Web: www.7elevenfranchise.com.au

BUSINESS DESCRIPTION:

COMPANY DETAILS:

7-Eleven is a global success story with more than 59,000 stores world-wide. 7-Eleven Australia is growing rapidly and you can be a part of the growth opportunities by becoming a 7-Eleven Franchisee.

Date of first franchise: 1977 Membership: FCA, AACS Training provided: Our extensive training program includes classroom, in-store hands on training and also support in your store during your first four days of trading.

As a 7-Eleven Franchisee you will benefit from our position as market leader. Our business is committed to being the best in Australia in convenience retailing, we will work with you to deliver our market leading customer offer. We are continually investing in innovation, delivering compelling customer marketing and promotional campaigns, and evolving our offer to meet customer needs.

Territories available: VIC, NSW, QLD, ACT, WA FRANCHISE OUTLETS AUSTRALIA: Current: 637+ FINANCIAL DETAILS: Initial franchise fee: Site specific Minimum investment:

You will be backed by our comprehensive support system. Our system gives you a complete turn-key set up including industry leading POS systems and extensive training and operational support services.

$400,000 - $1,000,000 (site dependent) Royalty fee: Gross profit split, determined progressively. Other income stream profits, such as commissions, are also shared

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retail

Beaumont Tiles NSO: 225 Marion Rd, Marleston SA Contact: Trevor Dixon | Phone: 08 8292 4444 Email: franchiseenquiry@tile.com.au | Web: www.beaumont-tiles.com.au

BUSINESS DESCRIPTION:

FRANCHISE OUTLETS AUSTRALIA:

Beaumont Tiles are Australiaâ&#x20AC;&#x2122;s largest tile group bringing the best and latest to our Australian customers - we supply more tiles to Australian homes and builders than any other tile retailer. We are proudly unique in what we do and how we do it and each and every person is valued for their contribution and input.

Current: 64 franchise stores as part of our 108 strong store network. FINANCIAL DETAILS: Initial franchise fee: $45,000 + gst which includes opening promotion and advertising costs. Minimum investment: Indicative Range $265,000 - $335,000 + gst

COMPANY DETAILS:

Royalty fee: 4%

Date of first franchise: 1990 (very first), & new franchise system 2004

Advertising/marketing fee: Group advertising and marketing levy 5%

Membership: FCA (Franchise Council of Australia) Training provided: Extensive in house training program provided Territories available: NSW, VIC/TAS, QLD, SA & NT

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retail

BRIGHTEYES franchising PTY LTD 36 Cessna Drive, Caboolture QLD 4510 Contact: Ralph Edwards | Phone: (AUS) 1800 178 251 Email: enquiries@brighteyes.com.au | Web: www.brighteyes.com.au

BUSINESS DESCRIPTION:

COMPANY DETAILS:

Searching for true work-life balance in a fun and friendly retail environment focused on enhancing Australia’s active outdoors lifestyle, then look no further than BrightEyes.

Date of first franchise: 1985 Membership: FCA Training provided: Full training provided & ongoing support Territories available: Australia wide

If you like the idea of simply opening the shutters when you arrive in the morning, with no early morning preparation or late night clean-up, this is the franchise opportunity for you.

FRANCHISE OUTLETS AUSTRALIA/ INTERNATIONAL: Current: 48

Established in 1985, BrightEyes is Australia’s largest privately-owned retail sunglasses network and is eyeing new store opportunities throughout the country for Franchise Partners to share in its bright future.

FINANCIAL DETAILS: Initial franchise fee: POA Minimum investment: $120,000 Royalty fee: 5% Financial assistance: No

Owning and operating a BrightEyes franchise can be the most satisfying and fun way to earn a living that you’ll ever know. At BrightEyes, we are not simply selling sunglasses – we are selling an enhanced way of life.

Advertising/marketing fee: 1.5%

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retail

TSG PO Box 559, South Melbourne VIC 3205 Contact: Head Office | Phone: 03 8698 9600 or 1800 777 079 Email: inquiry@tobaccosg.com.au | Web: www.tobaccosg.com

BUSINESS DESCRIPTION:

COMPANY DETAILS:

The TSG story began over 20 years ago as a single store and it was from this moment that we made a commitment to our customers and our franchisees to be best in class within retail.

Date of first franchise: 1996 Membership: FCA Training provided: YES Territories available: ALL

With instant brand recognition and an elite level of professional operational excellence unlike any other, TSG lead the way in providing innovative franchise solutions and best practice franchise management for our franchisees. Some key differentiators are our bright vibrant design, clear brand vision, unique retail experience and our ability to offer franchisees an innovative retail strategy.

FRANCHISE OUTLETS AUSTRALIA: Current: > 400 FINANCIAL DETAILS: Initial franchise fee: $1000 - $3000 Minimum investment: $150K - $200K Royalty fee: Annual fixed fees ($4200 Franchise + $360 IT Support) Financial assistance: No Advertising/Marketing fee: N/A

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Professional Services categories: Accountants.......................................................................................... 154 Financial Institutions.......................................................................... 155 Franchise Consulting & Development.............................................. 157 Insurance Brokers................................................................................ 158 Lawyers................................................................................................... 159 Point of Sale........................................................................................... 162 Support Services & Consultants....................................................... 163

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Accountants

babo group pty ltd Level 1, 12 Cramer Street, Preston VIC 3072 Contact: Mr Pat Soldo | Phone: (AUS) 03 9466 0200 Email: pats@babo.com.au | Web: www.babo.com.au BUSINESS DESCRIPTION: Babo Group provides a complete accounting and business structuring service to aspiring business entrepreneurs and to those entering into franchising. Our in-house services and dedicated partner driven service is individually tailored to your specific requirements and will make sure that you are ready for business. Our service is independent and objective making sure your expectations can be achieved. Going into business is not always straight forward and entering into a franchise can be even more complex. We believe there may be a minimum of 92 points you need to consider when considering buying a franchise. With our assistance and guidance we will make the experience as smooth and friendly as possible. Babo Group is a proud member of the Franchise Council of Australia. A Quick Test â&#x20AC;&#x201C; ask yourself! 1. Why am I considering this particular business? 2. What are the short and long term rewards I hope to achieve? 3. How can I improve this business? 4. What personal sacrifices does my family have to make for this business? 5. What are my financial and personal risks? 6. Can I realistically achieve the expected business targets? 7. What will prohibit me from selling this business to at least recover my costs? 8. Do I agree with the operational and ethical aspects of this franchise? 9. Will I be happy, wealthy and healthy? 10. Is your advice objective and independent? Please call us to assist you with the proposal.

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Financial Institutions

CASHFLOW IT® Level 1, 349 Coronation Drive, Milton QLD 4064 Contact: Dan Toms | Phone: 1300 659 676 Email: customerservice@cashflowit.com.au | Web: www.cashflowit.com.au BUSINESS DESCRIPTION: Cashflow It® are the franchise finance experts. We specialise in equipment finance solutions only for the franchise sector. With competitive rates and flexible terms from 12 months to 5 years, Cashflow It can provide the funding that franchisors and franchisees need today. We offer flexible rental, traditional leasing solutions and business loans tailored to your requirements. What Can We Fund?

Why Choose Cashflow It®?

• New equipment

• Competitive rates

• Used equipment • Fit-outs

• 24 hours a day / 7 days a week Customer Service

• Store refurbishments

• Preserve your precious capital

• Re-financing

• Simple, manageable, low weekly payments

• Buying an existing franchise

• Terms start from just 12 months

• National equipment roll-outs

• Repayments are 100% tax deductible • Flexible end of term options • Experts in franchising • Fast online application process

Cashflow It is a division of Thorn Group Ltd. Thorn Group is a leading Australian provider of financial services, meeting the needs of niche consumer and commercial markets. They are an ASX 200 company and have over 80 years’ experience in the finance Industry. Franchise Accreditation Cashflow It Accredited Franchise systems enjoy pre-approval and other exclusive benefits. Talk to us today about getting your franchise system accredited. Why spend your hard earned capital when you can simply… Cashflow It! In Business Since: 2014 - 155 -

Financial Institutions

silver chef ltd PO Box 1760, Milton BC QLD 4064 Contact: Silver Chef | Phone: (AUS) 1800 337 153 Email: enquiries@silverchef.com.au | Web: www.silverchef.com.au BUSINESS DESCRIPTION: Silver Chef is the only specialist hospitality funder in Australia. We have provided flexible equipment funding solutions to customers for 30 years. Unique to the marketplace, the Rent-Try-Buy® solution is perfect for franchisees who want to keep their options open and save their hard earned working capital rather than spending it on depreciating assets. With the Rent-Try-Buy® solution, you aren’t locked into a long-term contract. Instead, Silver Chef offers a simple 12 month term, so you have the flexibility to: • Buy equipment at any time during the first 12 months and receive a 75% rental rebate. • Return equipment at the end of the 12 month agreement if you don’t need it anymore. • Keep renting and we’ll continue to reduce the purchase price. • Upgrade if you decide your franchise has outgrown the original equipment. If you belong to a Silver Chef Accredited Franchise, you are already pre-approved for finance and you can access other great benefits. Speak to your franchisor today or call Silver Chef on 1800 337 153 for further information. In Business Since: 1986

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Franchise Consulting & Development

Franchise Simply Contact: Brian Keen | Phone: (AUS) 1300 960 136 Email: enquiries@franchisesimply.com.au Web: www.franchisesimply.com.au or www.franchisesimplySYSTEM.com.au BUSINESS DESCRIPTION: Brian Keen helps business owners who want more time and money and who want to grow their business into a valuable asset through franchising. Well over 30 years’ business experience in the industry and as a multi-outlet franchisee, franchisor of multiple brands and a franchise consultant to many well-known names in both Australia and internationally, has given Brian a commercial understanding of what needs to be done, what succeeds, and critically, what doesn’t. Franchise Simply is a modern business which has developed easy to use systemised and cost effective processes, tailored to suit your needs and budget. You will also work with a specialist team of lawyers, accountants, branding and marketing specialists, territory experts, and documentation and training specialists among others to help you to put the parts of the puzzle together. Brian’s input and experience means you only use the specialists you need and the results you achieve are commercially grounded. We have also developed FranchiseSimplySYSTEM, the new cloud-based software to help you prepare Operations Manuals and franchise systems which are simple for you to produce and easy for your team, your franchisees and their staff to use. In Business Since: Franchising since 1982

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Insurance Brokers

NATIONAL FRANCHISE INSURANCE BROKERS (NFIB) Unit 9, 281 Hay St, Subiaco WA 6008 Contact: Chris Carter | Phone: (AUS) 1800 776 747 Email: info@mynfib.com.au | Web: www.mynfib.com.au BUSINESS DESCRIPTION: NFIB meets the Australian demand for a dedicated online provider of insurance cover for franchisees, franchisors and franchised businesses. Our service is fully automated, compliant and provides you with full documentation. Put simply, our service is the fastest, most affordable way to get the most appropriate level of cover you need to protect your business. How NFIB can help? Franchisors are always looking to provide a value adding facility for their franchisees. Many â&#x20AC;&#x153;blue chipâ&#x20AC;? franchise systems have taken advantage of the NFIB on-line insurance solution to provide this to their franchisees. When Managed Program franchisees visit our site, they will arrive at a dedicated online area with access to a compliant insurance program created specifically for their franchise business. All information about that franchise will be pre-populated. To make things even simpler, all Managed Program insurance policies have common due dates. This creates a win/win situation with NFIB assisting franchisees to save on their insurance costs and you, as the Franchisor, have one less headache when it comes to confirming that each franchisee has insurance which complies with the franchise agreement. In Business Since: Established in 2010

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lawyers

MADGWICKS LAWYERS Level 33, 140 William Street, Melbourne, VIC 3000 Contact: Chris Verebes | Phone: (AUS) 03 9242 4744 Email: chris.verebes@madgwicks.com.au | Web: www.madgwicks.com.au BUSINESS DESCRIPTION: Australia has some of the most stringent franchise legislation in the world. When considering establishing a franchise system, entering into a franchise agreement or navigating a dispute with a franchisee or franchisor, it is important that you use a law firm with extensive knowledge of the franchising business model and the Australian legal landscape. Madgwicks is a full service business law firm. Our team of experienced lawyers regularly advise franchisors, franchisees and franchise industry service providers. Our lawyers also have extensive experience advising groups that operate under similar business structures, including cooperatives and strategic alliances. We regularly advise on: Franchise system establishment | Franchise due diligence | Franchising Code of Conduct compliance | Franchise agreements and disclosure documents | Business structures appropriate for franchise systems | Supplier and terms of trade agreements | Commercial and retail leasing, as well as general property advice | Trade practices advice, including ACCC notification/authorisations | Acquisition, disposal, joint venture and partnership advice | Employment and workplace relations | Tax, duty and GST advice | Branding, intellectual property and trade marks | Litigation and dispute resolution Madgwicksâ&#x20AC;&#x2122; Franchising team is an active member of the Franchise Council of Australia and has an established network of accountants, business advisors and brokers to assist our clients when required. Madgwicks also provides clients with the benefit of our international affiliation with Meritas, connecting them with member firms across Australia and globally, providing expertise wherever they need it. In Business Since: 1973

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lawyers

Marsh & Maher Lawyers Level 2, 100 Wellington Parade, East Melbourne VIC 3002 Contact: Robert Toth | Phone: 03 9604 9400 Email: rxt@marshmaher.com.au | Web: www.marshmaher.com.au BUSINESS DESCRIPTION: Wow, what a year in franchising in 2016! Our franchise group have been extremely busy advising new Franchisees, establishing Franchise Systems and advising Overseas Franchisor’s and Companies. Our Franchise, Licence and Distribution Group has over 30 years experience and industry knowledge. Members of the Franchise Council of Australia (FCA), the International Franchise Lawyers Association (IFLA) and the US Commercial Service. We can assist clients with: • Development and Advice on establishing Franchise Systems, • Company structures; • Master Franchising; • Advising International franchisors; • Code Compliance • IP and Trade Marks • Leasing • Dispute Resolution and Mediation We provide clients with fixed fees based on scope of service.

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lawyers

Stewart Germann Law Office

Ground Floor, 2 Princes Street, Auckland PO Box 1542, Auckland 1140, New Zealand Contact: Stewart Germann | Phone: (NZ) +64 9 308 9925 Email: stewart@germann.co.nz | Web: www.germann.co.nz BUSINESS DESCRIPTION: Stewart Germann is acknowledged as New Zealand’s leading franchising lawyer and has over 35 years experience in this area. Stewart Germann Law Office (SGL) is New Zealand’s longest established specialist franchising law firm and has won multiple awards in franchise law both nationally and internationally. Stewart is a recognised national and international guest speaker at franchise conferences (New Zealand, Australia, USA) and he is listed in the International Who’s Who of Franchise Lawyers 2016. SGL’s clients include many of New Zealand’s best known national and international franchise brands and the firm has extensive franchising contacts worldwide and locally. SGL has been selected by Best Lawyers in New Zealand in the area of Franchise Law for 2016/2017. The firm won Boutique Franchising Law Firm of the Year in New Zealand at the 2015 Global Law Experts Awards. SGL also won Law Firm of the Year – Franchise – New Zealand in the Global 100 – 2015 rankings and Boutique Licensing Law Firm of the Year in New Zealand 2015 – Corporate INTL Legal Awards. The firm is Law Firm of the Year – Franchise – New Zealand in M&A Global Awards 2016. SGL belongs to the Franchise Association of New Zealand, the Franchise Council of Australia Limited and the International Franchise Lawyers Association. Stewart was instrumental in the formation of the Franchise Association of New Zealand in 1996 which celebrates its 20th birthday this year and he wrote the original rules, as well as being a Past Chairman and a current member. Stewart has been awarded Life Membership of the Franchise Association of New Zealand in recognition of his significant contribution. He was also a board member of the supplier forum of the International Franchise Association (IFA) from 2001 to 2007. He is actively involved in international franchising and has published articles in the International Journal of Franchising Law. Stewart is a Notary Public and can witness documents for use in overseas jurisdictions and he is also a qualified mediator. Stewart regularly advises international clients on legal issues relating to franchising in New Zealand and welcomes enquiries from overseas. In Business Since: 1993

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Point of Sale

redcat pty ltd Level 2, 70 Park Street, South Melbourne VIC 3205 Contact: Spiro Vournazos | Phone: (AUS) 1300 4 REDCAT Email: info@redcat.com.au | Web: www.redcat.com.au BUSINESS DESCRIPTION: Redcat provides the very latest in franchise technology… Redcat Polygon. Redcat Polygon is a totally integrated solution that gives you sophisticated tools to effectively manage your entire business including Point of Sale, Accounting, Inventory, Wages, Loyalty Programs and Mobile Apps. Redcat Polygon has genuine real time management and reporting capabilities. In fact, it’s one of the very few POS products in the world that can deliver real time profit and loss reporting without integration to a third party application. You can run a global network of franchise stores from head office or even the comfort of your own home. Or for that matter anywhere else in the world. Redcat Polygon will improve efficiency, reduce costs, manage resources, control your inventory, and ultimately improve profitability. Redcat continues to lead the way with POS and financial management solutions. Redcat has an ongoing commitment to research and development to ensure that its solutions stay ahead of hospitality industry challenges. OUR CLIENTS Redcat serves some of the biggest franchise groups in the country. These include Nando’s, Boost Juice, Salsa and many more. In Business Since: Started in 1991, focusing on the franchising sector since 1998.

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Support Services & Consultants

FC Business Solutions Contact: Corina Vucic | Phone: (AUS) 03 9533 0028 Email: contact@fcbs.com.au | Web: www.fcbs.com.au

BUSINESS DESCRIPTION: FC Business Solutions is a multi-discipline franchise consultancy with a dedicated team of professionals focusing on the development of franchise businesses. Established in 1999, FC Business Solutions has the experience and expertise to empower franchisors to grow their business and become market leaders in their chosen field. With services including documentation standards; marketing, communications and PR; action based training; executive recruitment; system development; business operations and HR solutions, FC Business Solutions have the team and resources to assist you in all aspects of your franchise business. The team are actively involved members of the Franchise Council of Australia (FCA), regularly attending events, participating in committees and ensuring their skills and knowledge remain cutting edge and current. With a solid reputation based on relationships and results and a dedication to raising the profile of franchising in Australia, FC Business Solutions stand by their motto of â&#x20AC;&#x153;We help businesses growâ&#x20AC;?. System Development: Franchise systems development | Operational support | Strategic planning | Business Health Check Business Operations: Strategic and business planning | Multi-site ownership programs | Franchise recruitment systems | Mentoring and coaching Marketing, Communications and PR: Marketing, communications and brand strategy | Local area marketing | Franchise launch strategies Training Solutions: Training development and facilitation | Franchise focussed and operational public programs | Induction program development HR Solutions: Executive recruitment | HR audits | HR Helpdesk Standard Operating Procedures: Online operations manual platform | Franchise operations manual | Head office department procedures

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Publications BUSINESS FRANCHISE AUSTRALIA AND NEW ZEALAND PO Box 968 Mt Eliza VIC 3930 Phone: (AUS) 03 9787 8077 Fax: (AUS) 03 9787 8499 Email: cgb@cgbpublishing.com.au Website: www.businessfranchiseaustralia.com.au

BUSINESS FRANCHISOR PO Box 968 Mt Eliza VIC 3930 Phone: (AUS) 03 9787 8077 Fax: (AUS) 03 9787 8499 Email: cgb@cgbpublishing.com.au Website: www.businessfranchiseaustralia.com.au

AUSTRALIA & NEW ZEALAND BUSINESS FRANCHISE DIRECTORY PO Box 968 Mt Eliza VIC 3930 Phone: (AUS) 03 9787 8077 Fax: (AUS) 03 9787 8499 Email: cgb@cgbpublishing.com.au Website: www.businessfranchiseaustralia.com.au

THE FRANCHISE REVIEW The official journal of the Franchise Council of Australia PO Box 2195 Malvern East VIC 3145 Phone: (AUS) 1300 669 030 Phone: +61 3 9508 0888 Fax: (AUS) 03 9508 0899 Email: info@franchise.org.au Website: www.franchise.org.au

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Helpful organisations FRANCHISE ASSOCIATION OF NEW ZEALAND PO Box 33-676 Takapuna New Zealand 0622 Phone: +64 9 274 2901 Fax: +64 9 274 2903 Email: contact@franchise.org.nz Web: www.franchiseassociation.org.nz

FRANCHISE COUNCIL OF AUSTRALIA Suite 5B, Level 1, 307-313 Wattletree Rd Malvern East VIC 3145 Phone: (AUS) 1300 669 030 Phone:+61 3 9508 0888 Fax:+61 3 9508 0899 Email: info@franchise.org.au Web: www.franchise.org.au

SPECIALISED EVENTS Level 1, 578 Malvern Rd Prahran VIC 3181 Phone: +61 3 9999 5460 Fax: + 61 3 9999 5461 Email: info@specialisedevents.com.au Web: www.specialisedevents.com.au

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION GPO Box 3131 Canberra ACT 2601 Phone: +61 2 6243 1111 Fax: +61 2 6243 1199 Email: info.centre@accc.gov.au Web: www.accc.gov.au/franchisingcode

OFFICE OF FRANCHISING MEDIATION ADVISER Suite 205, Level 2, 370 Pitt Street Sydney NSW 2000 Phone: (AUS) +61 2 9267 0167 Fax: +61 3 8660 3399 Email: office@franchisingmediationadviser.com.au Web: www.franchisingmediationadviser.com.au

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AUSTRALIAN TAXATION OFFICE GPO Box 9990 (In your relevant Capital City and State) Phone: 13 28 66 Web: www.ato.gov.au

Index of franchises & services NUMERICAL 7-Eleven.............................................................................................................................................................................................................149

A Australian Skin Clinics. ...........................................................................................................................................................................132

B Babo Group. ....................................................................................................................................................................................................154 Beaumont Tiles. ...........................................................................................................................................................................................150 Bodiez 24 / 7. .................................................................................................................................................................................................148 Brighteyes Franchising...........................................................................................................................................................................151

C Cashflow It. .....................................................................................................................................................................................................155 Chem-Dry..........................................................................................................................................................................................................135

F Fasta Pasta......................................................................................................................................................................................................142 Fastway Couriers........................................................................................................................................................................................137 FC Business Solutions.............................................................................................................................................................................163 First Class Capital.......................................................................................................................................................................................138 Franchise Simply.........................................................................................................................................................................................157

H Hairhouse Warehouse.............................................................................................................................................................................133 Hogâ&#x20AC;&#x2122;s Breath Cafe.......................................................................................................................................................................................143

I InXpress.............................................................................................................................................................................................................134

L La Porchetta....................................................................................................................................................................................................144 Looksmart Alterations.............................................................................................................................................................................136

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M Madgwicks Lawyers................................................................................................................................................................................159 Marsh & Maher Lawyers. .....................................................................................................................................................................160

N National Franchise Insurance Brokers. ........................................................................................................................................158

R Redcat.................................................................................................................................................................................................................162 Rent 2 Own Cars Australia...................................................................................................................................................................130

S Silver Chef........................................................................................................................................................................................................156 Snap-on Tools................................................................................................................................................................................................131 Snooze................................................................................................................................................................................................................147 Steve Costi’s Famous Fish...................................................................................................................................................................145 Stewart Germann Law Office.............................................................................................................................................................161

T The Interface Financial Group............................................................................................................................................................139 Theobroma.......................................................................................................................................................................................................140 TSG. ......................................................................................................................................................................................................................152

W Wokinabox.......................................................................................................................................................................................................146

X Xpresso Mobile Café................................................................................................................................................................................141

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notes

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How Do II Franchise My Business? How My Business? How Do Do I Franchise Franchise My Business? Directed by Brian Keen, the team at Franchise Simply makes How Do I Franchise My Business? Directed by Brian Keen, the team at Franchise Simply makes it incredibly easy to grow your business by duplication, with a

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Rhonda Thomson Rhonda Thomson Rhonda Thomson Documentation Documentation Documentation Systems Expert Systems Expert Documentation Systems Expert Systems Expert

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Veronica Jumeaux Veronica Jumeaux Veronica Jumeaux Veronica Jumeaux Franchise Legals Franchise Legals Franchise Legals Franchise Legals

David Jenyns David Jenyns David Jenyns David Jenyns Online Marketing Online Marketing Online Marketing Online Marketing

Peter Buckingham Peter Buckingham Peter Buckingham Peter Buckingham Territory Specialist Territory Specialist Territory Specialist Territory Specialist

James Brown James Brown James Brown James Brown Corporate Structures Corporate Structures & Franchise Corporate Structures & Franchise Corporate Structures Accounting & Franchise Accounting & Franchise Accounting Accounting Les & Liz Hannaway Les & Liz Hannaway Les Les & & Liz Liz Hannaway Hannaway Les & Liz Hannaway

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For Business Owners Who Want To Grow Their For Owners Who Want To Grow Their For Business Business Owners Who Want To Grow Their Business And Get Their Life Back! For Business Owners WhoTheir Want ToBack! Grow Their Business And Get Life Business And Get Their Life Back! Business And Get Their Life Back!

More information at your fingertips! Check out our other resources available, designed to empower and educate you on your franchising journey.

Business FRANCHISE Australia and New Zealand magazine The Magazine for Franchisees, Bi-monthly publication

Australian and New Zealand Business FRANCHISE DIRECTORY Annual publication CGBâ&#x20AC;&#x2122;s website also provides an additional advertising and information format and complements our publications.

www.businessfranchiseaustralia.com.au

Tired of working for someone else? Ready to be your own boss? Worried about going it alone? this guide is your key to financial independence through franchising Imagine buying a business with a proven system and business model and a brand that people already know! This comprehensive guide will help you on your franchising path to success, utilising decades of experience from experts in the industry to answer your questions such as:

What is franchising? By Rod Young | DC Strategy Group Rod is considered one of the world’s leading franchise consultants and has over 30 years’ experience in franchising, licensing and business development.

What you need to know before you buy By Michael Purcell | MSI Taylor Business Services Michael heads a team of franchising experts who partner with both franchisors and franchisees to develop strategies to help their business grow.

Along with: Are you suited to Franchising? | Peter Fiasco, Hairhouse Warehouse what does due diligence really mean? | Elizabeth Gillam, Franchisee Success Funding your franchise | Ian Watt, Westpac understanding the documentation | Bianca Sevastos & Marwan Kojok, Baybridge Lawyers what to expect from a franchisor | Gavin Culmsee, Bedshed Franchising Marketing & Social Media for Franchisees | Katherine Grace, Elemental Solutions Marketing HR compliance: What you need to know | HR Central How to franchise your business simply | Brian Keen, Franchise Simply.

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