AUS & NZ Business Franchisor issue 5#1 Jul - Oct 2016

Australian & new zealand

Franchisor B u s i n e s s

VOL 05 ISSUE 01, 2016

FCA sets sights on boosting buoyant sector funding tomorrow’s franchisees store design for franchise rollouts

BUSINESSFRANCHISOR 1

A franchise is not like any other business So make sure your accountant

knows

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Australian & new zealand BUSINESS FRANCHISOR VOLUME 5 ISSUE 1 CGB Publishing Pty Ltd TEL: 03 9787 8077 (AUS) FAX: 03 9787 8499 (AUS)

publisher: Colin Bradbury colin@cgbpublishing.com EDITOR: Joanne Tuffy editor@cgbpublishing.com.au SALES DIRECTOR: Vikki Bradbury vikki@cgbpublishing.com SALES and marketing manager: Kathleen Lennox kathleen@cgbpublishing.com.au PRODUCTION: production@cgbpublishing.com.au ACCOUNTS: Renee Gould accounts@cgbpublishing.com.au DESIGN: Jejak Graphics (03) 5977 8804 jejak@bigpond.com TO SUBSCRIBE: PLEASE CONTACT CGB PUBLISHING PO BOX 968

Franchisor B u s i n e s s

from the

Editor This issue we return to paper!

While all of our publications are still available digitally via our website, there’s nothing like having a magazine to hold; to be able to make notes in it; highlight useful advice; turn down the corners to save your place or simply use as a coffee mat, once read of course!

Hopefully the latter won’t be the only use as this issue features great expert advice editorials, alongside featuring a select number of service providers to a buoyant franchise industry.

You can read more about this industry buoyancy on page 6. Bruce Billson, the new Executive Chair of the Franchise Council of Australia says, “I am excited to be able to work with the FCA Board, executive team and membership to build on the positive momentum in franchising by continuing to nurture confidence in this model of commerce, the capacity of the sector and our commitment to quality to ensure more people see franchising as a pathway to a more prosperous future.”

On page 10 you can find Ayers Rock Resort.

Hosting a monumental solar powered art installation, franchisors and their delegates can enjoy the conference complex as well as connect with Australia’s spiritual heartland.

This edition of Business Franchisor is packed with advice from experts across the franchising industry. Page 32, Nigel Collin explains that business improvement is a ‘Game of Inches’, where small changes can win big results and on page 22, Amy Grey, owner of Studio Greyscale shares her knowledge - gained from working within a franchise system - of managing the store design process.

This issue features a number of editorials that deal with international franchising. On page 12, Darryn McAuliffe from FRANdata Australia discusses the changing face of franchise finance and says that looking at the US market can provide useful insights regarding this. Peter Fiasco, CFE, from Hairhouse Warehouse shares his observations from his trip this year to the International Franchise Association Convention in San Antonio, Texas on page 38. Next issue we will also be featuring a Q&A session completed with Robert Cresanti, CEO of the International Franchise Association who says there are many similarities between American and Australian culture - allowing each to cross over the water smoothly, so make sure you keep watch for that!

There’s all this and much more.

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

Joanne Tuffy Editor

MT ELIZA, VICTORIA 3930 Email: cgb@cgbpublishing.com.au www.businessfranchiseaustralia.com.au

SUPPLIER FORUM

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.

Franchisor B u s i ness

6

48

CONTENTS

volume 5, issue 1, 2016

18

16

On the Cover 6

FCA sets sights on boosting buoyant sector

8

Funding tomorrow’s franchisees

Franchise Council of Australia

Darryn McAuliffe, FRANdata Australia

22 Store Design for Franchise Rollouts

Amy Grey, Studio Greyscale

28 2 BUSINESSFRANCHISOR

16

8

22

32

42

Expert Advice

ALSO IN THIS ISSUE

16

Can you “prove” that your business is ready for Franchising Growth?

IFC Walker Wayland

18

Six Essential Elements to drive Customer-Centricity

Griffith University

Bill McMurray, Qualtrics

28 Getting to the Table

Cecily Zhu, Office of the Franchising Mediation Adviser 32

Small Changes win Big Results

36

Cash Flow squeeze and ATO crackdown

38

IFA Convention: USA issues relevant to Australia

Nigel Collin

Peter Marsden, RSM Australia

Peter Fiasco CFE, Hairhouse Warehouse

44 Looking for a Great Candidate?

Saxon Marsden-Huggins, Recruit Shop 48 Ketchup in your Veins

Nicola Larking, TeamsPlus

4

News items:

Announcements from the industry

38

10 Profile: Ayers Rock Resort 12 FANZ: 2016 CONFERENCE 15 Krneta Building Surveyors 26 Profile: Franchising Expo 31 Benga Design 42 Consultant Close-up:

Jason Gehrke, Franchise Advisory Centre

52 A-Z Directory IBC Jejak Designs OBC National Franchise Convention

2016

BUSINESSFRANCHISOR 3

business franchisor

NEWSitems From organising Expos to traditional sailing

JUST CUTS™ RAISES $21,600 FOR THE ROYAL FLYING DOCTOR SERVICE Persistence and patience are two attributes Tim Collett brings to both his business life, and his other love – sailing.

The Managing Director of Specialised Events for six years, we see Tim’s work in the success being enjoyed at the various franchise expos around the country. Working closely with Fiona Stacey, they have made the franchise expos a regular event for both franchisors and potential franchisees.

A sailor as a teenager, Tim combined his work and passion for many years, working as the Store Manager in a yachting store whilst still at University. From there he went into the exhibition business, with a small break working in an Agribusiness. His first expo working for Australian Exhibition Services was the Brisbane Franchise Expo 25 years ago – with Fiona Stacey.

Starting Specialised Events in 2010, Tim launched a popular food show and then acquired the franchising exhibitions from Diversified. It was obvious the show needed some passion, new ideas and investment to make it great again. He was fortunate to have Fiona come out of retirement and it has been wonderful to watch the show blossom with some exciting developments to come in the next few years.

When not organising Expos, Tim turns to his other passion – sailing. Six years ago he was invited to sail a couta boat and he was immediately taken by these classic wooden sailing boats and the Sorrento sailing club where they live. He now steers a beautiful old wooden, traditionally built Couta boat – called Fiona!

Tim is one of the leading sailors at the Sorrento Sailing and Couta Boat Club (SSCBC), on the Mornington Peninsula, VIC. It’s a family affair and feels he is very lucky to have his daughter also sailing at the club in her own dinghy.

4 BUSINESSFRANCHISOR

The Just Cuts™ team were joined by brand ambassador Grant Denyer, members of the Narrabri community, Royal Flying Doctor Service of Australia representatives and participants of the Outback Car Trek at the annual Cut-A-Rama event. Crowds packed the local Crossroads Hotel for the event, which raised $21,600 for the Royal Flying Doctor Service of Australia, surpassing the 2015 record of $15,000.

Cut-A-Rama is the kick-off event to the Outback Car Trek, held the night before the official trek commences. Eight Just Cuts™ Stylists from all over Australia helped Outback Car Trek drivers create wild hair styles and colours to sport during their week-long trek.

“I’ve been involved with Just Cuts since 1999, the year they started supporting both the Royal Flying Doctor Service and my fledgling racing car career. I became a brand ambassador for them this year and am thrilled that I could be part of this amazing event. We had a huge turn out and it was hilarious to pit mate against mate in support of such a worthy case,” said Grant.

“This was the 18th Cut-A-Rama event that we’ve put on. We’re so proud to be able to support a charity that impacts the lives of so many people across Australia who wouldn’t ordinarily have that kind of medical and emergency support”, says Denis McFadden, CEO and founder of Just Cuts™ and dedicated Outback Car Trek trekker.

Cut-A-Rama is just one small part of the brand’s ongoing commitment to the Royal Flying Doctor Service of Australia. Every Just Cuts™ salon in Australia receives a donation box for the charity, with Clients, Team Members and Owners alike donating their loose change to the cause all year round.

Since first partnering with the Royal Flying Doctor Service in 1998, Just Cuts™ has raised over $400,000.

How to recruit and support franchisees more effectively

Accreditation campaign lands top award for Poolwerx

A series of educational events to be held over the next few months will give Australian franchisors and their leadership teams new insights into best practise methods to more effectively recruit and support franchisees.

The events will be held in Brisbane, Sydney, Melbourne and Adelaide, and are part of a wider education program delivered by the Franchise Advisory Centre, the largest provider of specialised education for franchisors in Australia.

Each event highlights best practise in a range of core franchisor functions, including franchise recruitment, site selection, managing the performance of franchisees, and maximising communication effectiveness and buy-in from franchisees through properly-formed franchise advisory councils (FAC’s).

There is also an introduction workshop which is ideal for new franchisor head office staff with no prior franchising experience, and start-up and growing franchisors.

Each event also provides points towards the internationally-recognised Certified Franchise Executive (CFE) qualification. The list of upcoming events includes: Franchise Management Forum Management strategies and tactics behind successful chains

Full-day conference

Introduction to Franchising Essential training for start-up franchisors and new franchisor staff with no prior franchsing experience.

Full-day workshop

Improve Franchise Advisory Councils How to improve the effectiveness of FAC’s.

Half-day workshop

Effective Franchise Recruitment Understand the recruitment process from A-Z.

Full-day workshop

Managing Franchisee Underperformance Strategies and tactics to lift performance

Half-day workshop

Franchise Site Selection Understanding data to make better site decisions.

Half-day workshop

Franchise Territory Planning Defining territories with the same market potential.

Half-day workshop

Franchise Marketing Forum Essential professional development for franchise marketing managers. Full-day conference

Full-day conference

Discounts apply for multiple registrations from the same organisation, with registrations fees starting from just $215 per person, including GST. For more information, visit www.franchiseadvice.com.au or contact the Franchise Advisory Centre at events@franchiseadvice.com.au or phone 07 3716 0400.

Linda Horgan PW Marketing Manager with President of Spasa Qld Andrew Jakovac presented the Award for Splash.

A marketing campaign aimed at educating consumers on the value of certified technicians has landed its creators, Poolwerx with the Marketing Campaign of the Year award at the 2016 Swimming Pool and Spa Association (SPASA) Queensland Awards of Excellence.

Poolwerx CEO John O’Brien said the marketing campaign, including a TV commercial, targeted weather sponsorship and advertorials, were hugely successful resulting in a 165 per cent increase in phone enquiries and 139 per cent increase in online bookings.

“Poolwerx recognised a service from a certified technician was above and beyond that of an unqualified technician and we were instrumental in actually establishing accreditation for the industry,” Mr O’Brien said. “We are the first company in the industry to ensure there is one accredited technician in every Poolwerx franchise.

“This was completed over two years and then the next step was to create value in this proposition for consumers, which is the crux of the campaign,” he said.

“We believe it has achieved a great service for the industry by helping to lift the standard, professionalism and overall perception of pool servicing – and we’re very proud of this contribution. Winning the award is certainly kudos for all the hard work and amazing results our Franchise group and marketing team has achieved.”

Mr O’Brien said the marketing campaign highlighted the importance of certification and its link to the health of a person’s pool and family.

“We linked the certification message to a Summer Start Up Service offer, which struck a chord with both new and existing customers and led to such great enquiry rates,” he said.

“Advertorials were particularly successful as they allowed us to explain certification in more detail. This was backed up by social media posts, print ads and posters in-store.”

Mr O’Brien said the company would continue to build on the campaign over the next few years.

BUSINESSFRANCHISOR 5

FCA

Franchise Council of Australia

sets sights on boosting buoyant sector Australia’s $144 billion franchise sector is set for a new era with the recent appointments of a new Executive Chair and Chief Executive Officer at the Franchise Council of Australia (FCA).

Former Federal Cabinet Minister Bruce Billson has been appointed to the Board of the FCA as Executive Chair, while Damian Paull has been named as CEO, joining the FCA from the Australian Retail Credit Association (ARCA).

The FCA’s mission is to support the growth and success of franchising and the appointments of Mr Billson to lead the FCA Board, and Mr Paull as CEO, are aimed at further boosting vitality in the sector.

Mr Billson is keen to continue to support entrepreneurial women and men in the Australian economy in his post-political life and believes the FCA Board role is an excellent fit for his skills, experiences and ambition to continue to ‘energise enterprise’.

He has long been supportive of franchising including introducing reforms aimed at maintaining a mutually supportive relationship between franchisors and franchisees.

“Franchising is a wonderful model for entrepreneurship where people can be in their

6 BUSINESSFRANCHISOR

own business but not be on their own for this commercial journey,” Mr Billson said.

“The experience and know-how made available by franchise systems and the drive and entrepreneurship of franchisees combined to make franchising a very resilient business model during and post-GFC. “With improved business conditions, now is the time to take Australia’s leading role in franchising to the next level and grow the number of first-class systems, investors and livelihoods made possible by franchising.

“I am excited to be able to work with the FCA Board, executive team and membership to build on the positive momentum in franchising by continuing to nurture confidence in this model of commerce, the capacity of the sector and our commitment to quality to ensure more people see franchising as a pathway to a more prosperous future.

“There is considerable scope to expand the appeal of franchising, particularly to the increasing number of women and young people looking to ‘have a go’ in their own business, by adding to the 79,000 independently-owned and operated franchised outlets.

“Our export markets are also ripe and ready for successful and proven Australian franchise systems to expand their reach,” Mr Billson said.

Speaking on the appointment of Mr Paull

as CEO, Mr Billson said, “Damian comes to the franchise sector with a sound systemsbased understanding of the shared purpose, collaboration and mutual respect between franchisors and franchisees that is at the heart of successful franchises and their capacity to support more than 460,000 local jobs.

“Damian is a highly regarded membership organisation executive who brings years of experience, a successful track-record of achievement and a reputation for effective stakeholder collaboration and membership engagement.

“His leadership role at the Australian Retail Credit Association (ARCA) shows an ability to work with and embrace the goals of a diverse array of large and small members where views need to be distilled into a clear and coherent agenda and policy-maker engagement that is credible, considered and collegiate,” Mr Billson added.

Mr Paull spoke fondly of his five years at ARCA and excitement about his new role with the FCA as he feels that he can make a valuable contribution in implementing the FCA’s strategic agenda, lifting the profile of franchising and the FCA and helping the sector pursue a sustainable growth trajectory.

“Franchising is a very big deal in the Australian economy and draws its strengths from well-developed business models working in partnership with small and family business investors to enable enterprising people to be

Franchising is a wonderful model for entrepreneurship where people can be in their own business but not be on their own for this commercial journey,” - Mr Billson.

in their own business but not be on their own,” Mr Paull said.

“I understand how right-sized regulation and effective regulator engagement, supported by education and professional development, provide the confidence and competence to support growth, investment and job creation in a key sector of our economy.

“Franchising is where creative ideas and innovation delivers real economic value.

Working with our Board and the FCA team, my aim is to capture that spirit of innovation and creativity to deliver real value to our members,” Mr Paull added.

An early priority for Mr Paull will be finalising plans for the National Franchise Convention, to be held in Canberra in October, implementing plans for membership growth and supporting the Board in restoring sector confidence and a sustainable FCA budget position in the wake of the impact of the 7-Eleven revelations and regulatory responses. www.franchise.org.au

BUSINESSFRANCHISOR 7

Darryn McAuliffe

Funding tomorrow’s franchisees Darryn McAuliffe is the CEO of FRANdata Australia and has over thirty years’ experience in the banking and finance sector. He is a CPA, CFE and experienced former bank executive across business banking, risk management and franchise industry specialisation.

FRANdata has been supplying independent and credible information to support key franchise decisions for more than twenty five years and operates the Australian Franchise Registry™.

Franchise finance remains of great importance as the majority of franchisees need to borrow to complete their transactions. Whilst the major banks continue to dominate, new players, new approaches and new rules are emerging.

A process or review, known as an ‘accreditation’ has been in place across all major Australian banks for many years.

The essence of an accreditation is the bank having a degree of knowledge and comfort with a particular brand that enables them to process transactions faster and more consistently for franchisees. This generally includes an exhaustive (and often costly) process of sourcing and analysing information.

Whilst the process has been similar across

8 BUSINESSFRANCHISOR

the banks, there have been swings in their appetite, resource investment and the number of accreditations maintained which has been the source of some frustration, and at times confusion, to the franchise sector.

Australian banks have continued to grant new accreditations in recent years however the general trend has been one of rationalisation with an increasing focus on the cost of processing and maintaining accreditations.

Apart from the obvious consequence of poor loans, brands that cannot place enough (revenue generating) transactions with the accrediting bank can also face the withdrawal of that accreditation.

Like many aspects of franchising, the giant US market* can provide some useful insights into where Australia may be headed with franchise finance. While the US also has accreditations (lending programmes) these are typically only provided by the largest of banks with much of the franchise finance demand satisfied outside of these larger bank accreditations.

The absence of internal accreditation teams in all but the largest of US banks has created an appetite and dependence on external and objective information. For example, in the US there is a multitude of community and regional banks that contribute to the 7,000 lenders accessing information on some 3,500 active franchise brands through the Franchise Registry.

This information can include eligibility reviews for government backed lending programmes and Franchise Underwriting Reports to support individual transactions.

Locally, in addition to major banks we are now seeing the growth of specialist equipment type financiers, the reinvigoration of interest from some regional banks and the arrival of genuine alternative lenders in the franchise funding space. Whilst this is all pointing to a reduced reliance on the major lenders and traditional accreditations much depends on the lenders comfort with measuring and assessing performance outcomes.

THE IMPORTANCE OF PERFORMANCE STANDARDS While both US and Australian lenders are ready to make new loans, finding borrowers they deem to be qualified still seems to be a challenge for them. Franchised businesses have an advantage over independent small businesses in that they have the ability to statistically and quantitatively measure a brand’s performance history. This provides franchisees with a competitive advantage when

It is becoming more apparent that the ease of finance access increases as the prospective franchisee becomes more experienced.� securing financing as the creditworthiness of the system is addressed, in addition to the borrower’s qualification.

There are three areas that lenders want to assess in addressing system creditworthiness: unit economics, system performance, and franchisor performance. Lender willingness to extend a loan declines as a system’s credit risk becomes less transparent. Franchise systems with a proven track record have the best access to the credit market, compared to other franchise systems and independent businesses that are competing for the same loan.

The key to lender willingness in this environment centres on information. As banks are slowly changing from a mindset of not losing money to positioning to competition, greater underwriting due diligence remains and much more analysis and paperwork is required.

It is becoming more apparent that the ease of finance access increases as the prospective franchisee becomes more experienced, operates a larger number of stores, has a proven credit history, and partners with a creditworthy franchisor.

While much has gone into underwriting the borrowers, it is becoming increasing important to also evaluate the brand. Franchisors are being assessed on their history of closed units, assistance with struggling units, systemwide growth, and category growth within the industry. The ability to provide a comparative historical risk analysis of both franchisor and system performance will certainly be a consideration and provide a competitive advantage for franchisors who have positive performance trends.

The importance of a strong brand is more apparent for first time franchisees. A strict franchisee selection process and a well-

structured franchisor support structure provide

The uniformity of franchise systems lends

lenders with reassurance. Knowing the type

itself to comparative metrics, such as returns

of infrastructure that is in place to provide

on investment, sales growth, unit profitability,

franchisee support helps lenders gauge risk

and operating costs, which will be key in

when the borrowers are on the higher end

guiding best practices that result in successful

of the risk curve due to a lack of credit and

operations and growth. The industry needs

performance history. A partnership with a

to define, standardise, and lead the efforts

strong brand becomes a mitigating factor

towards measuring performance. Otherwise,

for more risky borrowers, such as first time

it will be forced to follow a path created by

prospective franchisees.

others.

Even for borrowers that have no problems accessing finance, brand still plays an important role as lenders are willing to structure better terms and lower interest rates for franchisees operating businesses in brands that are strong and financially sound. However, the definition of

For more information: 02 8346 6093 dmcauliffe@frandata.com.au www.frandata.com.au www.thefranchiseregistry.com.au *FRANdata research estimates US $30.1 billion is required to support

what constitutes strong or good is vague and

US franchise transactions of which 75% is provided by conventional

no standards have yet been set in franchising

lenders, 4% by alternative (market place type) lenders and the

that drive performance.

remaining 21% through the SBA (government supported lending) program.

BUSINESSFRANCHISOR 9

Ayers Rock Resort

LET THERE BE LIGHT

Ayers Rock Resort is hosting its most ambitious event, Field of Light, adding extra sparkle to any event.

other unique experiences, including camel rides over the red sand dunes, Indigenous cultural experiences and guided tours around the base of Uluru.

The Uluru Meeting Place, Ayers Rock Resort’s

Delegates can delve into the experiential artwork in a number of different ways with a special Field of Light sunrise experience. Hot tea, coffee and pastries is available on arrival at an exclusive dune top, followed by a walkthrough the Field of Light as a guide provides insights and background to the installation.

After sunrise, delegates are invited to an outdoor dining site adjacent to the Field of Light to extend their sunrise experience and choose from either a light breakfast of bacon and eggs or a freshly cooked buffet breakfast.

conference centre has won two consecutive

In addition to Field of Light, delegates can enjoy

flexibility to the complex while an outdoor

10 BUSINESSFRANCHISOR

Australian Tourism Awards in the Business Events category, in recognition of its state-ofthe- 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

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.

rated walls, or opened up to become one

For more information contact

common space for exhibitions or trade shows.

T: 02 8296 8067 E: conferences@voyages.com.au W: www.ulurumeetingplace.com.au

A light-filled pre-function area adds more

r

R • • • • •

BUSINESSFRANCHISOR 11

FANZ

2016 Conference Trinity Wharf Hotel, Tauranga 4-5 August

The 2016 Franchise Association Conference will be held for the first time, in Tauranga, at the unique Trinity Wharf Hotel located on and over the harbour with a relaxed ambience and waterfront dining.

with ROBERT CRESANTI, CEO of the International Franchise Association

Tauranga is New Zealand’s fifth largest city and home to an estimated 125,000 people. The city sits right on the water’s edge and is well-known for its blue skies, warm climate, sparkling harbour and relaxed lifestyle. Many national and international businesses are based here, and the bustling Port of Tauranga is the country’s largest export port. The region has much to offer with its stunning beaches, outdoor activities, wineries, arts and cultural experiences.

The Franchise Association of New Zealand’s conference will bring together the franchise community over two days to network, exchange ideas and interact with other systems and service providers; catch up on industry trends and hear what experts in the field of franchising have to say. Conference registration will include invitations to two social events where delegates can relax, recharge and enjoy their surroundings.

The theme for this year’s conference is ‘Building Your Brand’ and the conference will open with a presentation by Chris Brown, NZ Director of Marketing for one of the world’s leading franchise brands McDonald’s. A great opportunity to learn

12 BUSINESSFRANCHISOR

from the masters of franchising! Following on from Chris, attendees will hear from an array of talented speakers, both local and international.

Should energy levels dip, look out for Bruce Ross from Ignite Business Leadership. Bruce is sure to fill the room with energy as he shares his ‘Inside Out’ approach to dynamic leadership, focusing on how higher energy levels impact on performance.

In this session it is not just about theory, he will show you how!

The Trinity Wharf Hotel will be the base for the conference sessions, however for the two social occasions there is a real treat in store.

Afternoon workshops continue to be popular and provide delegates with an opportunity to drill down on some specific areas of interest. Smaller groups made up of like-minded individuals, facilitated by an industry expert, provide a valuable insight into the world of franchising.

The Trinity Wharf Hotel will be the base for the conference sessions, however for the two social occasions there is a real treat in store. Lord of the Rings fans will revel in their very own Middle Earth adventure, with a visit to Hobbiton. In the surrounds of the Green Dragon pub and Hobbiton movie set you will enjoy a Hobbiton style evening of fun, games, socialising and a memorable feast.

Lord of the Rings fans will revel in their very own Middle Earth adventure, with a visit to Hobbiton.

Conference will conclude on the evening of Friday 5th August with A Masquerade Ball and Gala Dinner at the Mills Reef Winery, an awardwinning Tauranga landmark situated on 20 acres of beautifully landscaped grounds with stunning rural vistas and relaxed surroundings.

So if you are keen to progress in the franchise business and network with like-minded people who are happy to share their experiences and challenges plus soak up new ideas and hear the latest happenings in the industry, the 2016 FANZ Conference is not to be missed.

Registrations are open now at www.franchiseassociation.org.nz/event

A Masquerade Ball and Gala Dinner at the Mills Reef Winery.

BUSINESSFRANCHISOR 13

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GRIFFITH UNIVERSITy

CAN YOU “PROVE” THAT YOUR BUSINESS IS READY FOR FRANCHISING GROWTH? You have a business and it is going great guns, so that must mean it is well placed to be expanded via franchising, right?

Well, maybe! Having a successful ‘one-off’ business is no guarantee to this success automatically being replicated on a greater scale through the franchising model.

In order to set solid foundations for a future in franchising, you must first aim to test whether

16 BUSINESSFRANCHISOR

your business is ‘proven’ for this growth path – not only to yourself but also to potential franchisees. The problem with using the word proven in this context is that it is subjective, i.e. what’s proven to you, may not be proven to someone else.

How then can you go about demonstrating, to yourself and your future stakeholders, that the viability of your business for franchising is proven?

Proven does not mean risk-free. There is no 100 per cent way of guaranteeing success for any small business. Risk is inherent in all business,

franchising included, as there are many factors that even as a franchisor you won’t be able to control.

It is mitigating the risk through trial, duplication, and replication of systems that can make all the difference between a robust franchise network and a one-off business that depends on the owner to be everything to everyone at once.

How can you show that your business can be successfully duplicated within a franchise system? As a prospective franchisor, if all that you have to point to is your existing business and a claim that ‘of course it will work’ for

consistently replicated to achieve scalability.

You might be able to show someone what to do, but if there are no documents to refer back to, how can you expect them to follow what you have shown them, consistently when you are not there? How will you, as a franchisor, ensure that your franchisees and their businesses are compliant? If you can’t ensure compliance across your network, then you are putting your brand and ability to sell the next franchise at risk.

• Duplication – this is a very important step. If you do not open your own additional outlets, how do you expect anyone to believe your claims that your concept is proven?

Through duplication you will learn more about the transferability of your concept and the systems needed to support a growing network. Prospective franchisors should open at least one or two additional outlets, ideally in different locations with different demographics. If you can successfully duplicate profitable outlets, this is a positive sign for a successful franchising network, and these may become your training centres or the first to be offered for sale to future franchisees.

This is just a snapshot of the preparatory work required to successfully franchise a business. There’s a big gap in resources when you are thinking about becoming a franchisor.

Our advice is to start doing your own due diligence on the suitability of your business for franchising, before you make the leap into engaging consultants or drawing up disclosure documents and the like. someone else, then this is highly unlikely to meet anyone’s definition of a proven system, and your franchising growth dreams will not progress very far at all.

The key to successful and sustainable franchising, for all parties involved, is preparation. For prospective franchisors, this means taking a systematic, long-term approach to proving, as much as possible, that franchising is indeed the right growth path for your business.

Here are some tips that will help in this process: • Longevity – you must have operated your business for a reasonable length of time (at least four years) to show that it can survive seasonal variations in demand and is based on a sustainable concept, not just a passing fad.

• Profitability – profits are important, if you have an unprofitable business then forget about franchising it. Don’t forget that your potential franchisees will also be paying you a royalty and various levies. Will the existing revenue in the business withstand at least another 10 per cent take-out, and still deliver a reasonable profit level for your franchisees?

• The Market – a thorough understanding of the market in which you operate. Be totally across your current and potential competitors and the viability of expansion. Don’t forget to include some ‘what ifs’ in your competitor review. What if an unforeseen ‘category killer’ enters your market? Or a major digital disruption or technology breakthrough is imminent?

• Documentation – If your systems and processes are not documented then they are not a system. They must be able to be

Empower your approach to business expansion so that you are sure this is the growth strategy best suited to you and your business. Research the types of decisions that you are going to have to make, before you are asked to make them on the fly.

It is for this reason that Griffith University’s Asia-Pacific Centre for Franchising Excellence has specifically developed the How to Franchise eClasses so that perspective franchisors can educate themselves on everything involved, before investing too much time and money, and be better prepared for the franchising journey ahead.

Find out more about due diligence for Franchisors on the Business Franchise website at www. businessfranchiseaustralia.com.au/ franchise-your-business.

BUSINESSFRANCHISOR 17

Bill McMurray

The six essential elements

to help drive customer-centricity Bill McMurray is Managing Director (Asia Pacific & Japan) at Qualtrics, who provide the rapidly growing enterprise customer and employee, insights and engagement technology platform. Bill is an international technology executive with over 30 years of experience in the Information, Communication and Technology (ICT) industry.

Once upon a time, businesses dictated most of the terms of engagement with customers. Today, the customers are in charge.

Thanks to the explosion of open and online engagement channels, companies are now under the watchful eye of the public. This means that every time they interact with an individual, their behaviour can be scrutinised by everyone.

Largely, this trend has been a good thing.

Consumers have more power to ensure they are treated fairly by organisations, and companies have enormous opportunities to use public engagement channels not only to connect with individuals, but also to shape how their brand is perceived. However, public opinion can often be an unforgiving taskmaster, and one wrong step

18 BUSINESSFRANCHISOR

can wreak havoc on brand associations among

Positive customer experience creates higher

the public.

value customers, more referrals and lower

Many organisations are now clued-in to the

churn. For many, customer experience has

power of public perception and the role social media plays in it. Consumers today can often

been largely overlooked in recent decades, but positive customer experience separates

spark company action faster by jumping on

industry leaders from industry failures.

the brand’s social media page and making a

While most companies recognise the

comment rather than calling the organisation, or

importance of keeping customers at the

visiting in person to make the same comment.

forefront of everything they do, it remains

The entire balance of power in the consumer-

challenging to do this effectively. Not only is it

company relationship has drastically shifted towards the customer. This means competition for every business is at an all-time high and

a daunting task on a process level to transform the business so it can put the customer first in everything it does, it is also challenging on a

growing by the day. If companies want to keep

systems and technology level.

up in this hyper-competitive environment,

Despite the challenges, organisations operating

they’ll have to create life-long brand loyalty

in today’s competitive, digital technology-driven

by focusing on the people who purchase

landscape need to start somewhere on the

their product and service. More than ever,

road to customer-centricity, and one of the

companies must leverage the customer

best ways to begin is to implement a customer

experience to succeed.

experience program. However, when building

For many, customer experience has been largely overlooked in recent decades, but positive customer experience separates industry leaders from industry failures.”

a customer experience program, too often organisations rush into it without aligning all the necessary factors to move forward with creating a customer-centric organisation.

Alignment of the entire organisation, its processes, culture, and technology is an essential key to developing a successful customer experience program and, ultimately, becoming a customer-centric organisation.

Businesses need to make a concerted, sustained effort to become customer-centric, taking a strategic rather than a merely tactical approach. Businesses must also be ready to take action on customer feedback, as there is absolutely no point in gathering customer feedback unless the organisation is going to do something about it. If the company gets negative customer feedback and they don’t act on it, then they have actually done more damage to the customer relationship, than by not asking for the feedback.

By introducing strategic elements, the organisations that lay out a path to customercentricity will be better able to cope with changes in the broader business environment.

Introducing a Voice-of-the-Customer (VoC) program is a first step to developing an effective customer experience strategy. VoC programs obtain customers’ feedback about their experiences with and expectations of an organisation’s products or services. Wellconceived and implemented VoC programs can be so effective that they often lead to companies questioning their readiness to shift towards a customer-focused culture. It can be a

wake-up call for some companies, but it is also a valuable gift.

Organisations can gauge numerous facets of their customers’ experiences with, and perceptions of, their brand, and take the measures necessary to foster a customercentric posture without the risk of making too many missteps once their customer experience strategy begins.

The voice of the customer is best heard as an ongoing conversation, so an effective VoC program needs to gather and use information in a timely way that informs improvements over time. Most organisations have multiple touch

The company’s vision for customer experience needs to be specific so that everyone within the organisation can easily understand the common goal.” points within which they engage customers, and these all need to be considered in a VoC program.

Before organisations rush into implementing a customer experience program to get closer to their customers, a customer-centric culture must truly be established in the organisation.

There are six general factors that need to align.

Once these are aligned, companies can produce an optimal customer-centric culture.

1

Strong leadership Establishing a customer-centric culture

starts at the very top. Without executive-level buy-in there is a low probability of creating maximum impact for any customer-centric initiative. Organisations also need to garner the support of lower level leaders to truly move the needle on improving the customer experience.

Leaders set the tone for their subordinates, so if a leader decides that the customer is important, their direct reports will follow suit.

2

Vision and clarity The company’s vision for customer

experience needs to be specific so that everyone within the organisation can easily understand the common goal. Leaders should start by focusing on the language and messaging to convey the vision. It can be useful to create a clear vision statement and refer back to it often to keep projects on track.

20 BUSINESSFRANCHISOR

3

Engagement and collaboration

As employees become more deeply engaged, the resulting cross-functional collaboration and synergy will help create more impactful and successful customer initiatives. Driving engagement depends on understanding the workforce, which can be done through implementing a formal feedback program.

4

Listening and learning

It is critical to get customer feedback as a basis for any changes, as well as to listen to employee feedback regarding how well these changes are working. It is therefore important to implement a systematic method for monitoring and collecting feedback. Because customer feedback can be gathered via multiple channels, it’s important to build any listening program on a robust platform, like Qualtrics, that can pivot with customers as their feedback preferences change.

5

Alignment and action

To achieve success, each action taken within the company must be aligned to the ultimate vision. Before acting, it’s important to analyse the root causes or drivers of things that need to be changed. Then leaders can assign people or teams to take measurable steps to make those changes.

6

Patience and commitment

Building a world-class customer culture is not an overnight exercise; it takes time and

cannot be completely outsourced. The most successful customer-centric organisations are built iteratively over a number of years.

Businesses need to alter the customer culture, refine collection practices, increase the complexity of analyses, and make action widespread and aspirational. All along this journey, business leaders must demonstrate patience and commitment to the process and vision.

More than ever, companies need to leverage the customer experience to remain relevant and competitive. A companies’ VoC program should be agile and cost effective to be a competitive differentiator and as such, companies must own their program and its results, in order to achieve this differentiator.

Qualtrics provides the balance of fullfunction capability, with a scalable and easy-to-use VoC platform. This enables an organisation to have a flexible and agile program where the company can start small, implement that, learn and iterate and then grow the program out in terms of capabilities/customer touchpoints and scale. Organisations can then take action and respond to customers in real-time, to make a negative or OK experience, an exceptional experience and ultimately lifelong customers.

For more information contact: www.qualtrics.com

Business Franchisor Australia & New Zealand is part of the global network of CGB Publishing

With over 30 years’ experience in providing high quality business information, with a particularly strong focus on franchising, our global presence allows opportunity for international franchise marketing solutions.

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amy gray

Store Design for Franchise Rollouts Amy Gray is a retail interior designer, and owner of Studio Grayscale. She works with retail brands to produce fresh, new and exciting interior design solutions - to transform and develop new and existing store designs.

Prior to starting Studio Grayscale, Amy worked in-house at Boost Juice – giving her a firsthand understanding from a franchisor’s perspective.

Your franchise network may be a few stores, or hundreds of stores – regardless of your size, the store design process will

Beginning the design process / Developing a brief There are two major factors to consider as part of your store design process: 1) The operational requirements of your business; and

be similar. It is helpful to

2) Aesthetic considerations.

understand the process,

Operational requirements – It is important

so you can effectively

that you pass on any specific requests /

brief your designer, and so you both have a clear

requirements needed for the operational success of your business to your designer. It is also worth discussing what has and hasn’t

understanding of what is

worked in the past.

expected.

Aesthetic considerations – while to a large

Design itself is incredibly subjective, with no one definitive answer. Having a clear direction of your brand, your target market, best operational practice, and the right people involved, will set you up in the right direction for great results.

22 BUSINESSFRANCHISOR

extent this side of things is subjective, the look and feel of your brand should take direction from your target market – who should be at the heart of your decisions. What designs will appeal to your ideal customer?...

These factors will help form the design brief

- information which will be passed onto the store designer. The brief can be either – verbal or written, but in general – the greater insight and understanding you can convey to your store designer – the more on track the resulting design will be.

Who will be involved?

It is key to involve the right people in the development of the store design. It is always best to keep it simple – more people involved in this instance does not mean a better result. In my experience, the best design processes have had a few key people involved – which allows for a clearer direction and viewpoint. This can get confused if there are too many players involved from the beginning.

The ideal team for evolving the store design, will depend on the size of the company – but someone that has a clear hold of the target market and the direction of the brand is important, together with someone that has a

As with all elements of your brand, it is a worthwhile process to keep an eye on what your competitors are doing with their stores.� clear hold on the operational requirements of the brand, paired with the store designer.

Research

design development process). Always aim to

As with all elements of your brand, it is a

create a point of difference for your stores, be

A good start to selecting a store designer would have to be via recommendation, but other things to look for when sourcing a store designer to further develop your brand would be:

worthwhile process to keep an eye on what

on trend, ahead of the competition – and look

your competitors are doing with their stores.

to improve your customers in-store experience,

What can you do to stand out, meet your target

or provide new, interesting and exciting

markets requirements, and stay ahead of the

offerings to give your customers a memorable

game in terms of store fit-out design?

experience, that they will want to continue

- Are they specifically a retail store designer, with an understanding of retail brands?

You and your designer should both research

returning in-store for.

- Do they have experience designing stores in your line of work?... ie. If you are a food retailer, have they designed food retail stores in the past?

There are a number of amazing websites out

Budgets

there that can be incredibly useful from a

Budget allowance for each store should be

research point of view, I always keep an eye on

given to the designer as a guideline from the

http://retaildesignblog.net/ and even Pinterest

outset. Design details and materials can differ

can be helpful to search for specific retail

greatly – and can affect the cost in a big way.

sectors.

Therefore, if the designer is given a budget

Research what your competitors are doing in

to work with from the beginning, this can be

terms of store design, search for inspiration

used as a guide when selecting materials and

(your store designer should do this to begin the

creating custom design details.

- Budget will generally be a consideration, and there are a huge range of retail designers out there, so as with anything, it really is a matter of hunting around, getting prices and finding the best fit for your brand.

local and overseas trends for store design.

BUSINESSFRANCHISOR 23

Concept Development The concept development stage is where the designer takes all previous information gathered and discussed – and begins to develop and form the concept.

The designer will need a site on which to base the concept design, and before delving too far into the concept design, it may be worthwhile first completing a floor plan – based on either a new or existing site. This can then be signed off from an operational point of view prior.

Any site that is selected for the basis of the concept should be reviewed on its own merit.

Ideally the designer will go to the site, review the surroundings and take into account best signage opportunities, vantage points and best orientation for the store entrance. If this is not possible, it is important that the designer is provided with, or sources good site plans, location plans and photos to gain a fuller understanding of specific information relating to the site. Signage orientation and entry points into the store should also take into account where the highest traffic flow is, and aim to maximise opportunities.

Once the concept is completed, the designer will present back to those involved in the briefing. Generally, there will be some feedback / updates before proceeding to documentation phase.

Design Consistency across your brand

Guidelines need to be set out and developed early on in the process. In terms of branding and appearance, it is important to maintain design consistency.�

24 BUSINESSFRANCHISOR

Having worked in house, in a store development team for a large retailer, for a short while in my career I have found that franchisees can have many differing opinions regarding store design and layout, and also specific requirements and demands for their own store. Bringing this factor into the design process can make it a much more complicated process; therefore it does need to be managed from the early stages. Guidelines need to be set out and developed early on in the process.

In terms of branding and appearance, it is important to maintain design consistency. As you would have a style guide for your logo and branding, when dealing with a franchise network it is also important to develop a clear style guide and regulations for your store design. This document can be adjusted and developed over time as required, but it is important that it is managed by one point of contact so the integrity is maintained.

Documentation, Tender Process and Construction Once the concept and finishes have been confirmed and decided upon, the designer will begin to document the drawings for tender and build. These are technical drawings from which the shopfitter can price the build of the store.

The documentation drawings should clearly convey all design intent, specify finishes and details. The better the information, the more accurately the shopfitter can price and build.

The designer should aim to avoid leaving room for presumptions or guesswork in the tender drawing set.

Once the preliminary drawing set is complete, the project is sent out to tender. This process generally takes two weeks. Usually the recommendation is to send the tender drawings to three shopfitters to ensure competitive pricing. The selection of the shopfitter is best to come from a professional recommendation (someone in the industry), and ideally will have build experience in the same retail sector.

Construction drawings are completed, before

the selected shopfitter begins the build. The construction set may have more detailed information than the tender set, but ideally doesn’t have any updates that will affect the shopfitters price – or these will be charged as a variation.

Once the shopfitter is selected, the store build begins. The shopfitter should submit a project timeline, with a set fit-out completion date. The designer should remain involved throughout this process as a point of contact for the builder to ensure design intent / details are carried through.

Manage the defects process Once the fit-out is completed, the designer needs to attend site to review details, and ensure everything has been built in accordance with the construction drawings. These construction drawings are incredibly important, as they form a guide for what the shopfitter has or hasn’t built correctly. Anything not built according to the plans is noted as a defect that the shopfitter will need to rectify, and it is best this is done in a timely manner.

The defects can also be area of continual learning and development and should be reviewed with the aim to improve designs. The store designer and builder should communicate and work together to ensure best possible development and future outcomes.

In summary The store design process is one that is constantly evolving, and which should regularly be reviewed to ensure the brand remains fresh, aligned with the direction of marketing and relative to the target market. The customer and target market should always be the key consideration for the store design. Consistency across the brand should be adhered to as best possible to ensure each store provides a clear and united message to the consumer.

If you are interested in finding out more, or working with Studio Grayscale, contact Amy: 0422 713 167 hello@studiograyscale.com.au www.studiograyscale.com.au

BUSINESSFRANCHISOR 25

Franchising Expo

Grow your business

at the Franchising Expo Hot on the heels of a successful show in Sydney and a pumping one-day show in Perth, the Franchising & Business Opportunities Expo will open it doors in Brisbane in July and then Melbourne in August.

“The Franchising Expo is gaining more fans wherever we hold the show, be it a small-scale format in the beautiful Crown Perth ballroom, or our biggest show of the year over three days at the Melbourne Exhibition Centre,” says Exhibition Manager Fiona Stacey.

“Visitors come because they love the idea of seeing so many different concepts under the same roof, and also hearing from the experts in the free seminar series,” she explains.

“Exhibitors keep coming back because there is no better way to grow their business and target prospective franchisees.”

Regular exhibitor Debbie Parry from Ella Baché says the Franchising Expo is always good for business. “It is a great branding exercise for us – there are a lot of people who don’t even realise we are a franchise,” she commented after the Sydney Franchising Expo in March.

outlets to a thriving franchisor, just by keeping a high profile at the Franchising Expo,” she says.

“The smart ones invite prospective franchisees to come and meet them at the show, it’s easier to qualify them when you meet in person and it saves time and money on the road.”

“It is obviously good marketing for us because the right people are coming through, we’ve had 10 or so good solid leads from this show.”

Jonathan Payne from Xpresso Mobile Coffee

New franchise Skinny’s Grill made their debut at the Sydney show, and CEO James McGovern couldn’t have been happier as he packed up at the end of the show.

marketing strategy,” he explains. “It’s also a

“It has been a massive show for us,” he said.

“We have definitely met the right people and have a long list of leads. We are following up with an information night to explain our concept – once we get people excited, we know who has serious potential.”

Stacey says over the years she has seen many companies start small and grow big by finding the right franchisees at the show. “It’s exciting to see businesses that grow from a couple of

agrees. “What a show does is tie all our marketing together, it is a big part of our whole great way to meet with prospects, we tell them to come and see us at the show, then they can see the vans, taste the coffee and meet us in person.”

Fiona Stacey adds that both new and established franchisors find the Expos a great source of support and advice from fellow exhibitors. “The Franchising and Business Opportunities Expo is an event where the industry comes together to educate, inform and network – it’s the highlight of the year for many franchisors.”

Register now for your free ticket to a Franchising & Business Opportunities Expo in Brisbane or Melbourne; go to www. franchisingexpo.com.au and use code BFM. For information about exhibiting in the Franchising & Business Opportunities Expo contact Fiona Stacey on: 03 9999 5464 Fiona@specialisedevents.com.au Diary Dates: Brisbane: 23-24 July, Brisbane Convention & Exhibition Centre, South Bank

Jonathan Payne from Xpresso Mobile Cafe says the Expo is a big part of his marketing strategy.

26 BUSINESSFRANCHISOR

Melbourne: 26-28 August, Melbourne Exhibition Centre, South Wharf

Cecily Zhu

GETTING TO THE TABLE Cecily Zhu is the Assistant Franchising Mediation Adviser and manages dispute resolution services at the OFMA. She is an accredited mediator and provides early intervention services aimed at resolving disputes quickly and informally.

Prior to joining the OFMA, Cecily worked in a law firm and with the Australian Federal Court. She is a Commerce and Law graduate having studied in Australia, the US and Denmark.

The Office of the Franchising Mediation Adviser (OFMA) is an independent office established by the Federal Government in 1998. Our primary role is to appoint mediators to disputes between franchisees and franchisors under the Franchising Code of Conduct (the Franchising Code).

When a party requests the appointment of a mediator, it is mandatory for parties to attend the mediation and try to resolve the dispute. A civil penalty for non-attendance was introduced

28 BUSINESSFRANCHISOR

In some cases, an agreement will be called something different, such as a license agreement, although it could still meet the requirements of a franchise agreement.” resolution procedure still applies in relation to a dispute arising from termination (unless it was terminated under special circumstances – see clause 29). If there are outstanding obligations that exist between the parties and arise from the franchise agreement, such as a debt, we can still appoint a mediator after the franchise agreement has ended.

Has there been a valid Notice of Dispute issued?

with the new Code that commenced on 1 January 2015 – the penalty is 300 penalty units ($54,000 as of 31 July 2015).

Despite the mandatory nature of mediation and the potential civil penalty for non-attendance, our office continues to face different obstacles in getting parties to the mediation table.

This article draws from the observations and experience of our office and outlines some of the tricky issues that arise in administering the mediation process. It is helpful to keep these matters in mind if you are ever faced with a franchise dispute or need to prepare for franchise mediation.

Is there a franchise agreement?

The first important step in setting up the mediation is to determine whether there is a franchise agreement. The definition of a franchise agreement for the purposes of the Franchising Code can be found in clause 5. The dispute resolution procedures in part 4 of the Code only apply to disputes between parties to a franchise agreement.

In some cases, an agreement will be called something different, such as a license agreement, although it could still meet the requirements of a franchise agreement. It is important to know what type of agreement you have and whether it is covered by the Franchising Code.

What happens if the franchise agreement has been terminated or expired? The dispute

To begin the dispute resolution process, the Franchising Code requires a complainant to tell the respondent in writing three elements: the nature of the dispute; what outcome the complainant wants; and what action the complainant thinks will resolve the dispute.

Sometimes, a party may dispute that the Notice of Dispute is valid as it is vague or unclear. We always encourage parties to communicate clearly to the other side and provide sufficient information for the person to understand the dispute and how to resolve it. Quite often, sending a Notice of Dispute will instigate a discussion between the parties that resolves the dispute.

Provided that the requirements of a Notice of Dispute have been met, our office can proceed with the mediation process. Once a mediator is appointed, he or she may provide the parties with an opportunity to exchange further information or documents.

Can I bring my lawyer to mediation?

Each party must be represented at mediation by someone who has the authority to enter an agreement to settle the dispute on behalf of the party. This usually means that the person can enter into a settlement agreement at mediation without checking with anyone else.

We had a tricky matter come through our office where the director of a franchisee provided full written and verbal authority for the store manager to attend mediation on behalf of the franchisee. The franchisor did not want to attend mediation with the store manager

and disputed the authority given at every turn. The franchisor asked us how we knew the written authority was actually written by the director and how we knew the person we spoke to on the phone was really the director and not someone pretending to be her! We had no reasonable grounds to believe that the person was not really the director and therefore the mediation had to proceed with the store manager attending as the authorised representative. Amazingly, the parties ultimately reached a settlement – the miracles of mediation!

Lawyers, advisers and other support persons can only attend mediation if the parties agree.

It can be helpful for both parties to have lawyers present when it comes to drafting the settlement agreement or giving perspective on general questions on the state of the law.

When a party does not agree to allow the other party’s lawyer to attend, we have seen other creative solutions that enable the party to access legal advice – for example, the lawyer could attend as a silent observer, be available by telephone, or remain in a break-out room and only enter the mediation during a private caucus with the mediator.

What happens if the parties are located in different places?

The Franchising Code only requires that mediation be conducted in Australia and that the mediator may decide the place for mediation. Where would we appoint the mediator though? If parties are in different locations, our usual approach is to appoint a mediator in a third neutral location. However, the parties may agree to an alternative arrangement, such as one party travelling to the other party’s location on the basis that the travel costs are shared between them.

Our office has facilitated a number of different location arrangements with parties based all around Australia. In assessing location, we first look at where the parties to the franchise agreement are based. There was once a dispute

BUSINESSFRANCHISOR 29

We always encourage parties to communicate clearly to the other side and provide sufficient information for the person to understand the dispute and how to resolve it.”

between a franchisee and master franchisee, both based in Western Australia. However, the master franchisee gave written authority for the franchisor, based in Queensland, to attend on their behalf. Given the parties to the franchise agreement were both located in Western Australia, we appointed a mediator in Perth and the franchisor travelled from Queensland to attend.

How much does it cost and when do I have to pay?

A mediator appointed by our office can charge a fee of up to $275 per hour with preparation time capped at 3 hours. The mediator’s fees are shared equally between the parties. On average, each party pays approximately $1,200 for the mediator’s fees. In special cases, we may be able to offer a reduced rate.

Once a mediator is appointed, the parties

30 BUSINESSFRANCHISOR

will usually be required to pay the mediator’s estimated fees upfront. This means that each party should be prepared to pay around $1,200 prior to the mediation date. We have experienced a number of cases where one party says they are unable to afford the fees.

On occasion, the mediator may agree to a flexible payment arrangement such as by instalment. One party may even agree to pay the full costs of the mediation in order to get the parties to the table.

It is important to remember that the Franchising Code not only makes it compulsory to attend mediation, but also states that the parties are equally liable for the cost of mediation (unless they agree otherwise). However, if the other party is financially distressed and cannot even afford the fees of mediation, you may have to consider the likelihood of achieving a monetary outcome at mediation.

Our experience shows that there are various procedural challenges in arranging a franchise mediation. The pre-mediation process can be just as important to the outcome of a dispute as the actual mediation itself. As a franchise party, it is useful to be bear these matters in mind when you are attempting to resolve a dispute or preparing to attend mediation.

If you would like further information or have a free and confidential conversation about a problem with your franchisor or franchisee, you can contact the OFMA on: 1800 150 667 office@franchisingmediationadviser.com.au www.franchisingmediationadviser.com.au This article should be taken as general advice only. You can contact our office for more information about your specific issue or seek legal advice from a franchise solicitor.

"Long term partnerships in business are often rare in a fast paced world. It takes commitment and dedication, together with a good product and attention to service.

Danny Sinclair, owner and CEO of Benga Designs has been involved with Foodco for 14 years. In that time, signage for hundreds Donuts stores have been manufactured and delivered with very few hiccups. Benga Designs prides itself on producing quality work, on time, and on budget. This is most paramount in our business with the number of franchise partners in our system, and Foodco's requirement to deliver exceptional products. the extra yard to accommodate tight timelines when they are apparent. Our brands continue to evolve and reinvigorate, and Benga Designs have been instrumental in assisting us with new designs and brands. We continue to maintain our relationship with them, and are appreciative to have them in our portfolio"

Robert Cavallo Former National Design/Project Manager

Foodco Group Pty Ltd

+ Servicing Australia-wide + Custom Manufacture + Supply and Installation + Project Management

07. 3352 6972 | www.bengadesigns.com.au

Nigel Collin

Small changes win big results in business improvement

32 BUSINESSFRANCHISOR

Nigel Collin is an author, professional speaker, and founder of Game of Inches, specialising in a process for sustainable business growth by making small consistent changes.

The latest book Game of Inches is available through all good booksellers.

Business improvement shouldn’t be an option; it needs to be an everyday process on every level of a business.

partners and stakeholders who are in the best position to see where improvements could be made and how they could be made.

The challenge though is two-fold.

What if then, you encourage your people to find ways of improving just their part of the business, no matter how big or how small that improvement may be? Imagine the difference that would make to the business as a whole.

You’re not asking them to change the system or recreate the process, you’re just asking them to improve how it’s how done and how it’s delivered.

Firstly, that there is a myth in the world that to grow and be successful you need to come up with the next big innovation or quantum leap.

That to outpace your competition and increase profits you need to reinvent your system and what it is you do. That business improvement equates to big explosive innovations. That’s not actually true.

Business improvement is a ‘Game of Inches’, where small changes make big happen. It’s having a constant hankering for implementing everyday innovation and improvement. It’s about consistently finding ways to improve everything you do and having a process to do it every day.

A while back when working in New Zealand I noticed a billboard saying ‘by the time you finish reading this the world will have changed’.

I like that because it’s true.

The world is changing and so, no matter how successful a franchise business might be it still needs to constantly be seeking ways to improve.

Over the past few years I’ve had the opportunity of interviewing over eighty successful business entrepreneurs and leaders from many different industries, and this obsession for constant improvement appears again and again. It’s a common trait of successful businesses and so shifting your mindset from seeing business improvement as singular, big changes to one of everyday, small changes you open the door to a myriad of improvements and opportunities for growth.

The other challenge is enabling your team and franchisees to take ownership of constant improvement on a daily basis as well. Let’s face it most people in your business are simply trying to keep up with their own workload and their own tasks on a day-to-day basis that they simply don’t have the time or inclination to focus on finding innovative ways to do things better. And yet it is our people, those who are on the front line serving franchisees, suppliers,

This requires you to give people permission to seek ways that improve their world and more importantly act on those ideas. If they don’t feel they have your permission to do so, they won’t.

It also requires that you have a process in place that is easy and accessible for everyone to follow and tap into. Interestingly in a survey we conducted, 95 per cent of participants from a range of businesses and industries said they actively sought to improve their business and profit, and yet almost half of them (46 per cent) admitted to not having a process in place to do so.

One of the things that stands out from interviewing many successful people and businesses is that patterns appear in what they do and as a result there is a definite process they follow to consistently improve their businesses. There are four key actions involved:

1

Find the gap:

The challenge for many franchises in regards to improvement is that they become idea hunters instead of gap hunters. Gaps are problems or areas in your market or business that if addressed or improved create viable outcomes and move your business forward. I’m all for innovative ideas, but if an idea doesn’t solve a problem or exploit an opportunity then

BUSINESSFRANCHISOR 33

You need to be able to measure if an improvement is or isn’t working. Not just when it’s completed but for every step of the way.”

it’s not a useful, relevant or viable one. The world is full of ideas that don’t solve problems or exploit opportunities, so focus on finding gaps within your business and your market and then find the ideas to address those gaps.

Which is why enabling your people to find ways of improving their part of the business is so important.

2

Take Action:

The business world is full of ideas that are never implemented so taking action is vital. Which is why finding gaps is so important because it keeps ideas purposeful. If you don’t allow people to act on their ideas nothing will ever get done. By focusing on making small changes and small improvements if those changes and improvements don’t work then they don’t work on a small scale. Which of course brings up another very important point, we learn from mistakes and the truth is if you are not making mistakes you are not doing anything. The good news is that, in many ways, the ‘Game of Inches’ mitigates risk because it’s not about reinventing the entire system at once.

3

Test and Measure:

The previous step of taking action raises the question of how will you know if the action you have taken is working? The answer lies

34 BUSINESSFRANCHISOR

in testing everything every step of the way.

You need to set in place expectations or benchmarks of what you think or know the outcome should be. You need to be able to measure if an improvement is or isn’t working.

Not just when it’s completed but for every step of the way.

4

Delete or Improve:

Let’s be honest, if the improvement you put in place isn’t measuring up or isn’t doing what you expected it to, you need to let it go and find another one. You need to brave enough to kill an idea if it isn’t delivering. And if

your improvement isn’t working then you need to improve it and make it better otherwise complacency sets in.

Business improvement is not a once off event.

It is a ‘Game of Inches’ where you move ahead, systemically every day. It’s giving yourself and your team permission to find gaps, take action, measure if things are working and then either deleting the idea or improving. It’s a consistent process and one that needs to be achievable for everyone on every level of your business.

Details at www.gameofinches.com.au

Resources at your fingertips!

CURRENT TITLES INCLUDE: Business FRANCHISE Australia and New Zealand magazine The Magazine for Franchisees, Bi-monthly publication The Australian and New Zealand Business FRANCHISOR magazine The Magazine for Franchisors, Quarterly publication Australian and New Zealand Business FRANCHISE DIRECTORY Annual publication The FRANCHISE GUIDE Annual publication CGB’s website also provides an additional advertising and information format and complements our publications.

www.businessfranchiseaustralia.com.au

Peter Marsden

Cash flow squeeze and ATO crackdown

pushing insolvency to record highs

Peter Marsden is Director and National Head of Restructuring & Recovery, RSM Australia.

A resumption of normal interest rates, and more stringent collection efforts by the ATO will leave a record number of companies, mostly SMEs with unserviceable higher-than-average debt levels, liquidation ‘timebombs’ waiting to explode: This is the major finding from a newly released national survey of 1,500plus Australian business owners, consultants, and directors.

Conducted by national accounting firm RSM Australia to better understand Australia’s ‘time

36 BUSINESSFRANCHISOR

bomb’ phenomenon, just over half of the survey respondents claim harsher collection actions by the ATO, directly contributed to a 31.9 per cent increase in official liquidations recorded by ASIC last year.

With around two thirds of survey respondents (64.8 per cent) noticing an increase in ‘walking dead’ - aka Zombie companies trading with varying degrees of insolvency, artificially propped up by historically low interest rates, and a hitherto benevolent ATO approach to tax recovery. RSM Australia expects wind-up notices to increase over the next 18-24 months.

While all industries will be affected over the next two years, research suggests industries directly impacted by the ‘tax debt issue’ are financial and insurance services, construction, professional/scientific services, agriculture, forestry and fishing.

Given that they lack the capital needed to grow, ‘walking dead’ companies with insufficient profit to service debt are increasingly vulnerable to higher interest rates, and an ATO that’s taking greater action to recover its money.

Cash flow outweighs ATO crackdown Survey respondents (23 per cent) thought insufficient cash flow exposed companies to a much greater risk of insolvency than any policy tightening by the ATO (11 per cent); while forcing companies to pay GST in advance of receipt, was seen as accentuating cash flow problems with long-term debtors.

But instead of blaming the ATO for wanting to recover outstanding tax, respondents also recognised that it’s incumbent on business owners to take active steps – like improving budgeting and cash flow management skills - to minimise insolvency risk.

Insufficient cash flow is often symptomatic of more complex problems, which emanate from falling profit margins or failure to adequately plan for growth. This is reflected in almost half of all respondents identifying poor planning and cash flow systems as the driver of increasing company liquidations.”

Insufficient cash flow aside, over one in five

around two thirds of survey respondents (64.8 per cent) noticing an increase in ‘walking dead’ - aka Zombie companies trading with varying degrees of insolvency.” respondents also suggested inadequate financial systems for making informed planning decisions was the second single biggest contributor to insolvency risk. Respondents suggested online accounting systems would help the ‘walking dead’ monitor profitability in real time, and not just once problems arise.

Alarm bells Almost 40 per cent of respondents identified cash flow shortage as the single biggest tell-tale sign of ‘walking dead’ status. Other indicators of struggling companies trying to address cash flow warning signals is the number of respondents witnessing an increase in late or altered super and tax payments (16 per cent), rising extended credit terms & overdrafts (14 per cent), redundancies and higher staff turnover (12.7 per cent).

These numbers suggest the insolvency issue is considerably bigger than those companies being wound-up annually would suggest, with expectant tightening of banking regulations and higher wages, adding to the number of companies heading towards ‘walking dead’ territory.

A common precursor to trouble is a rising number of days outstanding for payments, and may be a sign that if they’re in trouble, late payments might get worse. Similarly, GST, PAYG, and super payments are not monies that ever belonged to a company, and failure to meet these obligations is only delaying the inevitable.

Reverse exposure to insolvency risk By refocusing on what they can control, utilising up-to-date information and accounting systems, preparing business plans, budgets, and cash flow forecasts, SMEs are reminded they can reverse their exposure to insolvency.

Given that their underlying business might be quite profitable, there are numerous steps within the SME’s control - including good debtor systems, early discussions with bankers to better anticipate future debt provisions or even going into voluntary administration to restructure the business– to help get them back on track.

Going well beyond repaying creditors, restructuring arrangements can also make SMEs profitable again. While companies wait

far too long to get help, seeking proper advice early enough can not only prevent them from going bust – typically by defaulting on debt provisions - it can also restore shareholder value.

Peter Marsden is Director and National Head of Restructuring & Recovery, RSM Australia.

RSM is a full service national accounting and advisory firm delivering expert corporate financial and advisory accounting services to clients across diverse industry sectors.

Its unique one-firm structure means clients can more readily connect to its extensive national and international networks, expertise and industry experience.

Nationally RSM has 29 offices, combined with over 90 years’ experience. Its network spans across 110 countries and comprises 730 offices.

02 8226 4902 peter.marsden@rsm.com.au www.rsm.global/australia

BUSINESSFRANCHISOR 37

Peter Fiasco CFE

IFA Convention: USA issues that may be relevant to us in Australia

38 BUSINESSFRANCHISOR

With such large distances

work lives, you can take away what you want from them, however, there were a lot of really interesting topics that opened my eyes as to the different challenges that they face in the USA, and also the challenges that are so similar to what we face in Australia. Some of these might be a cautionary reminder to us of what we may have to look forward to or how to avoid going down similar paths.

franchising offers a unique opportunity for

States of America, can align

Perception of Franchising

immediately think of a big corporate brand. Few

to the challenges we may

Something that came up very strongly at the IFA Convention was the misunderstanding that the general public have about franchising.

Currently, some studies being conducted by the International Franchise Association in the USA are providing the industry with some sobering results. There is a real lack of understanding by the general public of what franchising is all about. As we in the industry understand,

between Australia and the rest of the world, it’s not always top of mind that the challenges faced in franchising in other countries, like the United

face in Australia.

This year’s trip to the International Franchise Association Convention in San Antonio Texas, certainly opened up a much deeper understanding of the challenges that franchising faces in the USA. Like any convention that we attend in our

people that aspire to better their lives and own their own, and ultimately build wealth; under a brand that supports their success to achieve their goals. However, it would be fair to say that this is not always the perception the public has of franchising.

When people drive past an Autobarn store or walk past a Hairhouse Warehouse store, they people understand that the business they are going past is actually a small business most likely owned by a local operator. The same is true in USA where franchise brands are being lumped in together with larger multi-national brands.

Aziz Hashim, who is the first franchisee to serve as Chair of the IFA; is now leading the charge on changing this PR deficit that franchising faces.

BUSINESSFRANCHISOR 39

As he puts it, “There is no better business model than franchising to create opportunities for all groups, irrespective of their educational background or financial position.”

Thought: Do customers see your franchisees as small business owners?

Joint Employer What does Joint Employer mean? In terms of what this means in franchising, it is where an employee of a franchisee, is considered under the law to be employed by both the franchisee and the franchisor, essentially having a joint employer. This means that the franchisor, can be held responsible for the actions of franchisees in their dealings with employees.

This is currently being tested in court in the USA, in a court case against McDonald’s by the National Labor Relations Board (NLRB). A decision in the courts in favour of the NLRB has the potential to change franchising in the USA and the way those businesses are run.

The IFA is mounting a strong case against this, however, it has the potential to drag on in court for quite a while yet before a final outcome is established.

Franchising once again is being perceived as big business, not a collection of small businesses.

This Joint Employer dispute is evidence of this. It is inconceivable to people that work in the franchising sector, that an employee of a franchisee for a brand in one location, is considered under law, to have a joint employer in the franchisor.

In Australia, we need to remain informed of what is going on with this joint employer dispute, particularly in light of the recent scandal involving 7-Eleven franchisees underpaying employees. In fact, the Greens MP Adam Bandt introduced a Bill into Parliament in October 2015 to legislate franchisors as a joint employer so that franchisors were made liable if any of their franchisees underpaid staff.

Although this Bill has not passed, it shows the lack of understanding of franchising, and also that as a sector, we need to stay diligent to the possible changes that can profoundly affect our industry. What is happening in the US can certainly have a flow-on effect for us here in Australia.

At the IFA I met with several franchisors that have already started taking steps towards dealing with this Joint Employer issue. For example, many have removed access to any

40 BUSINESSFRANCHISOR

Our higher wage costs in Australia means that we need to be more efficient and multi-skill and multi-task our staff to a far greater level than is done in the USA.” HR support from their intranets and refer their franchisees to relevant industry bodies for advice and support in this area. Some have gone as far as not providing any job description templates or anything that can be seen as them being a joint employer. In one session I attended, the CEO of a large national brand in the US kept correcting herself when she referred to the franchisees in her network as franchise partners. Even the terminology that they use to refer to their franchisees has started to change.

Although in Australia we have not seen big effects on the franchise sector thus far, it is something that as an industry we need to keep an eye on. The Franchise Council of Australia is certainly keeping pace with this as they have already made submissions in Senate hearings.

Thought: Are you aware of the impact joint employment would have on your business?

Wage Pressures Like many industrialised countries, wage pressures is one of those constant hot topics.

It has hit a new high in the USA with talk of changes to their minimum wage. There is currently a push to increase the minimum wage from $7.25 to $15 per hour. Any business in Australia would think “what are they complaining about”, as even at $15 this is far below minimum wage costs in Australia, and even higher when you add penalties. But in reality, although the minimum wage is $7.25 per hour, it is hard to find any franchise business in fact paying this. Each state in the USA also has their own provisions on top of that, which increases the wage rate; individual cities also have their own requirements and most importantly, if a business wants to attract the right employees, they will generally have to pay more to attract and maintain good quality employees. This in fact already increases the hourly minimum rate in most states and cities that these businesses operate in. In the city of

Seattle in Washington State, on June 2, 2014, the city passed a local ordinance to increase the minimum wage of the city to $15 an hour, giving the city the highest minimum wage in the United States, which will be phased in over seven years, to be fully implemented by 2021.

During my visit, I met a number of multi-unit franchisees and franchisors that were talking about how this has meant a re-think in their business model in Seattle as a result to ensure their businesses remain sustainable.

In Australia we have much more highly regulated wage and employment conditions, which means that we do have higher labour costs. In visiting several brands in the USA and talking to many people in franchise systems, I found that although wages are lower, their wage percentages in their businesses are not as far apart as they are in Australia. They seem to have more staff rostered on, with more defined roles that are carried out by different staff. Our higher wage costs in Australia means that we need to be more efficient and multi-skill and multi-task our staff to a far greater level than is done in the USA. In fact, it would be fair to say that we get higher productivity in most cases from our staff, and must be more efficient.

The current wage pressures that are being experienced across some parts of the USA are not too dis-similar to the penalty rates discussions that are currently taking place in Australia. The highly regulated labour system that we operate in, makes us a high cost nation to operate a business, but on the flip side, there is a lot more uniformity in the regulations that we need to follow, whereas in the USA, regulations change from state to state, region to region and city to city.

Thought: Do your franchisees understand their employment obligations?

Regulation Having met several different franchise brands in

the USA, it was interesting to learn some of the regulatory regimes that they need to deal with from state to state. Unlike Australia, where we have the one Franchising Code of Conduct which covers us for every state and territory, in the USA, at the federal level franchising is regulated in accordance with the Federal Franchise Rule and the franchise regulations implemented and enforced by the Federal Trade Commission.

At the state level there are various franchise registration and regulation obligations imposed on franchisors. A franchisor’s franchise registration, filing and/or disclosure obligations vary on a state-by-state basis with the most stringent requirements typically associated with the franchise registration states.

While Federal Law provides an overriding framework regulating the offer and sale of franchises throughout the entire country, fifteen states have enacted their own franchise laws that supplement and add additional regulations to be followed by franchisors.

In fact, some brands simply opt out of opening stores in particular states because of the regulatory regime. Interestingly enough, there is only one brand in the USA that has claim to having franchises in all 50 states. That brand

is Sport Clips, a men’s and boy’s hair cutting brand that is based in Texas. Currently they have 1,500 franchisees with plans to expand to 2,500.

about the American culture which is to be

However, despite the regulation, the industry is very robust, and franchisors work within the regulatory framework that is required of them.

In Australia, although some of the regulations and requirements on franchisors may be considered onerous, the fact that we have one code that covers every state and territory allows us to be more streamlined, and makes it far less complicated to open franchises nationawide.

much more forthright way.

Thought: Does your brand fully comply with the Franchising Code of Conduct?

admired in this regard. There is a level of entrepreneurship and an ‘anything is possible’ culture that helps them propel forward in a Like us, they have their challenges. In a smaller market like Australia, there is no doubt that we must be better and more efficient at what we do to endure and thrive. In the end, franchising is a collection of small businesses under one brand. The best thing that governments can do to support their economies is to reduce the burden on small business rather than continually add on regulatory pressures. As in the USA, it is small business that has outperformed big business and is also the driver of job growth.

Summary

There are certainly some current issues that

The sheer number of units that a franchise brand can open in the United States is the thing that strikes you first. The size and population in the USA means that where some brands in Australia may see 200 units as their market penetration, in the USA, the equivalent may be 2,000 units or more.

we share with the USA, as well as challenges

Regardless of the regulations, or challenges that are put before the franchise community, they carry on with business. There is something

Manager, Hairhouse Warehouse;

that are different between us, but in the end, we are striving for the same thing, to grow our businesses and ensure that we have a prosperous society.

Peter Fiasco CFE, Franchise Development Committee Member of Victorian State Chapter of FCA.

BUSINESSFRANCHISOR 41

Jason Gehrke

on a mission Jason delivers a range of education events for different franchisor functions, starting with a general Introduction to Franchising for all newcomers to the sector, to advanced topics such as Managing Franchisee Underperformance and Improving Franchise Advisory Councils.

Franchise sector veteran Jason Gehrke is on a mission to improve Australian franchising one franchisor at a time.

Over a 25-year career as a franchise marketing manager, system co-founder, CEO, director, advisor and educator, Jason has an extensive background of practical experience and formal qualifications.

Since forming the Franchise Advisory Centre in 2004, Jason has used this experience to deliver Australia’s most comprehensive range of professional development activities for franchisors and their management teams.

In the last ten years, more than half of the nearly 1,200 franchise brands operating in Australia have attended at least one or more Franchise Advisory Centre education events; ranging from the biggest household names in franchising with more than a thousand franchisees, to new start-up systems yet to grant their first franchise.

The reason behind Jason’s drive to improve Australian franchising one franchisor at a time

42 BUSINESSFRANCHISOR

is simple: If franchisors are better at what they do, they in turn make their franchisees more successful.

The benefits of franchise education flow outward from the franchisor to franchisees, with this ripple-effect resulting in better outcomes for both.

“The reason franchise education is so important to franchisors is that they underestimate the challenges of franchising when they start out, and fail to understand that they are transitioning from one business into another, completely different business along the way,” says Jason.

“For example, a widget business owner will be a widget expert and have unrivalled technical expertise, but when they start franchising and outsource the widget work to franchisees, the franchisor must develop an entirely new skillset to coach, manage, train, inspire and build profitability for widget franchisees.

franchise systems I was involved with, and subsequently observed in many others, and which inspired me to create an education offer for franchisors to help them be more effective in their new job functions.”

In addition to an extensive range of franchise education offers, Jason coaches and mentors new and mature brands, and has

“Not only does this transition from widget expert to widget franchisor require a new set of skills, but it also requires an ongoing investment in time and resources to keep those skills up to date,” he says.

been appointed to the board of directors of

“This is something I experienced in the first

Franchise Council of Australia, and its Deputy

Inspirations Paint, a franchisee-owned chain of 130 home-improvement stores throughout Australia.

Since 2008 he has been a director of the

Participants from many different brands enjoying a Franchise Advisory Centre workshop

Chairman since 2012, and also serves on the Australian Competition and Consumer Commission’s (ACCC’s) Small Business and Franchising Consultative Committee.

published in magazines and journals in Australia,

Jason is an adjunct professor at Griffith University’s Business School, and has taught its postgraduate course in franchising, as well as taught and developed content for Griffith’s undergraduate franchising course which has been undertaken by students from all over the world.

destination,” says Jason. “The environment

He is frequently invited to speak to franchise conferences in Australia and overseas, and has written more than 160 articles on franchising and franchising best practise that have been

New Zealand, Singapore, Malaysia and the United Kingdom.

“Perfection in franchising is a journey, not a is constantly changing and those franchisors who are constantly learning to stay relevant, fresh and up to date will be the ones whose franchisees prosper the most.”

For more information about Franchise Advisory Centre services and franchise education events, visit: www.franchiseadvice.com.au

The benefits of franchise education flow outward from the franchisor to franchisees, with this rippleeffect resulting in better outcomes for both.”

BUSINESSFRANCHISOR 43

Saxon Marsden-Huggins

Looking for a great candidate?

Frustrated by the lack of an effective, value-for-money recruitment alternative for small business, Saxon founded Recruit Shop in 2010 to help small businesses find their next great hire.

Saxon has an MBA from UQ, is a member of the Entrepreneurs Organisation and is currently based in Sydney.

44 BUSINESSFRANCHISOR

RECRUITMENT ADVERTISING: 3 Common Mistakes Large businesses can allow for a few mistakes during the hiring process, however small businesses aren’t afforded the same luxury.

Hire the wrong person and you risk using a significant portion of your budget investing in an employee who fails to deliver a

organisation comes from executing engaging job advertisements in the right channels for your target candidates. Get the job ad right and you’ve taken the first step in the journey toward the best hire for your organisation.

Unfortunately this is where many businesses go wrong, so I’ve compiled a list of the most common mistakes small businesses make when writing job ads.

1. Underselling your business Small businesses don’t have as much market exposure as larger-sized competitors, which can mean potential talent might not recognise your brand name immediately. To sell yourself and educate candidates about your organisation, you need to tell it to them straight. Highlight your work-perks, the personality of your staff and your growth plans– spell out anything you think will excite your potential candidates about working for your organisation.

return.

2. Listing too many qualification requirements

Attracting the right candidates to your

Employers are starting to catch on that long

and detailed lists of essential criteria is a bad idea. Candidates will rarely meet every single criteria in your list and you don’t want to run the risk of having qualified candidates disqualify themselves prematurely because of a long and daunting list of prerequisites. If you’re asking for three years’ experience when really only one is necessary to do a good job, then you could be excluding some potentially great candidates from engaging with your organisation.

3. Writing boring job ads Online job boards are crowded places and if your job ad lacks personality or character it won’t do well in the competition for candidate air-time. Add some personality when you’re crafting your ad - think about what you want your brand to say to potential candidates and try to excite them through language and imagery.

Hopefully this will help you when you next look to recruit - think of it as your ‘what not to do’ list and you’ll be right on track to creating more interesting and engaging job ads, which will result in more candidates hitting that ‘Apply Now’ button.

BUSINESSFRANCHISOR 45

CANDIDATE SCREENING: Explore new channels Phone interviews have long been the number

Video and phone interviews offer a variety of benefits for both recruiters and candidates.

Where video interviews excel is in their ability to create a more personal connection than is possible over the phone. Also, they allow the applicant to gain a better idea of the personality of your organisation. Video interviews can also be more revealing (for both you and the applicant) because you can respond to facial cues and tone with greater ease. After all, 70 per cent of all communication is non-verbal.

one choice for companies

As exciting and innovative as video interviews

conducting first round

are, they do bring with them a few challenges.

interview screening

interview it’s important to consider these

So before you abandon the humble phone

but with the increased

points:

availability of online video

Lack of Internet Access – While the

technology, employers are now considering more

Internet has become a necessity for job searches, research shows that around 30 per cent of Australians still don’t have an

interactive channels like

internet connection at home. No internet will

Skype during their hiring

disadvantage if video interviews are the

process.

obviously put some candidates at an immediate screening method of choice.

with the increased availability of online video technology, employers are now considering more interactive channels like Skype during their hiring process.”

46 BUSINESSFRANCHISOR

Spotty Reception – Even for candidates that do have internet access, it might not always be reliable. Spotty reception can cause delays, make communication more difficult, or cause the video feed to cut off. So always have a Plan B in case the connection gives you trouble.

Poor Camera Quality – Poor camera or microphone quality can cause a candidate to become more uncomfortable, or can make it harder to conduct the interview. Echoes, hums, and buzzing can make it difficult to hear candidate’s answers and can make the interview disjointed.

Awkwardness – Research has shown that over 20 per cent of the population feels uncomfortable in front of a camera. Combine that with the nerves most candidates experience during an interview and it’s easy to see how some candidates may feel awkward and make more mistakes than they would under normal circumstances.

For some, the benefits of a video interview may outweigh the challenges. But for others, these risks may simply be too great. If you do choose to use a video interview, make sure you have carefully considered the pros and cons. It may be a great recruitment tool, but it all depends on how well you use it.

Offer something to your staff they can’t get anywhere else.

People want to believe their workplace is different.”

4. Measure Management and More

HAPPY EMPLOYEES: 5 Secret Tips

1. Be Different

into the New Year there

Offer something to your staff they can’t get anywhere else. People want to believe their workplace is different. Add exercise equipment to your breakroom, or have craft beer Fridays, or offer plane tickets in addition to vacation time. Offer something different that delivers a tangible benefit to your employees and you’ll improve their workplace satisfaction.

is still much of 2016 to

2. Hold Group Events

come and for many that

Building strong bonds between your employees is a critical element of employee engagement.

Make sure you’re encouraging, even facilitating events for your people to interact with each other in a more relaxed setting. Trust building exercises and retreats are great but simple activities like creating sports teams or holding team parties can also improve connections in the workplace.

While we’re well and truly

means searching for and finding the ‘perfect’ new job. While it’s exciting to recruit top talent it’s even more important to concentrate on how to keep your employees excited and engaged in their role.

After all, there’s no point attracting top talent if you can’t hold on to it.

Happy employees work harder, stay longer and act as better brand ambassadors than dissatisfied employees - so it’s a no-brainer.

But how do you keep your employees happy at work? The following five tips will help you keep on track this year.

3. Train Thoroughly It’s not just current employees but new employees who want to be happier at work and studies have shown one of the best ways to improve satisfaction is to give a great first impression through training. The more an employee knows and understands about the tasks they have to complete, the more satisfied they’ll be. Offer a comprehensive on-boarding program to ensure new recruits have the knowledge and support they need to excel in your business.

Every person in your company should be measured for their attitude, behaviours, and how much they’re getting out of their work.

You need to know if a manager is rude to their subordinates, or if an employee you thought was lazy is actually extremely productive and simply runs out of work to do late in the week.

Ensure you have robust KPIs and measurement tools that provide a good picture of what is going in with each person, and host monthly one on one reviews to make sure everyone is getting what they need from the relationship.

5. Create Growth Plans and Milestones Most, if not all employees within a company want to be able to grow with it. Consider providing employees with a path towards growth, tracking how they can achieve a raise or attain a new title or promotion. Giving people a long term plan is a great way to make sure your employees feel they have a reason to stay and keep growing with you.

Lastly, ensure you’re open and honest with your people to foster an environment of conversation and trust. If your employees feel they can discuss the highs and lows of their work with you, they’ll be less likely to jump-ship when another opportunity presents itself.

Recruit Shop is Australia and New Zealand’s best priced recruitment agency providing low cost recruitment solutions to small and franchise businesses in any industry and location throughout Australia & New Zealand.

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BUSINESSFRANCHISOR 47

Nicola Larking

Ketchup In Your Veins What McDonald’s Taught Me About Passion, Pride and Having Fun

1990 was an exciting year for me. I had just arrived from the UK where I had run a couple of smaller businesses. In my first few months I secured a job in the heart of Sydney, as a trainee Manager at McDonald’s brand new Circular Quay store.

48 BUSINESSFRANCHISOR

Nicola is a Director of TeamsPlus, specialists in improving company and departmental performance through High Performance Team Development, Leadership Coaching, Customer/ Partner Engagement and Management and Business Planning.

accounts were Store and Assistant Managers, the majority of whom were just 17 – 22 years of age.

I waited patiently for Head Office to get back to us with errors and oversights – but they never did. It was not long before I was doing monthend along with them and my awe only grew.

While the system is now fully computerised, when I joined it was all done manually – pen, paper, clipboard, calculator and managers’ energy and enthusiasm!

At McDonald’s, complex processes - such as store financial controls and month-end processes - were broken down into simple templates that all came together in one large sheet. Once taught, these smart, elegant systems worked beautifully across the network.

The Processes and People While I had many learnings during my time at McDonald’s, the first three still stand out:

At that time, I believed from my business experience in the UK, that it takes years of training, expertise and experience to run and manage a business. Then I landed in the McDonald’s system and my thinking was completely turned on its head.

The restaurant’s month-end closing process was my first shock. As all businesses know, month-end is the bane of everyone’s life especially getting them completed in a timely and accurate manner. At McDonald’s I watched as the restaurants completed their month end P&L, ready to submit to the relevant store consultants, by 9am on the first of the month – whether it was 1st June, July or January, a Tuesday or Sunday, a normal working day or a public holiday. And to add to my shock, the personnel completing these month-end

1. Nothing is too important or complex that it cannot be broken down into its component parts and simplified; 2. Staff are honest, decent and quite capable of the extraordinary; and 3. Enthusiasm and commitment trumps experience and qualification.

This approach of simplifying every process was applied to everything in the restaurants.

Whether it was staff recruitment or training, local store marketing plans or rostering, stock ordering or inventory control – everything was simplified and easy to learn.

More importantly, I learnt a lot about employing the right people – people with energy and enthusiasm. As a result, opportunities were provided to many people who would not have been considered for other jobs in more traditionally managed companies. The late Charlie Bell (President and CEO of McDonald’s

International) and Guy Russo, now CEO of Department Stores (Kmart and Target) are both extraordinary examples of this powerful employment philosophy.

A Relentless Focus on Customer Service A year later I moved into Head Office and found the same enthusiasm there. The focus at Head Office was on doing everything possible to ensure the restaurants were able to exceed the customers’ expectations. It was not the job of the restaurants to chase us for information, or stock, or marketing material, or anything else they needed to deliver outstanding customer service. As far as we were concerned, nothing was too small to matter.

Two examples of this focus were: 1. Some full rubbish bags were splitting in the restaurants which was catastrophic for the restaurant staff and unpleasant for customers nearby. Huge focus and attention was placed on resolving the quality issues and progress was regularly reviewed at the Top Management Team (TMT) meetings.

2. Concerns were raised as there was a positive variance with our mustard dispensers, which were to be dispensing insufficient mustard.

This meant that the flavour profile of the relevant burgers was being compromised with too little mustard. The amount of mustard on a burger is tiny – but that did not matter. We were committed to our customers and franchisees. To resolve the mustard dispenser matter, trials were run, alternatives were considered, results from trials in restaurants were assessed and again, like the rubbish bags, it remained a priority and was regularly reviewed by the TMT until it was resolved.

This commitment went through everybody and every department.

BUSINESSFRANCHISOR 49

Assured Supply

develop contingency plans for these unusual,

cent overnight! Due to the dramatic increase

A fundamental principle of McDonald’s supply chain - along with the safest, quality product at all times - is the concept of ‘assured supply’.

A customer could not visit a store and be told the fries or nuggets were temporarily off the menu as they had run out of stock, or that the delivery had been missed, or that the supplier had delivered the wrong product. 100 per cent supply at all times was the expectation.

unlikely, and possible catastrophic events, you

in volumes required, the Queensland bakery

dramatically increase the chance of achieving

also had to step in and supply parts of northern

your target of 100 per cent supply. This meant

New South Wales to ease the pressure on the

that when there were ferry strikes to Tasmania,

NSW bakery as it supplied Melbourne. We

or floods in the Nullarbor desert, product was

even considered shipping buns in from New

flown over to Tasmania and Perth respectively.

Zealand if the demand had soared any further.

An extreme example of this was the tragic

This could not have happened if it weren’t for

Many new suppliers used to say “You are kidding, aren’t you? No one can assure this - there are always events outside of our control.” They were right - it is impossible to guarantee 100 per cent supply. However, if you start with the expectation of 100 per cent supply, work through what could happen, and

Contingency Plan’ was activated and burger

50 BUSINESSFRANCHISOR

gas explosion in Victoria leaving homes and factories without gas for several days. The ‘Bun buns were freighted into Melbourne from

the contingency plans that had already been developed by the supplier and McDonald’s which was then able to swing into place before this tragedy was being widely reported in the

the South Australian and New South Wales

media.

bakeries immediately. In this particular instance,

While there are numerous examples, what was

because people could not cook at home,

critical was that through it all, everyone worked

customers poured into our restaurants and

together and the passion, commitment and

unexpectedly demand increased over 50 per

pride shone through.

Having pride in what you do, getting satisfaction and enjoying your work, your team, and your company does translate into greater productivity and an improved culture.” business was taken very seriously, there was one learning at McDonald’s that I really valued - the importance of having fun at work. This is so often frowned upon, considered irrelevant, forgotten or overlooked. Yet we spend more time at work and with our colleagues than with almost anyone else. Having pride in what you do, getting satisfaction and enjoying your work, your team, and your company does translate into greater productivity and an improved culture.

When an organisation puts in place great people and processes, mixes in a generous dash of customer focus, and tops it off with pride, We used to call it ‘ketchup in your veins.’

Ketchup In Your Veins I had never experienced such extraordinary passion and pride in a brand until I worked at McDonald’s. It touched everything we did – from the store month-end closing processes to new product innovation and incredible marketing campaigns. Everyone in the organisation was united by a common purpose, way of working and commitment to excellence.

When you witness your CEO jumping onto the fry station to help because he has walked in to a busy restaurant with long queues, you understand what ‘ketchup in the veins’ really

unique to McDonald’s. I have learnt since then

passion, fun and a commitment to learning, the

that it is achievable in any organisation.

foundations for developing their own unique

However, it requires a number of elements

version of ‘ketchup in your veins’ are truly in

to come together at once. These include a

place.

real passion for - and belief in - the brand and product/service offering, a focus and steely

Nicola Larking joined McDonald’s

determination to try and do the right thing by

Operations as a trainee Store Manager

everyone (and most importantly the customer),

in 1990. She left in 2003, having served

and a commitment to quality at all levels. It

as Executive Vice President, Director of

takes serious hard work, determination and

Restaurant Supply and Systems Supply in

persistence to bring it all together – but it can be done, as I see in my work with both franchise and non-franchise organisations today.

means.

Having Fun

I used to think the ‘ketchup in your veins’ was

After an early business training in the UK where

Australia and Corporate Vice President, Director of Supply Chain Management in Asia Pacific, Middle East and Africa.

She can be contacted at: nicola.larking@teamsplus.com.au www.teamsplus.com.au

BUSINESSFRANCHISOR 51

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52 BUSINESSFRANCHISOR

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NATIONAL FRANCHISE CONVENTION 2016

NEW HORIZONS 9-11 OCTOBER CANBERRA

Innovation Meets Opportunity Innovation has long been the backbone of the Australian franchise sector and the entrepreneurial men and women who drive its success. And as the National Franchise Convention 2016 heads to Canberra from Sunday 9 to Tuesday 11 October, innovation will form a key theme of this year’s program.

Innovation is the transformation of systems and processes to promote sustained success across your franchise system. It’s fostering and implementing new ideas to recruit and engage franchisees as well as to develop new growth opportunities. It is, of course, effectively harnessing technologies to enhance marketing and unearth new sales channels, while improving the customer experience.

Whatever your innovation goals and challenges, NFC16 will deliver vital information to assist your franchise to reach its objectives.

Book your ticket to NFC16 today & save Super Early Bird registrations available until 1 July 2016

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