AUS & NZ Business Franchisor issue 4#4 Nov 2015 - Feb 2016

Australian & new zealand

B u s i n e s s

VOL 04 ISSUE 04, 2015

FRANCHISING...

IT’S NOT ALL ROSY

5 TIPS FOR HEALTHY CASHFLOW PROCEDURAL FAIRNESS EXPLAINED

protect your trade mARK BUSINESSFRANCHISOR 1

2 BUSINESSFRANCHISOR

Australian & new zealand BUSINESS FRANCHISOR VOLUME 4 ISSUE 4 CGB Publishing Pty Ltd TEL: 03 9787 8077 (AUS)

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from the

Editor

Attending the Hairhouse Warehouse annual convention recently, it was great to witness first-hand the passion and creativity present within this awardwinning franchise system.

Speaking to many of the franchisees, it was extremely interesting to hear their individual stories regarding what motivated them to join a franchise and the value that they gain from attending their annual franchise convention.

On page 16 you can find a Profile featuring Ayers Rock Resort. Hosting a monumental solar powered art installation for 12 months from 1 April 2016, franchisors and their delegates can enjoy the conference complex as well as connect with Australia’s spiritual heartland.

In this issue, on page 14 Michael Paul, the Chairman of the Franchise Council of Australia (FCA) reports on one of the key roles of the FCA, which is to foster an understanding of the economic importance of having a strong

franchising sector in Australia among consumers, governments and the business community.

This edition of Business Franchisor is packed with advice from experts across the franchising industry. Michael O’Shaughnessy from HR Central explains Procedural Fairness and how this relates to your employees and dismissals on page 10, Andrew Barr from DC Strategy explains how to protect your trade mark, which even if registered in Australia, can still be at risk of unauthorised use in other countries on page 22, and Mark Hoppe from Atradius shares his five tips for a healthy cash flow on page 18. Janine Allis, newly inducted member to the FCA Franchise Hall of Fame for her outstanding contribution to franchising, features on our cover and you can read some of the things that Janine has learned upon her franchising journey. There’s all this and much more.

As always, at CGB Publishing we welcome your feedback. Enjoy the read.

Joanne Tuffy Editor

CGB PUBLISHING PO BOX 968 MT ELIZA, VICTORIA 3930

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Email: cgb@cgbpublishing.com.au www.businessfranchiseaustralia.com.au or www.isubscribe.com.au

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. The publication is sold subject to the terms and conditions that it shall not be copied in whole or part, resold, hired out, without the express permission of the publisher.

BUSINESSFRANCHISOR 3

Franchisor B u s i n e s s

8

issue 4, volume 4, 2015

14

CONTENTS

26 On the Cover

PROCEDURES

8

Janine Allis, Retail Zoo: Franchising…

It’s not all rosy

10

Procedural Fairness explained

18

5 tips for healthy cashflow

22

Protect your trade mark

Michael O’Shaunessy, HR Central

Mark Hoppe, Atradius

Andrew Barr, DC Strategy

ALSO IN THIS ISSUE 2

Redcat

6 News items:

Announcements from the industry

16 Ayers Rock Resort

10

32 Franchising Expo 37 Jejak Graphics 40 A-Z Directory

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18

28

30

38

34

Expert Advice 14

Franchising best practice key to a successful sector Franchise Council of Australia

26 Your franchise is only as strong as your weakest franchisee

Belinda Bow, Green Chilli Marketing

28 11 ways to improve the value of field visits

Greg Nathan, Franchise Relationships Institute

30 Should the franchisor hold the head-lease to retail premises?

Robert Toth, Marsh & Maher Lawyers

34 The steps to mastering franchise recruitment & selection

Tania Allen, Vision Alliance

38 Better-educated franchisors attract better franchisees

Jason Gehrke, Franchise Advisory Centre

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business franchisor

NEWSitems La Porchetta’s Sara Pantaleo Joins FCA Board

ACCC urges businesses to check that their contracts are fair The Australian Competition and Consumer Commission is urging businesses to closely review the standard form contracts they use when dealing with other businesses.

A new law will take effect on 12 November 2016, following a 12-month transition period, that offers small businesses protections against unfair contract terms offered by other (usually larger) firms. This law supplements the existing law on unfair contract terms for consumers.

The ACCC, Australian Securities and Investments Commission (ASIC) and state and territory offices of fair trading are responsible for enforcing the law.

“This new law is a positive step for small businesses that are presented with standard form contracts,” ACCC Deputy Chair Dr Michael Schaper said. “For every business that deals with small businesses, now is the time to check that your contracts are compliant.”

The law applies to standard form contracts between businesses where one of the businesses employs less than 20 people and the contract is worth up to $300,000 in a single year or $1 million if the contract runs for more than a year. Standard form contracts provide little or no opportunity for the responding party to negotiate the terms – they are offered on a ‘take it or leave it’ basis.

“The new protections will help address significant imbalances or disadvantages to small businesses in their dealings with other businesses by allowing the courts to declare void unfair terms within standard form contracts,” Dr Schaper said.

If you’re from a small business and you’re offered a standard form contract that includes a term you think is unfair, visit the ACCC website to find out about your protections under the law. Information is also available on the ACCC website to assist big business.

Watch the following videos to find out about your rights and obligations under the new law. Know your obligations: keep your small business contracts fair. Know your rights: unfair contract terms & small business

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La Porchetta CEO, Sara Pantaleo has been elected to the Board of the Franchise Council of Australia (FCA). This is the second time Ms Pantaleo will serve on the Board, having previously served from October 2012 to October 2014.

Ms Pantaleo is a former Franchise Woman of the Year (2010) and a Telstra Business Woman of the Year Finalist (2012). She has also served as Vice President of the Victorian State Chapter of the FCA. Ms Pantaleo was also one of only six Australian executives to complete the inaugural Certified Franchising Executive (CFE) program earlier this year. This is the only internationally recognised professional accreditation program for franchise executives and is respected by franchise leaders worldwide.

A passionate advocate for franchising as a business model, Ms Pantaleo often acts as a mentor to others in the sector. She says of her appointment to the Board, “I see this as an opportunity to continue advocating for franchising as a business model and to support ongoing development of best practice and continuing education for stakeholders at all levels.”

ATO calls on small business

Award winners honoured on the Gold Coast The Franchise Council of Australia honoured franchising’s best and brightest at the MYOB FCA Excellence in Franchising Awards Gala Dinner at the RACV Royal Pines Resort on the Gold Coast. The big winner on the night was Boost Juice Bars, which was named Australian Established Franchisor of the Year.

“Winning an award like this means a lot. Being recognised by your peers is fantastic and it’s also good to know that we’re heading in the right direction,” said Boost Juice Bars CEO, Scott Meneilly.

Boost Juice Founder Janine Allis, who has grown the business from her kitchen bench to a franchise of more than 400 stores across 13 countries, was recognised for her outstanding contribution to franchising as she was inducted into the Franchise Hall of Fame. Boost Juice’s international arm was also successful on the night, taking out the award for Excellence in International Franchising for its international expansion strategy.

Optometry business Laubman & Pank was named the Australian Emerging Franchise of the Year. First established in 1908, Laubman & Pank opened its first franchise store in 2012. Ian Taunton, National Sales Director for Laubman & Pank, said franchising had been a positive step for the business. “We’ve seen a real passion and energy being reborn in our network from our franchisees. This award is a great signal for us about the strength of the franchise group,” Mr Taunton said.

Fastway Couriers Australia took home the award for the International Franchisor of the Year. CEO Richard Thame said the award recognised what the company’s 800-plus courier franchisees across Australia do every day. “These guys are getting up tremendously early and working hard running their own business, servicing tens-of-thousands of customers. This award really goes to the courier franchisees out there that make up the brand and do the hard work every day,” Mr Thame said.

Optometry and retail franchise, OPSM also took out two awards on the night, Excellence in Marketing and Franchisor Social Responsibility.

A total of 14 Excellence in Franchising Awards were presented on the evening, which was proudly sponsored by MYOB. Successful individuals and businesses were recognised across a range of functions including franchisees, support staff and franchise systems.

The ATO is asking small business to work with them to improve their tax and super experience.

Deputy Commissioner Steve Vesperman said the ATO is currently looking for new members to join its Small Business Liaison Group and had recently called for expressions of interest.

“We’re committed to making it easier for small business to manage their tax and super responsibilities. The best way for us to work out what small businesses need is to have ongoing engagement with them and their industry representatives directly, the Small Business Liaison Group gives us this opportunity,” Mr Vesperman said.

“To do this well, we need the liaison group to include a range of industry bodies and other associations representing small business. We also want to work with the people who know small business the best - the owners themselves.”

Mr Vesperman said the liaison group, which includes a number of industry representatives, is just one of the ways the ATO engages and collaborates with small business.

“When it comes to delivering improved services, some of the best advice we can get is from small business operators. That’s why, in addition to the liaison group, we also have initiatives like the Small Business Consultation Panel, which is a list of small business operators who we work with on short-term consultation activities.”

“We use the feedback and information that comes out of these collaborations to improve the overall tax and super experiences for all small businesses, so it is well worth the effort.”

Liaison group members attend three meetings each year and assist with occasional out-of-session work.

Small businesses and industry associations interested in assisting the ATO can download the expression of interest information pack at https://www. ato.gov.au/General/Consultation/Getting-involved-in-consultation/SmallBusiness-Liaison-Group-overview-for-prospective-members/ or email SBITConsultativeForums@ato.gov.au.

BUSINESSFRANCHISOR 7

Janine Allis

There are so many things to say about franchising...

but it’s not all rosy M

any people who start a business think that franchising is the best way to grow, and for many businesses this is true, but franchising is not for everyone. Like any business model, there are positives and negatives. Before you even consider franchising, you need to ensure if it is a win-win for both parties, and the franchisee can make a good living from the model. Below are some things to consider and some learning that I have had along the way.

People – it is all about them The best thing – and the worst thing – about franchising is the people. The best is when you get like-minded people on board that have a vested interest in growing your collective brand and business, where they have full buy-in and full commitment to the brand and the business. As business owners we are always looking at ways for people to treat the business as if it is their own – making franchising the perfect model.

For the franchisees, not only do they get the support from head office, but also receive support from their network of fellow franchisees that have different strengths and knowledge, and can collectively pool their talents, lessons and resources.

Buying power The biggest factor in driving profit involves reducing your expenses, and sometimes the only way to grow your profitability is to drive volume.

This is a huge advantage about a franchise network. As a single operator in a franchise

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network you get the benefit of a big business buying; which in a market like Australia is a huge advantage, as our cost base is often very high.

Marketing When a person buys a franchise they are buying a brand as well as the systems and processes, so marketing is an important and valuable part of being part of a franchise. By pooling the marketing dollar you can get a bigger impact, which will make the franchisees’ businesses more profitable.

But franchising is not all roses. It can be very difficult for a franchisor who has put everything on the line to create a business that they love and want to share – things do not always go to plan, and you cannot please all people all of the time. If you try you will fail! Yes, as a franchisee your odds of success are significantly better with a franchise model than going it on your own, but that does not mean that it gives you a guaranteed ticket to success.

Everyone – business franchise or not – needs to put in 100 per cent focus and attention to make it work. We do get franchisees that just want to put a manager in, take the cash, and think it’s that easy. I’ve never heard anyone say that starting a business was easier than they thought.

Things also change in people’s lives. New babies, divorce, and even death can play havoc with stores and their success. The hard truth is sometimes franchisees get so desperate when things aren’t working that they need to blame someone, and it is often not at themselves. The finger gets pointed very much at the franchisor,

As you get bigger your biggest challenge is to ensure that all your franchisees are delivering on the experience and service that you have created.” whether it is justified or not. This is mentally challenging for a franchisor, who is emotionally connected to the brand, and like life, it does not always go to plan.

Often people from the outside of franchising will see a chain of 30 stores and think that the owners are making a truck load of cash, but this is often not the case. The reality is that for a franchise network to succeed, you need a large volume of franchisees. It is really only after you hit over 100 franchise stores that real profits start to be made.

While franchising means you can grow without the capital of a company-owned strategy, you need to resource the business well enough to cope with growth, and often this means you are re-investing most of your profit.

Don’t just keep the mystery shopper to the stores – mystery shop your head office.”

Communication is the key • If you are not communicating effectively and frequently enough, then your network will speculate about what may or may not be happening, and gossip goes into full swing. I can tell you it is always worse than the reality.

• Have regular meetings with key franchisees so you can always get feedback on all things relating to your business. We have PAT (partner advisory team) meetings, which are incredibly valuable.

• Run yearly conferences where everyone gets together. I have seen time and time again, how this invigorates all people who are involved in the brand, both franchisee and support staff alike. These events enable everyone to meet on a more social level.

• Create clusters in your group. We have many stores, so we created cluster meetings where local area franchisees get together to see how they can help each other with additional marketing and services.

• Monthly newsletters. You have done the face to face, but the good old fashion newsletter still has its place.

• Information is king – keep your franchisees informed. Do not let the media be the first

time they read about something. If you know something is going to hit the media, then let them know in advance. It is not reasonable for them to read things in the media first.

Tracking As you get bigger your biggest challenge is to ensure that all your franchisees are delivering on the experience and service that you have created.

We use a number of tools to track how stores are performing, who our customers are, and what they react to, but we still need to trust that our franchisees are absorbing rules and regulations to ensure that our customers are receiving the best possible experience. For example, if a marketing campaign is developed to drive business through a “buy one get one free” promotion, and a customer goes to a store and the owners have not read about the promotion, then your customer experience is a poor one.

To avoid situations like this, we have strong systems and audits on the stores to make sure the franchisees are always up to scratch, and of course there is a mystery shopper program. Don’t just keep the mystery shopper to the stores – mystery shop your head office. How was the call answered by the receptionist? Did the franchise recruiter return the potential franchisees’ call and answer the questions? You should be checking

every part of your business to ensure that it is at the level that you expect. You owe it to every franchisee that is in your network to be the best you can be, then it is easier to demand excellence from them. Do a yearly health check on your franchisees and see what areas you can improve.

Every day be better.

Transparency Not everyone agrees with me here, and that is perfectly OK, but we have total transparency with sales in our network. Any store in the network all over the world can view other store’s sales.

This creates healthy competition, and also a benchmark for many stores on the types of sales that they should be achieving.

At the end of the day, I love being a part of a franchise network, through the good and the bad, and helping people grow and achieve through mutual support. This is amplified when attending our annual conference, seeing first-hand the differences that being part of a franchise has made to many people’s lives. It’s all worth it.

T: +61 3 9508 4409 E: boostinfo@retailzoo.com.au

salsasinfo@retailzoo.com.au

ciboinfo@retailzoo.com.au

BUSINESSFRANCHISOR 9

Michael O’Shaughnessy

Procedural Fairness explained W PROCEDURES

e often hear the term ‘Procedural Fairness’ as it relates to employees and dismissals. It tends to be presented as “employees need to be shown procedural fairness” or “the employer didn’t show procedural fairness”. Is it really important and do we really know what this means from a practical day to day perspective?

Let me start by making it very clear, following procedural fairness or not following procedural fairness in many cases is the difference between being successful in the Fair Work Commission when an ex-employee challenges their employment termination.

Despite the fact you might believe you have 100 per cent clear evidence of misconduct, your failure to follow some simple procedural steps could result in the Fair Work Commission saying you have a valid reason for terminating that employee, however you didn’t follow the right process.

This is because the Fair Work Act specifically refers to the matters it must take into account when determining the harshness of a dismissal case. Over time, the expression ‘harsh, unjust or unreasonable’ has come to encapsulate what the Fair Work Commission examines and, in simple terms, the words mean: • harsh — because of its consequences on the personal and economic situation of the employee or because it is disproportionate to the gravity of the alleged offence.

• unjust — because the employee was not

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guilty of the alleged offence on which the employer acted.

• unreasonable — because it was decided on inferences that would not reasonably have been drawn from the material before the employer.

Interwoven into this examination is the area of procedural fairness and its absolute relevance is demonstrated in the following case.

An employee was dismissed for serious misconduct following an altercation with his supervisor, but was successful in his unfair dismissal application. The Fair Work Commission found that the employer had a valid reason to dismiss the worker, but the dismissal was nonetheless unfair due to deficiencies in procedural fairness.

This was because the Commissioner held that the employee’s dismissal was unfair because the company had failed to discharge its obligations with regards to procedural fairness.

The key facts were that the employee had sworn at his supervisor and acted towards him in an aggressive fashion when approached by his supervisor to ask why he had not followed the job list the previous day.

An argument ensued between the two men with the employee swearing and seemingly acting very aggressively towards his supervisor.

This was not the first occasion the employee had received warnings for similar behaviour so on the surface, it would seem a very routine matter justifying termination.

However, this was not the case as some key deficiencies were found to have occurred in the process.

For example, the Commissioner found the employee had not been given the full opportunity to respond to the allegations as they were put to him in the meetings.

The employer had made its mind up prior to hearing from the employee about the facts of the incident and had in fact prepared the termination letter before its final meeting with the employee.

In addition, the Commissioner also took into account evidence that the employer had not applied its disciplinary procedure consistently, and that this had resulted in the unequal treatment of the employee.

It is essential to have a process to follow each and every time you are dealing with a performance issue or an area where an employee may be guilty of misconduct.”

The employee was awarded a substantial compensation payout, not to mention the time and costs incurred by the employer having to defend its initial decision.

It is clear to see that the element of procedural fairness plays a key role in determining Fair Work Commission decisions, but what does this mean for you as an employer from a practical ‘day-today’ perspective?

What should you be doing in your business to meet this standard of procedural fairness?

It is essential to have a process to follow each and every time you are dealing with a performance issue or an area where an employee may be guilty of misconduct. Have it clearly written so you know what do when the situation arises.

Suggested steps to follow are listed below, but these are by no means exhaustive: • Act promptly and communicate transparently in relation to all matters.

• Provide a minimum of 24 hours before any performance discussion.

• Advise the employee of what a disciplinary meeting is about rather than ambushing them with allegations at the meeting.

• Don’t deny the employee the opportunity to have a support person present if they have asked.

• Allow the employee to respond to all of the allegations put to them.

• Have all meetings and interviews documented, including details of who attended and agreed outcomes.

• Don’t make up your mind on actions to be taken before hearing what the employee has to say.

• Establish a paper trail of documentation that shows you followed these steps.

A broad way to look at this is to ensure the employee is provided with sufficient information to understand the nature and specifics of the allegations, and the information is sufficient for the employee to prepare and articulate a response to those allegations.

Don’t simply go through the motions of giving the employee the opportunity to deal with allegations concerning their conduct when, in fact, a firm decision to terminate has already been made irrespective of anything the employee might say in his or her defence.

These steps are not onerous and are really what every fair employer should do and that is to give each and every employee a ‘fair go all-round’.

Some of you might be thinking you are covered by the Small Business Fair Dismissal Code so this doesn’t apply to you, but actually and quite specifically, this area of procedural fairness is referenced within the Fair Dismissal Code, a code

BUSINESSFRANCHISOR 11

Michael O’Shaughnessy

Don’t simply go through the motions of giving the employee the opportunity to deal with allegations concerning their conduct when, in fact, a firm decision to terminate has already been made.”

A snap shot of a few key parts of the Code is below:

employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Other Dismissal

Procedural Matters

which applies to small business employers with fewer than 15 employees (calculated on a simple headcount of all employees including casual employees who are employed on a regular and systematic basis).

A small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the

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In discussions with an employee in where dismissal is possible, the employee can have another person present to assist.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s),

a statement of termination or signed witness statements.

Summary Procedural fairness is a process and series of steps all employers need to follow when disciplining employees in a clear and consistent fashion.

Not only should you implement the steps referenced to comply with the Fair Work Commission or Small Business Fair Dismissal Code, you should do it because it’s the right thing for you as an employer in order to give each and every employee a ‘fair go all-round’.

Michael is the Principal Human Resources Specialist at HR Central, with 20 years HR experience in a variety of industries, nationally and internationally, including McDonalds, VECCI and the Coles Group.

HR Central is an HR solutions provider, offering cloud based software teamed with accessible HR Specialist support. This service has been developed to help franchises manage all their HR requirements.

Contact HR Central today: P: 1300 717 721 E: info@hrcentral.com.au W: www.hrcentral.com.au

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franchise council of australia

Franchising

best practice key to a successful sector

T

he relationship between the franchisor and

separation of responsibilities between franchisor

franchisee is at the heart of any successful

and franchisee is also very much at the essence

franchise system and any individual

of the successful franchising business model.

The importance of disclosure Australia has a strong and vibrant franchising sector with one of the highest levels of franchise

franchise business.

Therefore, it is imperative that the franchisor

Successful franchising relies on recognising that

nurtures this understanding of the business

franchisor and franchisee have an interdependent

relationship from the outset through undertaking

and collaborative relationship. However, it is

best practice in all dealings and communication

through the Franchising Code of Conduct, which

also important to recognise that the division and

with both prospective and existing franchisees.

provides protection for both franchisors and

14 BUSINESSFRANCHISOR

systems per capita in the world. One of the key reasons for this is the regulation of the sector

as a method of doing business, franchising is the optimum small business model.”

Michael Paul, Chairman, Franchise Council of Australia

The new Franchising Code of Conduct, which came into force on 1 January 2015, set out requirements for franchisors in Australia to provide additional information, disclosure and transparency in their dealings with prospective and established franchisees.

While disclosure is mandated under the Code (and Australian franchisors should be reminded that the transitional period to review and update disclosure documents to comply with the new requirements under the Code ended on 31 October 2015) this level of transparency when dealing with franchisees also makes good business sense. The business relationship with the franchisee will be far stronger if the franchisee is well informed on the business before they start their operation.

franchising in Australia is amongst the most dynamic and progressive business sectors in the economy.” franchisees, and helps to provide credibility for the sector as a whole.

Protections provided to franchisees under the Code include the mandatory disclosure of information from the franchisor, including financial details, directors’ interests and a franchisee contact list, details on any marketing fund and the ability of the franchisor and a franchisee to sell online.

The Code also provides mechanisms for cost-effective dispute resolution between the franchisor and a franchisee should there be any serious disagreement during the term of the franchise - including that if no agreement can be reached by direct negotiation, disputes should be settled by mediation. It should be noted here that the number of disputes between franchisors and franchisees is low – the Franchising Australia 2014 report found that just 1.5 per cent of franchisees were involved in a substantial dispute with a franchisor in the preceding 12 months.

Best practice franchising One of the key roles of the Franchise Council of Australia is to foster an understanding of the economic importance of having a strong franchising sector in Australia among consumers, governments and the business community.

Independent research from the likes of PwC Australia and Griffith University has identified that franchising in Australia achieves growth rates that outperform the broader small business market – backing up the premise that as a method of doing business, franchising is the optimum small business model.

Maintaining the vitality, strength and financial viability of the Australian franchise sector is in the best interests of not just Australia’s 1160 franchisors and 79,000 franchise business units,

but also the wider economy which benefits from $144billion sales turnover generated by the sector.

In 2015, the FCA has worked towards this on a number of fronts, including negotiations with politicians in regard to proposed legislative changes to unfair contracts laws with the view to ensuring the contractual regime that underpins franchising in Australia is not adversely affected by any new laws. Maintaining certainty in franchising arrangements is a key goal of the FCA in this regard.

The FCA will also continue to work with the Fair Work Ombudsman and Fair Work Australia to ensure that the franchising sector undertakes best practice in workplace relations. We support the implementation of higher penalties for those who have been found to breach workplace laws.

This is in our interests as a sector committed to best practice – and it ensures that our members can compete in a business environment that is a level playing field.

The franchise business model is essentially built on franchisors providing the tools of big business to independently owned and operated small businesses (the franchisee). That’s why owning a franchise business makes a lot of sense - and why franchising in Australia is amongst the most dynamic and progressive business sectors in the economy.

Franchising is the backbone of the small business community, and as we look towards 2016, the Franchise Council of Australia will continue its efforts in highlighting this to political decisionmakers and influencers, as well as promoting best practice within the sector.

Michael Paul is the founder of PACK & SEND and has been the CEO of the company since its incorporation in February 1993 and Chairman of the Franchise Council of Australia.

The Franchise Council of Australia Limited is the peak body for the $144 billion franchise sector in Australia, representing franchisees, franchisors and service providers to the sector.

W: www.franchise.org.au

BUSINESSFRANCHISOR 15

Ayers Rock Resort

Light up your next event

A

yers Rock Resort will host its most ambitious event yet, a monumental solar powered art installation from 1 April 2016 to 31 March 2017, adding extra sparkle to any event.

at sunset accompanied by didgeridoo and Indigenous performance, and a mouth-watering three-course dinner showcasing native bush ingredients; to an exclusive sunrise breakfast experience.

As part of Ayers Rock Resort’s commitment to arts and culture, it’s hosting the biggest Field of Light installation to date at the place that inspired it - Uluru. Internationally acclaimed artist Bruce Munro’s Field of Light, will be installed in a remote desert area near the resort and within sight of the majestic Uluru.

In addition to Field of Light, delegates can enjoy other unique experiences, including camel rides over the red sand dunes, Indigenous cultural experiences and guided tours around the base of Uluru.

In keeping with the desert’s vast scale, 50,000 slender stems crowned with radiant frostedglass spheres, connected via illuminated optical fibre, will gently bloom as darkness falls over Australia’s spiritual heartland.

Delegates can delve into the experiential artwork in a number of different ways; from a special dinner under the night sky at Field of Light with inclusions such as a sparkling wine and canapés

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Since opening its doors in 2012 Uluru Meeting Place, Ayers Rock Resort’s conference centre, has won two consecutive Australian Tourism Awards in the Business Events category, in recognition of its state-of-the-art facilities and range of unique dining and touring options.

The conference complex itself includes two main conference spaces which can host 306 delegates and 420 delegates respectively with theatre style seating. The rooms can be sub-divided with acoustically rated walls, or opened up to

become one common space for exhibitions or trade shows. A light-filled pre-function area adds more flexibility to the complex while a permanent marquee caters for up to 280 guests and an outdoor amphitheatre can host up to 350 guests.

Advanced audio-visual equipment is seamlessly integrated throughout.

With easy access from all east coast capital cities, Ayers Rock Resort encompasses a diverse offering of accommodation, from 5-star Sails in the Desert through to the authentic 3.5-star Outback Pioneer Hotel. This diverse offering ensures all conference markets are accommodated. Outside the Resort’s four hotels, lies a collection of resort and community style facilities that add depth to a delegate’s overall conference experience.

For more information contact: T: 02 8296 8067 E: conferences@voyages.com.au W: www.ulurumeetingplace.com.au

ULURU MEETING PLACE

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ULURU MEETING PLACE AT A GLANCE • • •

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BUSINESSFRANCHISOR 17

Mark Hoppe

Five tips for healthy cash flow in

H

18 BUSINESSFRANCHISOR

ealthy cash flow is more than just a sign of a healthy business; it can be a makeor-break factor for long-term success.

While cyclical fluctuations throughout the year can affect cash flow, it is important to make sure that for the year as a whole, cash flow is safely in positive territory.

make sure they’re doing everything they can to

With the new year almost upon us, businesses should take stock of the previous year’s cash flow status and start to prepare for the coming year. They should learn from any mistakes and

Some businesses overcome cash flow shortages

maintain a positive cash flow in the coming year and beyond.

Interrupted cash flow makes it hard or even impossible to pay staff, order new inventory, and generally support daily business operations. by going into debt with overdrafts or short-term business loans. However, too much of that sort of behaviour can send an organisation insolvent,

Interrupted cash flow makes it hard or even impossible to pay staff, order new inventory, and generally support daily business operations.”

1

Keep your eyes open It might seem simple, but the first step

for businesses to maintain healthy cash flow is to make sure they deal with businesses or individuals that have a good credit history, are trustworthy, and can pay invoices on time. If a customer’s credit rating changes for the worse, for example, businesses may want to reassess the terms of trade.

2

Don’t dally with late payment

Without prompt invoice payments, organisations can’t maintain their cash flow, which could send them into a financial tailspin. If a business keeps track of when issued invoices are due to be paid,

corporate insolvency figures in Australia. ASIC received more than 10,000 insolvency reports from administrators during the year, with the vast majority (86 per cent) relating to companies with assets of $100,000 or less.

Clearly, SMBs are in the firing line when it comes to insolvencies and bankruptcies. This can be because they don’t have the deep financial buffer zones that larger companies with deeper pockets and longer lines of credit have. Most SMBs are comparatively lean and rely on stable cash flow to keep things running smoothly.

into administration, bankrupt, or permanently out of business.

If you think insolvency can’t happen to your business, think again. For the June quarter of the financial year ending 2015, ASIC reported an increase of 18 per cent in Australian companies entering external administration, compared to same quarter the previous year.

During the financial year ending 2014, small- to medium-sized businesses (SMBs) dominated the

While there are a number of things that can cause cash flow problems for businesses, one of the most prevalent for SMBs is non-payment or late-payment by customers for goods and services. Other factors for businesses of other sizes might include market pressures, such as diminished demand, heightened supply, or a soft economic climate.

Although many of the factors that contribute to cash flow interruptions for SMBs may be out the organisation’s hands, there are steps companies can take to lessen the chances of some of the influencing factors, and others that can help mitigate the cash flow trouble itself.

There are five key tips to help businesses maintain healthy cash flow in 2016:

it can follow up before non-payment becomes a problem. It is important to chase up payment without delay.

3

Issue invoices promptly If a company takes a while to issue an

invoice, its right to demand prompt payment will be diminished. While most invoices are generally issued promptly, sometimes this vital administrative task can slip down the list of priorities. It is important to not let this happen.

Make sure the invoice is issued at the first possible opportunity with a clear pay-by date.

If a business keeps track of when issued invoices are due to be paid, it can follow up before nonpayment becomes a problem.”

BUSINESSFRANCHISOR 19

Mark Hoppe

4

Increase credit lines

One way to keep cash flow going is to increase lines of credit with lenders or suppliers.

This may not always be easy for an SMB. Yet if an organisation’s underlying finances make it safe to do so, this can be a quick and easy method to keep cash flow healthy, even if there is an interruption of cash inflow or outflow. However, if finances don’t support it, extending credit can expose a business to greater potential risks.

5

Protect yourself

Businesses can also protect themselves from the variety of forces that interrupt cash flow with trade agreements, contracts, and trade credit insurance. Not only does trade credit insurance help keep cash going in the event of non-payment, it can provide an essential tool for organisations to trade confidently in the market, even if they have extended credit lines or are experiencing fluctuating market forces.

Trade credit insurance is an essential tool for businesses of all sizes to mitigate the fallout from a variety of situations that may leave a company with cash flow issues. These might include a customer itself becoming insolvent, or the delay of a supplier’s shipment. Businesses trading on

20 BUSINESSFRANCHISOR

While there are a number of things that can cause cash flow problems for businesses, one of the most prevalent for SMBs is non-payment or latepayment by customers for goods and services.” credit terms often have substantial amounts of working capital tied up in accounts receivable, which can be risky if customers don’t pay on time.

Credit insurance protects cash flow by ensuring accounts receivable are covered no matter what.

what might be a meagre buffer zone.

This means that even smaller businesses that operate on lean budgets and profit margins can continue to do business with the assurance that they will be covered in the event their trading partners or customers don’t or can’t pay outstanding invoices.

and broker issues. Mark was appointed as

In such an event, trade credit insurance can often step in and provide the capital for the business to keep on operating without needing to opt for comparatively risky options such as extending credit or overdrawing accounts and eating into

For more information contact:

Mark Hoppe joined Atradius in Sydney in 2006 as the Head of Client Service, which saw him responsible for all the day to day client Managing Director for Atradius Australia and New Zealand in August 2014, with more than 17 years’ experience in the insurance industry under his belt.

T: 02 9201 5222 E: info.au@atradius.com W: www.atradius.com.au

2016

FRANCHISE DIRECTORY media kit click here for direct link to our 2016 media kit and booking form

Andrew Barr

PROTECT YOUR TRADE MARK overseas Y

our trade mark provides brand awareness and distinguishes you in the marketplace, as well as creating value in the form of

goodwill.

Domestic registration and protection of your trade mark is just the starting point if you have aspirations or genuine intentions of international expansion of your business. A qualified trade marks attorney or intellectual property lawyer can assist you with international trade mark registration strategies to ensure effective protection measures are in place prior to commencing overseas business development activities. Without this foresight and taking pre-emptive steps, you could face the unenviable situation that your trade mark is in use by, or worse still has been registered by, a third party.

22 BUSINESSFRANCHISOR

International Trade Mark Strategies for Franchisors Even with your trade mark registered in Australia, it may be at risk of unauthorised use in other countries. The earlier you register your trade mark in an overseas jurisdiction, the sooner your brand and business will benefit from the goodwill associated with the trade mark, as well as the inherent value offered by the protection granted by the registration.

A trade marks attorney or lawyer can effectively and efficiently advise and oversee your international trade mark strategy, by going through these steps: • Searching – a preliminary review of trade marks already registered in the desired jurisdictions. It may also be necessary to

consider translations of the mark, or use of non-Latin lettering.

• Application – prepared with the appropriate goods and services pertaining to your trade mark and submitted, with the requisite fees, to the relevant authority.

• Evidence, if necessary – a Trade Mark Examiner may require evidence or further information in relation to the application.

• Registration – once accepted and fees paid, the application will proceed to registration, thereby granting you the rights to use the trade mark and prevent others from doing so.

You should prioritise which jurisdictions you intend to expand into initially by identifying target markets for your business. It is often unnecessary to register your trade mark in every

Even with your trade mark registered in Australia, it may be at risk of unauthorised use in other countries.” country initially but every effort should be made to register in each new jurisdiction prior to your business expanding into the territory.

the necessary searches to ensure the likelihood of a successful registration or any other appropriate action.

Upon determining in which countries you require your trade mark to be registered, your trade marks attorney or lawyer can advise on the most efficient international registration system to adopt. These include:

Once a decision is reached, it is essential to act immediately as many jurisdictions employ a “first to file” system as opposed to a “first to use” system, which means a third party may secure the rights in the trade mark should they make an earlier application, despite your earlier use of the trade mark.

• National applications – this requires agents to be engaged in each country and correspondence with each national authority.

This can be time consuming and costly if numerous jurisdictions are required.

• Community Trademark – A single application can be made for the European Union, rather than separate applications in each country.

However, if your trade mark application does not proceed in any one of the countries in the European Union, the entire application will be fail.

• Madrid Protocol – is an international filing system which allows for a single application to be made for registration under each of the 96 member jurisdiction. The initial application must be in your home jurisdiction but that same application can be extended to different countries. Fees are payable for each designated country but this centralised system saves on administrative time and costs completing multiple applications and corresponding with each national authority individually.

Depending on your requirements, your legal advisor will determine the most efficient system to use.

International Trade Mark Portfolio Management Your trade mark portfolio will comprise of your registered trade marks in various jurisdictions.

As you consider prospective overseas markets, you should determine where and when to apply for trade mark protection with advice from your trade mark attorney or lawyer who can conduct

Registration dates and renewal dates should be noted to ensure that the registration does not lapse and protection lost, thus allowing a third party to apply for that same trade mark and secure the rights to its use. The registration period in most countries is 10 years and can be renewed indefinitely at the end of each registration period by paying the required renewal fees.

Whether in Australia or overseas, your trade mark registration can be revoked or cancelled for non-use, typically where you have failed to use the trade mark for a period of three years or more.

Protection and your rights in the trade mark will be lost if you do not implement ways to ensure continued or periodical use of the mark.

Similarly, your trade mark should be used in conjunction with the goods and services for which they are registered so that they acquire and maintain distinctiveness in the marketplace.

Should your trade mark become generic, such as Hoover for vacuum cleaners or Biro for pens, the value is lost and your rights in the trade mark become more difficult to enforce. You should ensure your trade mark is being used correctly and prevent improper use of the trade mark.

If you become aware of an infringement of your trade mark you should seek immediate legal advice and take appropriate action. A strong enforcement strategy can prevent others from using the trade mark and put potential infringers on notice that you will take the necessary steps to protect your trade mark rights.

A trade marks attorney or lawyer can advise on defensive and preventative strategies, such as: • Registration for the correct goods and services; • Using ™ and ® to inform others that the trade mark is registered; • Ensuring the registration is renewed and not allowed to lapse; and • Monitoring your competitors’ marketing activities and new trade mark registrations.

Or, once you are alerted to a potential infringement; enforcement of your rights could include: • Opposing applications or registrations of trade marks that are identical or confusingly similar; • Issuing cease and desist letters and warnings to infringers, and subsequent legal action; • Using watching services to monitor trade mark applications; • Identifying distributors and manufacturers of infringing goods; and • Registering the trade mark with customs and border control agencies to prevent counterfeit imports.

You should also consider how you use the trade mark on the internet and be aware of possible infringements by third parties, known as ‘cybersquatters’, who seize the opportunity to register domain name addresses comprising of your trade mark with the intention of selling the domain name to you or profiting from the reputation and goodwill of your trade mark.

As your trade marks portfolio grows you should conduct regular reviews and audits to ensure

BUSINESSFRANCHISOR 23

Andrew Barr

As your trade marks portfolio grows you should conduct regular reviews and audits to ensure that appropriate protection and management procedures are in place.” that appropriate protection and management procedures are in place. Trade marks that are not being used can be utilised or alternatively licenced to a third party, or even allowed to lapse, and trade marks due to expire can be renewed accordingly. Your portfolio management should reflect your overall business strategy in respect of your competition and the market.

to expand and are in discussions about. If your trade mark is not already registered or priority claimed through an application having been submitted, the third party who you have been in discussions with may try to register the trade mark and establish a business in that country using your trade mark subsequently preventing you from doing so.

Ultimately the commercial decision was taken

Importance of NonDisclosure/Confidentiality Agreements When Engaging Overseas Business Partners

Case Study:

as possible in those countries in which you intend

When engaging third party business associates, including potential master franchisees, to discuss your business you should take necessary precautions to protect your confidential information, such as your system and processes, suppliers and intellectual property. A nondisclosure agreement or confidentiality agreement will create a contractual obligation that prevents the recipient from using the disclosed information.

An agreement of this kind should be entered into prior to any discussions taking place and will provide you with a degree of reassurance knowing that the recipient will be bound by the restraint provisions of the agreement.

Further to this, you should ensure that your trade marks are already registered, or applications submitted, in the jurisdiction into which you hope

24 BUSINESSFRANCHISOR

Poolwerk expansion to the United States John O’Brien, Founder and CEO of Poolwerx, faced a similar situation following an introduction at an international industry conference which resulted in $300,000 being paid to purchase the POOLWERX trade mark from the individual with whom he met and who registered the trade mark in Canada and the United States.

With 22 years of goodwill and value acquired in the Poolwerx brand in Australia, the company’s strategy was to move into the US market. John had been planning to expand from Australia to the United States but had not yet ensured the registration of his trade mark in the jurisdiction prior to commencing informal business discussions there. Senior management had instructions to register the trade mark but had failed to do so: This oversight costing the company dearly in the end as by the time they came to apply, it was discovered that a third party already claimed priority.

that buying the rights to the trade mark would be more cost effective than rebranding or engaging in lengthy litigation.

This situation could have been avoided with prompt registration of the trade mark at the conception stage of the international expansion.

We recommend applying for registration as soon to commence business activities, that way you will either secure the registration early or discover that it is not available and determine an alternative brand strategy.

Andrew Barr is a registered Trade Marks Attorney at the law firm at DC Strategy who deal with a variety of trade mark issues and portfolio management in Australia as well as overseas.

For over 30 years DC Strategy has been the region’s leading end-to-end franchise consulting, legal, recruitment and branding firm. The multi-disciplinary team is committed to providing professional, practical advice and ongoing support to clients.

Contact: T: 02 8220 8700 E: andrew.barr@dcstrategy.com W: www.dcstrategy.com

T h e

m a g a z i n e

f o r

f r a n c h i s e e s

AUSTRALIA and NEW ZEALAND

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with Potential Franchisees and Franchisors in 2016

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Belinda Bow

Your franchise is only

as strong as your weakest franchisee A

lmost every day someone will visit a franchised store. Whether it’s for fresh bread, giftware or noodles, franchises are a way of life for business in Australia and New Zealand. The interesting thing is that regardless of the store you visit, you will have an opinion of all of the other stores by that one visit. In truth, the franchise is only as strong as the weakest franchisee.

I have had the experience of visiting a particular store and refusing to go to others in the franchise based on my own experiences of extremely poor customer service and the food I purchased was, well, let’s call it a disaster. I even followed up with head office with very little feedback and subsequent outcome. As sad as it sounds I have judged all of their stores based on that experience. And let’s be honest, that’s how most

Just one franchisee that cuts corners on signage or visual standards cheapens the franchise to their customers and to the overall brand.”

26 BUSINESSFRANCHISOR

of us treat franchises when we have had a bad experience.

So when you own a franchise how can you maintain standards and reproduce excellence in each business? Here are six ways:

The Right People If you are hiring an employee you go through a process of reviewing multiple candidates with a job description and clear selection criteria, and also judging if they are a good fit for your culture.

Yet often, franchisors operate on an attitude of, “If you have the money to become a franchisee, then you are in”. This dilutes your brand and you cannot have franchisees who are just buying themselves a job.

Instead, write down criteria for what you require of franchisees, and make sure that they will help make your franchise successful.

For example, in my franchise I have a strict written criterion for potential franchisees. I make sure they will be a good fit for my franchise, as well as my franchise being a good fit for them.

One of my criteria is that they must be a Certified Practicing Marketer so I can be sure of quality and

be confident in their knowledge and abilities. They must also be disciplined enough to constantly set and reach goals, and they need to value the idea of creating their own path. This means they are more likely to be motivated and show ownership of their business and brand.

Written Guidelines Start by listing each task, process or service within the business. This includes everything from how to sell a product, to a service you provide, or even packing up at the end of the day. Then break down each of the tasks into a checklist and include every step of the process needed to get to the best end result. These checklists then form an overall plan with guidelines to ensure consistency and standards for the franchisees to adhere to.

The best news is that this will also give your franchisees a sense of clarity in what the other franchisees are doing. With this transparency, comes increased trust in the franchise and what you are offering not only among the current franchisees but also for new franchisees considering your business as an opportunity.

As founder of Australia’s first marketing franchise, I understand the value in consistency, support and training in maintaining a brand. We have a Business Practices Manual with every detail you will ever need to know in running a Green Chilli Marketing Franchise. From sending emails to presenting proposals and following up, each item has been documented for the franchisee to refer to at any given time. In addition, I have built in checklists to the manual to keep the process simple and easy to communicate to their team.

The way I approached this was to go back to the early days of starting a business and recalling what I learned the hard way and what I wish I knew. I then began to build a picture of what my franchisees would find valuable and I also included tips, guides and examples to ensure clarity. I have also worked with franchisees and franchisors in developing and maintaining their brand so I was also able to identify the potential pitfalls from the outset.

Branding Look at your business through your customer eyes. What does your business look like to customers? Is the logo consistent through everything that you produce? Are you using the same colour palette? Do you use the same fonts?

Is the signage produced professionally to the same standard? These may seem like little things and just based on looks, but the look and feel of a business is paramount to create the visual consistency of a franchise. Just one franchisee

that cuts corners on signage or visual standards cheapens the franchise to their customers and to the overall brand.

The other part to mention when it comes to branding is that each and every point of contact that a customer has with your business either builds or detracts from your brand. Think about each of the elements that go together to build the big picture. For example, what is your franchisees communication via emails like? Professional or scrappy? Are all franchisees email signatures professional? Does it include your relevant details?

The devil is certainly in the detail and by reviewing each element you will create and maintain a strong brand.

First Impressions First impressions may seem like a trivial topic, but it is a huge issue for franchises with storefronts and more particularly those franchises in the food industry. The way a store presents to customers builds an image of the franchise from the moment they step inside. We’ve all been into a fast food franchise at one time or another and I am sure that each of you would have your own stories in relation to the cleanliness or lack thereof of the store. Maintaining cleanliness standards throughout the franchises is paramount to successfully building a reliable and trusted brand.

Even if your business does not have a storefront, first impressions count. Do your franchisees go to meetings with a notepad and pen that has seen better days? Are their business cards dogeared and bent out of shape? Are they dressed professionally? Does their attire suit the industry that you are in? Those first impressions create the lasting image for your potential customer or client, and as a franchisor you need to make sure all your franchisees are making excellent first impressions as representatives of your brand

Standardising You can’t control and clone every aspect of your franchise, as there are some things such as location and the franchisees personality that differ from franchisee to franchisee. But you should standardise and control as much as you can, in order to achieve a consistent image and brand, and also to give customers a consistently positive experience. Areas that can be standardised include the products or services that your franchise offers, the tools that you offer to your franchisees for marketing purposes, and the value given to customers. These provide the staple for the franchisee to present their image, sell and build on.

Even if your business does not have a storefront, first impressions count.”

Customer service Customer service is one of the biggest complaints when it comes to retail stores and even servicebased businesses. By providing ongoing training as part of the franchise offering, you can help franchisees maintain a high level of customer service. Training can be delivered just to the franchisees to then transfer skills to their team, or you can provide an overall training program for all franchise owners and their employees.

Another aspect of customer service is how complaints and issues that arise are handled.

Developing and implementing successful recovery mechanisms means that customers are taken care of and that they leave the franchise on a positive note, rather than allowing the issue to spiral. This is particularly important with the rise of viral venting on social media.

The big picture When it comes to a successful franchise, it is really about consistency and maintaining a high standard of service or product. This will help you to maintain your vision for the franchise.

When you are proud of the business run by each franchisee, your franchise as a whole will be strong. When you are trying to communicate this message to your franchisees, it is key that you explain that consistency in the brand equals value in the brand. Whatever you do reflects on the others and vice versa. By each of the franchisees maintaining high standards, the value of their franchise remains.

Belinda Bow founded Green Chilli Marketing in 2008 and has recently launched Australia’s first marketing franchise opportunity for talented marketers to have a successful career and work life that fits in with their lifestyle.

Belinda is a Certified Practising Marketer and an Associate Fellow of the Australian Marketing Institute.

T: 1300 884 356 E: belinda@greenchillimarketing.com.au W: www.greenchillimarketing.com.au franchise/

BUSINESSFRANCHISOR 27

GREG NATHAN

11 ways

to improve the value of field visits A great outcome is arriving at conclusions together, which may be different and better than your own.”

1

Work up a joint agenda with franchisees prior to your visits

Collate a list of the things you both want to cover.

Once the agenda is agreed don’t deviate from these topics, but do allow time for discussion of additional issues.

2

Have a clear purpose for every visit

F

Ask yourself “If the visit were to go as well as

ield managers are employed to inform,

it reasonably could, what would be achieved?”

inspect and inspire franchisees to higher

Imagine yourself achieving this result and how

levels of performance. And most franchisors

spend 10-20 per cent of their royalty revenues on this important franchisee support function.

you would feel as a result. Review this in your mind just before you start each visit.

3

always know what they are going to face when

When making initial contact give people your complete attention

they walk through a franchisee’s door.

Only after you have greeted the franchisee

Here we share 11 tips to help field managers

and their staff, and checked that everything is

deliver greater value and improve the

still on track for your visit, should you raise any

effectiveness of their visits. These topics are

compliance or business issues. You never know

covered in great depth in our Foundation and

what has happened prior to your arrival so don’t

Advanced Field Manager Bootcamps.

jump to conclusions.

But field managers have a tough job, often working alone out on the road, and they don’t

28 BUSINESSFRANCHISOR

4

Be friendly but never friends

If you decide to socialise with a franchisee, for instance by having a meal together, always do this with a business purpose in mind. If you are spending time with a franchisee just because you enjoy their company you may be opening yourself and your company to a complicated relationship which is likely to go unpleasantly sour.

5

Arrive at decisions together regarding the meaning of data trends

Although you may have done your own analysis, initially keep your conclusions to yourself as these may be incomplete without further information from the franchisee. A great outcome is arriving at conclusions together, which may be different and better than your own.

6

Make it clear why data is being collected

They can sometimes be defensive or even a bit paranoid about how you intend to use their business information. Draw out any concerns and remind them your analyses are for the purpose of improving their profit.

The tone of your next visit will commence from where this visit ended.”

7

Explain compliance checks in terms of brand protection If a franchisee becomes defensive remind them

11

Finally, always ask the MAGIC QUESTIONS at the end of every field visit

how much money and effort has been invested

challenging, acknowledge this but also point

in building the reputation of the brand and how

out any positives that have been achieved. It is

quickly this can be undermined to the detriment

a good idea to make a short call a day or two

of everyone.

afterwards to thank the franchisee for their focus

8

and attention and reiterate the progress made

“What was useful about this visit, and what could I do to make my next visit more useful for you?”

These are powerful questions that demonstrate you care about the franchisee’s success. And you are likely to learn a lot about how to improve your own performance!

Keep conversations constructive

If a discussion goes negative stay solution focused by asking “What” questions. What do you want to see happen? What has been working? What can we do to help you move forward? Draw attention to what has been achieved and build on this.

9

Finish visits on a positive note

during the visit.

10

Look after yourself and keep your energy high The energy you give out, which is a product of how you are feeling, will have more bearing on the effectiveness of your visits than any other single factor. Get enough sleep, exercise regularly and keep an adequate quota of fun in your life.

The tone of your next visit will commence from

Also spend time with positive people who care

where this visit ended. If the visit has been

about you.

Greg Nathan is a psychologist, founder of the Franchise Relationships Institute (FRI) and author of several popular franchising texts including, The Franchisors Guide to Improving Field Visits. FRI conduct regular Bootcamps to improve the capability of field managers.

To find out more, go to www.franchiserelationships.com or contact events@franchiserelationships.com.

BUSINESSFRANCHISOR 29

Robert Toth

Should the Franchisor

hold the Head-Lease to Retail Premises?

T

his is an often considered issue for new start up franchisors and there can be differing opinions amongst consultants and

lawyers.

For retail franchisors finding suitable sites is becoming more difficult. Securing a site in a shopping strip can mean shutting out a

Should a franchisor or its related entity hold the lease?

Often a franchisor will set up a separate leasing entity to hold the leases to sites rather than holding leases in the franchisor’s entity. Why?

competitor from a strategic location. Therefore by

The lease is essentially a liability, often requiring

the franchisor holding the lease they have greater

security. It is best to firewall or protect the

control over that site.

franchisor as a trading entity who receives

30 BUSINESSFRANCHISOR

royalties and revenue from the liabilities.

In some circumstances, the determining factor will be the landlord. Shopping centres such as Westfield, Gandel and Lend Lease may require the franchisor to hold the lease, as they do not want to deal with individual franchisees.

This issue is often not properly considered by a franchisor and their consultants when establishing the business model. It is not until the franchisee defaults and the franchisor tries to

The clear benefit to a franchisor holding the lease is the ability to maintain their presence in a centre or shopping strip if a franchisee defaults.” take possession of the business to maintain their brand presence that the penny drops.

So what are the considerations?

The clear benefit to a franchisor holding the lease is the ability to maintain their presence in a centre or shopping strip if a franchisee defaults.

The franchisor is also in the best position to negotiate favorable terms, possibly rent free concessions and fit out contributions for their franchisee. The franchisor’s leverage with shopping centres also increases as their presence and brand develops.

The franchisor does not have to deal with a franchisee’s bank who may secure a mortgage over the lease. This means one less party for the franchisor to deal with, on default by a franchisee.

Franchisor’s liability By holding the lease, the franchisor is however primarily liable for the rent, outgoings and obligations to make good if the franchisee abandons the business or stops payment of rent.

The landlord will require the franchisor to meet those obligations regardless of any condition in the franchise agreement which might give the franchisor a right of indemnity as against the franchisee.

If a franchisee defaults or abandons the business, they generally do so quickly and there is little time for the franchisor to act.

If the franchisor does not hold the lease, they may have difficulty gaining access to the premises.

Exercising their rights under a power of attorney provision in the franchise agreement and dealing with the landlord or their agent can be fraught

with delay negotiating with landlords, agents and lawyers while the business remains closed, causing damage to the brand.

Where the franchisor holds the lease and the franchisee abandons, the franchisor can, without delay, step in, take control of the site and make arrangements to either manage and/or conduct the business. There may be certain sites where the franchisor may allow the franchisee to hold the lease however it is recommended that the benefits outweigh the risks where it is an A grade site. The franchise should hold those leases and sublet or license them to the franchisee.

Case note The franchisor was advised by shopping centre management that the franchisee did not attend to open the store during required trading hours.

This constituted a breach of the lease as the franchisor held the lease as head tenant.

The franchisee was thought to have abandoned the business. The franchisee operated under a license to occupy the premises.

The franchisor here was able to gain immediate access as the tenant with the assistance of shopping centre management and security. The business continued to remain open with little or no damage to the goodwill and reputation of the franchisor.

The franchisor could then negotiate with the franchisee (or franchisee’s bank) to pay out the depreciated value of the fixtures, fittings and stock less any default costs and monies owing to the franchisor.

Summary Each franchise business model needs to be carefully assessed, however this issue should

not be overlooked. On balance, we recommend a franchisor hold the lease on primary sites as we have found from experience it more effectively protects their site and brand.

It is vital to obtain specialist legal franchise advice.

Robert Toth is a Partner of Marsh & Maher Lawyers, with over 25 years of experience in Franchise law. He is an Accredited Business Law Specialist with expertise in franchising, licensing and distribution and franchise dispute resolution (acting for both international franchisors and franchisees).

Robert has written numerous articles in various publications including The Australian Financial Review, The Australian and New Zealand Business Franchise Guide, Business Franchise and Asia Franchise & Business Opportunities magazines. Robert holds numerous memberships including the FCA, Franchise Association of New Zealand (FANZ) International Franchise Lawyers Association (IFLA) and the US Commercial Service.

For more information contact: Robert Toth, Partner P: (03) 9604 9405 E: rxt@marshmaher.com.au Marianne Marchesi, Senior Associate P: (03) 9604 9413 E: mim@marshmaher.com.au

BUSINESSFRANCHISOR 31

franchising expo

Exciting year of Expos ahead exhibitors have been quick to snap up space in the 2016 Expos to be held in Sydney, Perth, Brisbane and Melbourne.”

- Fiona Stacey

W

ith a string of successful shows in Sydney, Brisbane and Melbourne this year, organisers are looking forward to an even more exciting year in 2016.

businesses are thriving in the transition from an

“We have been very happy with the response to this year’s shows and we are thrilled that next year we are adding to our calendar with an Expo in Perth in May,” says Exhibition Manager Fiona Stacey.

businesses by exhibiting at the Franchising &

The Perth Franchising & Business Opportunities Expo will be a more boutique event than its sister shows in Sydney, Melbourne and Brisbane. Each exhibitor may book a showcase stand, at a special introductory price.

Angie Cooksey, from Franchise Council of

“We have focused on keeping costs down for exhibitors while at the same time maximising the impact in this exciting new market,” says Exhibition Director Tim Collet.

franchisees seeking information and asking the

“The Franchising Expo has grown in size and stature since we took on the show in 2013,” he explains. “Now is an excellent time to bring the show to Western Australia, where small

“The Melbourne visitors this year have been very

32 BUSINESSFRANCHISOR

economy reliant on mining, to one focused on products and services.”

Many Franchise companies have built their Business Opportunities Expo. It is also a place where the industry comes together to network, discover new trends, and learn ways to improve their business.

Australia (FCA) says she thought the Melbourne show in particular was a standout. “This was one of the best shows we have seen in Melbourne,” she says. “We have met many potential right questions, and we have also met many potential franchisors doing the research into franchising their business. well informed and are serious about investing,” she adds. “The show is attracting the right people and the marketing has been spot on.”

Fiona Stacey says exhibitors have been quick to snap up space in the 2016 Expos to be held in Sydney, Perth, Brisbane and Melbourne.

“There’s no better endorsement for a show than exhibitors immediately re-booking, and many are seeking an enhanced presence next year, be it a bigger stand or more prominent location. It’s worth talking to our team as soon as possible to ensure your company doesn’t miss out!”

Franchising & Business Opportunities Expo 2016: Sydney: 18-20 March at Royal Hall of Industries, Moore Park Perth: 6-7 May at Perth Convention & Exhibition Centre Brisbane: 23-24 July at Brisbane Convention & Exhibition Centre, South Bank Melbourne: 26-28 August at Melbourne Exhibition Centre, South Wharf For more information go to www.franchisingexpo.com.au

Looking for new franchisees?

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Sydney Royal Hall of Industries, Moore Park, 18-20 March Perth Perth Convention Centre, 6-7 May Brisbane Brisbane Convention Centre, 23-24 July Melbourne Melbourne Exhibition Centre, 26-28 August

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Tania Allen

The steps to mastering

Franchise Recruitment & Selection

34 BUSINESSFRANCHISOR

feature

T

he importance of laying the right foundations for successful franchisee recruitment and selection is often times overlooked and perhaps even pushed aside, replaced instead with a sense of complacency that you’re the one who knows your business model best so recruiting franchisees should be easy right? Well not exactly.

Interestingly this is how many franchisors, both new and mature, approach franchise recruitment and selection. In a marketplace where competition is high, people are no longer looking for franchise opportunities that are relevant to their past trade or profession, instead choosing something completely different. An opportunity, a culture and a brand that will fuel their interest and desire to own their own business, ignite their passion and build a lifestyle they love.

So as a franchisor, the key question is firstly, how do you capture the attention of your ideal franchise candidate and; secondly how do you bring them onto a path of discovery with you, until they either deselect themselves, are deselected by you or, are granted one of your franchises?

There are 3 key selling skills all franchisors must have…

We’ve all heard it before…. Gone are the days where you just “flog” your franchises. It’s about granting them. Often times this is associated with a passive sales process and one that doesn’t fully support the fundamental function of a franchisor and that is to ‘sell franchises’. So if you are not in the business of selling franchises, yet your livelihood and success of the brand depends highly on it, it’s important to understand the key elements to success franchise recruitment and selection.

Build solid foundations with a solid sales process When you understand the lifecycle of a customer, in this case a franchisee and you, prepare and lay and develop solid foundations, you will accelerate your pace of expansion in the marketplace. The real statistics of franchisors and franchise sales people are dismal at franchise recruitment and only a small percentage however are real pros at it. It also helps if you’re supported with a robust system that can do a lot of the heavy lifting for you. We can talk about that a little later on. Old

Closing the franchise sale requires confidence, leadership, and a clear understanding of who your ideal franchisee is and what they are thinking.” sales techniques simply don’t work anymore and short-cutting the franchise process won’t support you either.

The third key in successful recruitment is effective closing skills

So what’s a solid sales process look like and how will it support you? A well-defined sales process will clearly lay out what steps you must take, in what order and at what time, so you help prospective franchisees make a smooth transition to franchisee. Take some time out now to jot down some thoughts about the steps you want your prospect to take as soon as they see your ad, land on your landing page, sign up to a webinar, or simply attend the first meeting. If you map it all out into a framework that enables the process to flow, you will be in a much better position to create leverage, scale and grow.

When you listen to a beautiful music composition, you would never hear a complete pause or stop after it’s built up to a crescendo. The crescendo smoothly transitions to a decrescendo and then continues with the rest of the piece. The same can be said with closing the sale. The crescendo is the final step in the process, where the candidate must make that life-changing move and take a leap of faith into your franchise world.

The second key to successful franchise recruitment and selection is strong relationship building skills Back when I started in franchise recruitment I was a master of the Tom Hopkins style of selling.

I led, influenced and convinced and won them over and yes that meant I then took their money.

That style of selling just doesn’t work anymore.

People are more aware; they are well educated and informed and are truly stacking your franchise opportunity up against another. I am a big believer that you just can’t possibly build strong, personal relationships with every prospect as there is simply not enough time in the day and secondly, not everyone will be the right fit for you and therefore doesn’t require as much one on one time and energy from you. It could therefore be said that the key to building strong relationships is to have a solid sales process and follow up strategy in place that incorporates a balanced mix of personal, sms and email touch points.

Prospects are still loved, and you get to focus your time and energy where it’s needed most.

Therefore it could be said that closing the franchise sale is an art and a science. One if mastered will serve and support your franchise brand in achieving both short term and long-term strategy. Closing the franchise sale requires confidence, leadership, and a clear understanding of who your ideal franchisee is and what they are thinking. It’s having clarity around what will comfortably lead the candidate to your franchise rather than further away. This one element alone separates the masters of franchise recruitment from the rest.

This is a topic that deserves a book, a suite of master class training and the rest, so keep an eye out for that on our website, however lets jump straight into how you can implement a compelling sales process as the foundation of you mastering and being more successful at franchise recruitment and selection starts exactly there, with your sales process. It’s the ‘anchor’ to embracing, informing, guiding and closing quality candidates who will help you build your system and franchise brand.

Your franchise sales process must be refined to work most effectively for your franchise business model and brand. Establishing your franchise sales process is about creating a solid plan for success. Follow the plan and the plan will work.

Add a robust CRM and marketing automation

BUSINESSFRANCHISOR 35

Tania Allen

closing the franchise sale is an art and a science.” program like Infusionsoft or Active Campaign and you will be recruiting more in less time.

Your franchise sales process is an evolving process that recognises the changing marketplace, competition, buyer motivations and current strengths and challenges within your franchise. Every franchise brand may have a slight variation to the process however the principles are simple and highly effective. The execution is quite demanding, however when followed correctly and combined with some sophisticated automation to do some of the lifting for you, it can produce rewarding results.

The process incorporates self-qualifying and selfclosing principles. These steps are:

1. Pre Qualification: Determine WHO your ideal prospects are, pre qualify them quickly. Your initial conversation with potential prospects is critical. It’s about asking the right questions upfront. Your closing objective is to move them quickly to the next stage.

2. Present – Explore – Qualify Present initial information, qualify the prospect, build rapport and establish the process. It’s your role to take control and lay the framework for the next stages. Follow up can include one on one, and automated emails and sms. It’s important you explain your role in the process ie “My role is to educate you about our franchise”. This will help you easily transition the prospect through to the application stage. Probe with more open-ended questions to show interest and to discover more about the prospect. This will also help you guide their investigation more effectively. Having clarity around their hot buttons and where their interests lie is more important than raving on about you and your products and services.

Find out what’s the key to their decision-making and what has turned them off looking at other opportunities and dealing with other franchisors.

36 BUSINESSFRANCHISOR

3. Application stage

6. Training and Launch

Request for application form, collect deposit, and move them to the business review. This stage should be short and sweet so your candidate can step into reviewing the business model in more detail.

Before your franchisees can launch they need to be trained in how to operate your franchise system. This provides an important foundation for your new franchisees to build their success upon.

4. 360 Review This is the stage where you can present next stage information, webinars, videos, written material etc along with your Disclosure Document and Franchise Agreement. This can all be automated excluding phone calls of course.

A great closing and qualifying question to wrap this stage up is simply asking “Now that you understand what our Disclosure Document and business model is all about, do you feel comfortable with how our franchise model works?” Franchising isn’t for everyone so make sure your prospect understands and buys into the franchise way of doing business. If not, wave the red flag and disqualify the candidate. Bringing mismatched candidates into your franchise network will create more trouble than what it’s worth.

5. Granting the Franchise This can be a very overwhelming and stressful stage for the incoming franchisee. It is important you support them and keep the energy up during this time. This stage includes: Franchisee approval, legal documents executed, training booked, pre launch execution.

7. Ongoing Coaching and Mentoring Many franchisors underestimate the power in ongoing coaching and mentoring. You can do this in a leveraged way using a combination of group coaching, monthly master classes, online tutorials and one on one support. Whatever you do, be sure this is part of your system.

Franchise recruitment and selection is a highly specialised process requiring sales principles and techniques foreign to most other business development strategies. New franchisors and sales personnel quickly realise the process is counter-intuitive, and doesn’t adhere to selling fundamentals you may have practiced in traditional business in the past.

To get the support you need to grow the franchise network you want contact Tania Allen today. Tania Allen is the founder of Vision Alliance a business growth and franchise consultancy who helps small businesses maximise potential. If you’re interested in learning more or working with Tania and her team contact Tania today.

T: 1300 76 49 20 | +61419481203 E: tania@vision-alliance.com W: www.visionalliance.com.au

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LEAVING A LASTING IMPRESSION Jejak Graphics is a freelance graphic design business based in Melbourne, Australia working with clients worldwide. With over 18 years experience in the design and print industry specialising in magazine layout and advert design as well as offering a number of other graphic design services and print solutions including: t $PSQPSBUF TUBUJPOFSZ t #SPDIVSFT BOE nZFST t 1PTUFS BOE CBOOFS EFTJHO t &EVDBUJPOBM NBOVBMT t 4QPSUT QSPHSBNT t .POUIMZ /FXTMFUUFST t 1SPEVDU MBCFMT BOE QBDLBHJOH Artwork is tailored to your brand and focused on your message and target BVEJFODF /P KPC JT UPP CJH PS TNBMM $POUBDU NF UPEBZ UP EJTDVTT IPX +FKBL (SBQIJDT DBO NBLF ZPVS DPNQBOZ or organisation leave ‘a lasting impression’.

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Jason Gehrke

Better-educated franchisors attract better franchisees why should franchisees invest in franchisors that aren’t prepared to learn themselves?” its franchisees (who lose a large portion of their investment, if not their entire business), would suggest that education in franchising principles and techniques is necessary for franchisors prior to and during the use of franchising to expand.

E

ducation alone may not be a determinant of business success, but it can be an essential element.

Unsurprisingly, a desire to learn and a commitment to ongoing professional development (in addition to formal qualifications) are commonly seen as highly desirable attributes in potential franchisees.

Franchisors like having franchisees who are prepared to learn.

But by the same token, why should franchisees invest in franchisors that aren’t prepared to learn themselves?

Many highly successful entrepreneurs who start franchise systems have little or no formal educational qualifications. However just because they might not have been to university doesn’t mean they aren’t continually learning, and prefer instead to attend short courses and workshops, and read books written by other successful business people.

38 BUSINESSFRANCHISOR

Furthermore, as their business develops, such entrepreneurs often surround themselves with highly-qualified talent because they are savvy enough to realise the limitations of their own skills and hire staff with the smarts to fill the gaps.

But equally, the use of education and professional development as selection criteria for franchisees could also be used by potential franchisees to assess what franchisors are worthy of their investment.

A study that tracked start-up franchisors in the United States over a ten-year period indicates that failure rates among start-up franchisors can be as high as 75 per cent in that time – a figure surprisingly similar to frequently quoted failure rates for independent small businesses, commonly understood to be approximately 85 per cent over five years.

This potential failure rate, combined with the severe consequences of a system’s failure on

Yet too often business owners start franchising their concept, and then realise after they receive complaints from franchisees and problems emerge in the network that they don’t have the answers for everything and need to learn more about the business of franchising. For example, important franchisor processes such as field support, site selection, financial benchmarking of individual and group performance, and franchisee selection are just a few areas where franchisors can flounder.

For those franchisor personnel with previous work experience in, and an understanding of the operations of large company-owned chains, a passing familiarity with these concepts overlooks the one key difference between corporate and franchised chains – the franchisee who has invested in the brand and expects to get a return on their investment. Managing and supporting franchisees is a world apart from managing and supporting employees in a company-owned chain.

It should be understood that franchising is not a

Managing and supporting franchisees is a world apart from managing and supporting employees in a companyowned chain.” required of franchisor staff, particularly those in direct contact with franchisees?

business by itself, but a way of doing business that transcends the boundaries of business type and industry. A fundamental knowledge of the principles of franchising is essential for franchisors to effectively lead and grow their organisation, in addition to the specific industryknowledge particular to their business.

An assessment of these two types of knowledge (ie. franchising and industry-specific) is important for a franchisee to determine the viability of a long-term commercial relationship with a franchisor. Not only should franchisees be encouraged to ask for more detail about the business qualifications and franchising experience of officers named in a company’s disclosure document, but they should also be considering the wider context, such as the qualifications and experience of the support personnel with whom the franchisee will have regular contact.

A potential franchisee might consider asking a franchisor the following questions (and of course franchisors should ask themselves these same questions periodically): • What is the franchisor’s professional development policy for its staff?

• In the last 12 months, what training programs (including conferences) have been attended by franchisor personnel who will be involved in supporting the franchisee’s business?

• How relevant are these training programs in supporting a franchisee’s business?

• Are staff who support franchisees required to undertake any competency assessments or attain any qualifications to maintain or progress in their role?

• What induction training (if any) are franchisor staff required to undertake prior to working with franchisees?

• What ongoing professional development is

Caught up in the excitement of becoming their own boss, a potential franchisee can easily view a franchisor through rose-coloured glasses, however asking some serious questions about the franchisor’s knowledge of franchising, and their commitment to learning can be highly revealing.

Questions of this nature will be particularly useful to help distinguish one franchise opportunity above another if the business concept, investment level and other factors are similar. Many franchisees shop around for the franchise that suits them best, and often narrow their search to two or three businesses that may operate in the same market and be direct competitors to each other.

A franchisor’s demonstrated commitment to continual improvement through ongoing professional development might make all the difference between a potential franchisee applying for one system in preference to another.

(And for that matter, if a potential franchisee is thinking about their future business investment in this detail, it may make them an even more appealing candidate as it demonstrates a thorough and planned approach to starting their business).

Not only can a commitment to ongoing education and professional development make a franchisor more appealing to potential franchisees, it can also improve its long-term chances of survival and extend competitive advantages over its rivals.

While there are no educational qualifications awarded to a franchisor’s business, there are both vocational and postgraduate qualifications available for themselves and their staff, as well as the Franchise Council of Australia’s own Certified Franchise Executive (CFE) program.

The CFE is a designation that identifies franchisor personnel who are committed to ongoing learning. To earn and maintain the CFE designation (which often appears as a postnominal after a person’s name), a participant must commit to a learning pathway. This can include vocational and postgraduate studies, as well as short courses,

workshops, and highly specialised franchise learning events, such as those conducted by the Franchise Advisory Centre, which conducts the largest range and number of franchisor education events in Australia.

The CFE designation is awarded only after a participant has completed 3,000 points of professional development across a range of activities. In order to retain the designation, a CFE-holder must continue to accrue a minimum of professional development points.

Franchisors generally prefer their staff to attend a number of short, highly-focussed education events rather than extended, drawn-out courses for the reason that they can rarely afford for their staff to be out of circulation for more than a day or so at a time. In addition, highly focussed learning events can help a franchisor’s business build its overall skills rapidly, resulting in accelerated improvements in support and guidance to franchisees.

Business owners typically don’t know what they don’t know. Franchisors are no different. Building the knowledge and capabilities of their staff in the specialised world of franchising is important to ensure that in turn, their franchisees have the best possible chances of success.

Perfection in franchising is a journey, not a destination. Ongoing education of franchisor personnel makes that journey safer and more sustainable for both franchisee and franchisor.

Jason Gehrke is a director of the Franchise Advisory Centre and has been involved in franchising for 25 years at franchisee, franchisor and advisor level. He provides consulting services to both franchisors and franchisees, and conducts franchise education programs throughout Australia. He has been awarded for his franchise achievements, and publishes Franchise News & Events, Australia’s only fortnightly electronic news bulletin on franchising issues. In his spare time, Jason is a passionate collector of military antiques.

T: 07 3716 0400 E: jason@franchiseadvice.com.au W: www.franchiseadvice.com.au

BUSINESSFRANCHISOR 39

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• Closing deals • Quantifying and measuring you sales costs and ROI The Franchising & Business Opportunities Expo will be held in Brisbane from 18-19 July 2015, Melbourne from 21-23 August 2015, and in Sydney 18-20 March 2016.

For further information about exhibiting contact Exhibition Manager Fiona Stacey, Phone: 03 9999 5464 or fiona@specialisedevents.com.au www.franchisingexpo.com.au

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