Australian & new zealand
Franchisor B u s i n e s s
VOL 05 ISSUE 02, 2016
NFC16: alive and buzzing great ways to win in business! australian franchising on the rise
Q&A
with the ifa BUSINESSFRANCHISOR 1
"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
Australian & new zealand BUSINESS FRANCHISOR VOLUME 5 ISSUE 2 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:
Franchisor B u s i n e s s
from the
Editor This edition of Business Franchisor is jam-packed with advice from experts across the franchising industry, both nationally and internationally. As mentioned in the previous issue of Business Franchisor, on page 14 we feature a Q&A session completed with Robert Cresanti, CEO of the International Franchise Association (IFA). Robert says there are many similarities between American and Australian culture - allowing each to cross over the water smoothly, so make sure you read it if you’re looking to expand into the USA. Speaking of the USA, CEO of FASTSIGNS USA Catherine Monson attended the recent FCA National Franchise Convention (NFC16) in Canberra, ACT as a Keynote Speaker. An inspirational and innovative leader, Catherine spoke about turning FASTSIGNS USA around when the USA economy was at its lowest. If you weren’t one of the more than 500 delegates to attend NFC16 you can read more about this year’s convention entitled ‘Innovations Meets Opportunity’ on page 6. Also at NFC16, Griffith University’s Asia-Pacific Centre for Franchising Excellence announced some of the key findings from the Franchising Australia 2016 survey, supported by the Franchise Council of Australia. Although the full report is not available until January 2017, key findings announced included that despite a relatively flat economy and retail sector,
Jejak Graphics (03) 5977 8804
the franchise sector continues to grow in total sales turnover and employment. Total sales
jejak@bigpond.com
turnover is estimated at $146 billion, up from $144 billion in 2014 and employment is now estimated at 472,000, an increase of 11,000 from 2014.
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As always, there’s all this and much more, we hope you enjoy the read. Joanne Tuffy Editor
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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 n e s s
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volume 5, issue 2, 2016
14
CONTENTS
16
On the Cover
ALSO IN THIS ISSUE
6
IFC Benga Designs
NFC16: Alive and Buzzing Franchise Council of Australia
10 Great Ways to Win in Business
Rowdy Mclean
14 Q&A with the IFA
Question Time with Robert Cresanti, CEO, International Franchise Association
48 Australian Franchising on the Rise
Key Findings released from Franchising Australia 2016 Survey - Griffith University’s Asia-Pacific Centre for Franchising Excellence
26
4
News items:
Announcements from the industry
13 National Franchise Insurance Brokers 24 Focus Feature: FC Business Solutions 28 Franchising Expo 39 Redcat 42 Consultant Close-up:
Grant Garraway, The Franchise Shop
52 A-Z Directory IBC Jejak Designs OBC FC Business Solutions
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20
20
26
30
Expert Advice 16 Six Strategies to Develop a Strong Leader
Bill McMurray, Qualtrics
20 Key Success Factors for Email Marketing
Theo Noel, Return Path
26 Innovation Proven Key to Success for
Gelatissimo
Filipe Barbosa, Gelatissimo
30 Bob’s Business Beliefs
Bob Beaumont, Beaumont Tiles
32 What makes a Good Franchise Executive?
40
48
36 Exclusive Franchise Territories –
Do they exist?
Raynia Theodore, MST Lawyers
40 Franchisors should heed the warnings of
Increasing Bankruptcies Mark Hoppe, Atradius
44 7 Things You Can Do Today to Become a Better Manager Melissa Penn, First Class Capital
50 Three Questions to ask yourself about your
Franchise Recruiting Website Matthew Jonas, TopFire Media
Peter Buckingham, Spectrum Analysis
34 Franchisee Recruitment:
The Times – They are a-changing Robert Toth, Marsh & Maher
44 BUSINESSFRANCHISOR 3
business franchisor
NEWSitems ACCC advises franchising industry to consider its agreements The Australian Competition and Consumer Commission is warning franchisors about potentially unfair contract terms under a new law offering greater protections to small businesses from 12 November 2016.
Franchising & Business Opportunities expo celebrates 30 years The Franchising & Business Opportunities Expo will kick off 2017 with the Sydney show on 25-26 March, at the brand new ICC Sydney at Darling Harbour. Featuring a striking contemporary design, leading technology and multipurpose spaces, ICC Sydney is located in the heart of Sydney in the active precinct of Darling Harbour on Cockle Bay. “In 2017 we are celebrating 30 years of the Franchising & Business Opportunities Expo with a new venue in Sydney,” says Exhibition Manager Fiona Stacey. “We are also re-launching the Franchise Advice Centre to give visitors quality time with financial and legal specialists to improve or start their own business.” Stacey adds it has been a big year for the Expo, with highly successful shows in Sydney, Brisbane and Melbourne, as well as a new boutique showcase event in Perth, which was very well received by both visitors and exhibitors. Visitors at each of the Expos found a wealth of information and advice available, as well as a huge range of business ideas. Franchising & Business Opportunities Expo 2017: Sydney: 25-26 March at International Convention Centre, Darling Harbour Perth: 7 May at Crown Perth Brisbane: 22-23 July at Brisbane Convention & Exhibition Centre, South Bank Melbourne: 26-27 August at Melbourne Exhibition Centre, South Wharf For more information go to www.franchisingexpo.com.au
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Speaking to the legal symposium at NFC16 in Canberra, ACCC Deputy Chair Dr Michael Schaper outlined the ACCC’s findings following a review that identified a number of problematic terms that appear to be widespread in the franchising industry. “Of particular concern are terms that give the franchisor unconstrained power to unilaterally vary agreements or operations manuals, broad restraint of trade clauses, excessive liquidated damages, and unreasonable termination clauses,” Dr Schaper said. “The ACCC urges franchisors to reconsider whether such terms are necessary and to ensure that the contractual relationship is not unbalanced as a result of any such terms.” The new law will apply to a standard form contract entered into or renewed on or after 12 November 2016. If a contract is varied on or after 12 November 2016, the law will apply to the varied terms. Contracts covered include those between businesses where one of the businesses employs less than 20 people and the contract is worth up to $300,000 in a single year or $1 million if the contract runs for more than a year. Some of the issues the ACCC has identified may be of concern are: • Franchisors unilaterally varying documents such as operations manuals. While the operations manual is often a separate document to the franchise agreement, it generally forms part of that agreement. The ACCC considers that terms that allow one party to unilaterally vary aspects of the operations manual, especially in an unrestrained manner, may be likely to be unfair. • Franchisors should also ensure that the amount of liquidated damages reflects a franchisor’s genuine estimate of costs and should review their restraint of trade clauses to ensure they are only as broad as reasonably necessary to protect their legitimate interest. • A ny termination clauses must ensure that they not only comply with the Franchising Code, but must not also be unreasonably broad and oppressive. • T he fairness of restraint of trade clauses will be judged based on the length of the restraint, the geographic area the restraint applies to and the breadth of conduct the franchisee cannot engage in. “Franchisors should be taking action now to ensure that their contracts do not contain unfair contract terms or risk having a court strike the term out of the contract,” Dr Schaper said.
Survey shows franchising on the rise in Australia
ACCC takes action against Pastacup for alleged breaches of Franchising Code
Despite a relatively flat economy and retail environment, Australia’s franchise sector continues to grow in total sales turnover and employment and its franchisors are confident of further growth in the next 12 months. According to the biennial survey of franchising in Australia, the total annual sales revenue for the country’s entire franchise sector is estimated at $146 billion, up from $144 billion in the previous survey in 2014. The total number of people directly employed in business format franchising in Australia also continues to rise now reaching 472,000 permanent, part-time and casual employees, up from 461,000 two years ago. These are some of the key findings of the Franchising Australia 2016 survey, undertaken by Griffith University’s Asia-Pacific Centre for Franchising Excellence and supported by the Franchise Council of Australia. The headline findings of the Franchising Australia 2016 survey were released at this year’s Franchise Council of Australia National Franchise Convention in Canberra. The full report will be available in January 2017. Mr Bruce Billson, Executive Chairman of the Franchise Council of Australia, said franchising is a robust, vibrant and exciting part of the economy, accounting for approximately 4 per cent of all small businesses in Australia. He said the survey results show Australia’s franchising sector has continued to perform strongly, against the backdrop of relatively slow economic growth. “The Franchising Australia 2016 survey points to a maturing sector, holding its own in a transitioning economy following the end of the mining boom,” he said. The retail (non-food) industry dominates the Australian franchising sector, with 26 per cent of brands operating in this segment Professor Lorelle Frazer, Director of Griffith University’s Asia-Pacific Centre for Franchising Excellence said the franchising sector continues to be impacted by intense competition in retailing, particularly non-food retailing. “Food retailing has been more resilient with consumers responding well to variety and innovation in food concepts,” she said. “However, we can expect to see plenty more turbulence in the retail sector moving forward.” A real positive for the Australian franchising sector is its employment growth, which has been on a steady rise since 2012. Significantly, the proportion of people employed on a permanent, full time basis has increased, suggesting a more optimistic outlook ahead.
The Australian Competition and Consumer Commission has instituted proceedings in the Federal Court against Pastacup’s current franchisor Morild Pty Ltd (Morild) and that company’s former director Mr Stuart Bernstein alleging breaches of the Franchising Code of Conduct. Mr Bernstein co-founded the Pastacup franchise in 2008 and has managed and been a director of two previous franchisors of the Pastacup franchise system that became insolvent. The mandatory Franchising Code of Conduct requires a franchisor to provide prospective franchisees with a disclosure document that, amongst other things, discloses the relevant business experience of all its officers. The ACCC alleges Mr Bernstein’s directorship and management of two previous Pastacup franchisor companies that became insolvent should have been disclosed by Morild to potential franchisees. The ACCC also alleges that Mr Bernstein was knowingly concerned in Morild’s conduct. “These proceedings are the first in which the ACCC has sought penalties for breaches of the Franchising Code. The ACCC is pleased that the revised Code provides for the Court to impose penalties for serious breaches. We expect that the availability of such remedies will act as a significant deterrent to others,” ACCC Deputy Chair Dr Michael Schaper said. “Last year’s changes to the Franchising Code require increased disclosure prior to entering a franchise agreement. The ACCC has made it an enforcement priority to ensure small businesses receive the protections of industry codes of conduct, including the Franchising Code.” “People who decide to buy into a franchise system often put their savings on the line and, in doing so, should be able to make informed business decisions on the basis of full and accurate disclosure by the franchisor,” Dr Schaper said. The ACCC is seeking declarations, injunctions, penalties, findings of fact and costs.
BUSINESSFRANCHISOR 5
FCA
NFC16: Alive and buzzing
Imagine the scene - over 500 delegates walk through the open glass doors with a smile, excitement and anticipation evident on their faces. The clink of coffee cups against plates hover in the background as handshakes are made and friendly laughter bubbles from a far off corner, the sound of soft shuffling feet moving past. Not far, exhibitors in the hall continue to set up their stalls and talk to their team, getting ready for the busy day ahead; meeting people from all over Australia and creating new networks for the future ahead. 6 BUSINESSFRANCHISOR
Welcome to the National Franchise Convention, Canberra. The inaugural National Franchise Convention (NFC16) of 2016 was attended by over 500 delegates and held in Canberra this October with an astounding program for delegates, concluding with the MYOB FCA Excellence in Franchising Awards Gala which recognised exceptional performers within the franchise sector. Opening the NFC was Bruce Billson, Executive Chairman of the Franchise Council of Australia. “I’m incredibly optimistic about the sector,” Mr Billson said. “Never has there been a more significant opportunity for us; even with the challenges of the economy, people still have that sparkle in their eyes and fire in their belly for being in their own business. “We know that most people contemplating entering into a franchise – a quarter of them are husband and wife – and they’re looking at us to be as optimistic and ambitious as they are, and we are. But we need to keep sharing
the story of why the franchise model is a great platform for enterprise success.” The joint employer liability was an important topic and Natalie James from Fair Work Ombudsman provided further insight into the concept and what it means to Australia. The FCA has taken a dedicated proactive approach to informing and supporting participants in the sector during the NFC16 and Mr Billson acknowledged that the issue is one that affects and concerns the encompassing community. “It’s all about creating a more supportive entrepreneurial ecosystem, where enterprising men and women know the ground on which they stand and can make good decisions,” he said. Aptly themed ‘Innovation meets Opportunity’ the program included inspiring keynote speakers such as Alex Malley, CEO of CPA Australia and The Naked CEO, Megan Quinn, co-founder of luxury goods online fashion retailer Net-A-Porter, Dr Sam Prince, Founder of Zambrero and humanitarian aid worker, Australian of the Year 2016, Lieutenant General David Morrison as well as Small
Business Minister, Michael McCormack to open the keynote sessions. Peta Credlin, Sky News Contributor and former Chief of Staff also attended and spoke to the audience receiving a great reception. Growing up in a family that owned small businesses themselves, Peta knew first-hand the challenges and rewards of families that greatly supports the local economy and believes conferences like the National Franchise Convention are so important because it fosters a community where knowledge is transferred and experiences are shared. “I think conferences like these are really important for people in franchises because you need all the support you can get to get your businesses off the ground and make it a success, and you really have to come here to build a network and participate. Ask a stupid question, because there is no stupid question, there is someone in the room that’s gone through the same experience that you have. Come away from it with a network and a support system when you’re back in your own business.” Ms Credlin said. Catherine Monson, CEO of Fastsigns USA was
delighted to be in Canberra to present to the delegation and was an enthusiastic supporter of the conference. “I’m really thrilled to be here at the FCA National Franchise Convention and here’s why – it’s an opportunity for me to learn and for me to get better, the advice I give to my friends and certainly to my team members is to be at every single session that you can, take great notes, meet as many people as you can, collect their business cards… and the week you get back, reach out to the people that you’ve met,” she said. Ms Monson is no stranger to conventions. Speaking to thousands of people each year and inspiring them all, she speaks with the grace of a professional and the tenacity of a successful CEO at the top of her game that turned the business around when the economy was at its lowest, which is why she thinks innovation is such a topical issue. “We live in a time that’s so exciting, because technology is changing so quickly that we have opportunity to do amazing things for our brand and to serve customers better, so technology is definitely a driver…we take a look at the
competitive landscape and make sure that we position ourselves way ahead of that. “When I think of the challenges within franchising to get adoption of innovation its always getting your franchisees to do that – and here’s a great example with Fastsigns. We’ve been working very hard to get our franchisees in digital signage… it looks like a big LCD board, and there’s been a lot pushback. It’s an important innovation because we’re seeing huge growth in digital signage and we’ve had to really work, push, prod, encourage, even incentivise them with rebates to take that scary step to digital signage, so that can be the challenge…to get people to adopt those new innovations, but it can be done.” The Franchise Council of Australia also honoured franchising’s best and brightest at the MYOB FCA Excellence in Franchising Awards Gala Dinner with Poolwerx taking out two major awards, Established Franchisor of the Year and Stephen Hall winning Field Manager of the Year. Founded 24 years ago, the business has evolved from a man-in-a-van operation into
BUSINESSFRANCHISOR 7
“Never has there been a more significant opportunity for us; even with the challenges of the economy, people still have that sparkle in their eyes and fire in their belly for being in their own business.“ Murray d’Almeida has been involved directly and indirectly in the Australian Franchise sector since 1978 and became a member of the FANZ in its second year of inception. Speaking to the delegates, Mr d’Almeida said that being recognised as an integral contributor to the sector was an honour. “Being inducted into the Franchise Hall of Fame is particularly important – because it’s recognition from your peers. Fundamentally in any sector, whatever you do, peer recognition is more important than any other recognition. “I started franchising by accident when I was 15. I was in fact, franchising and I didn’t know it. I had a chain of stores, and thought I would get greater productivity by involving the stores managers in the profitability. So that developed into a system. Someone said to me, “How long have I been in franchising?” and I said, “Is that what I’m in?” It was a surprise to me.” Mr d’Almeida had the following tips for young entrepreneurs and those new the sector.
Bruce Billson, Chairman, Franchise Council of Australia
a model that supports big businesses with over 106 partners operating close to 100 stores and 300+ vans.
that they feel a part of it. Communicate it well
“I remember when I was nine years old and I knew in my heart that I wanted to succeed. I wasn’t sure what it was that I wanted to do, but I knew I wanted success.” Mr O’Brien said.
awards, Mr O’Brien stayed humble and
As innovation was the theme of the National Franchise Convention, which the awards were a part of, Mr O’Brien had some key messages for what it takes to be ahead of the crowd. “Having a culture of innovation is not enough, you also need a structure and strategy for innovation, having rewards for innovation, having people and the environment in which it’s pretty cool to make mistakes and to push the boundaries. Sometimes mistakes are good. “If you don’t take your franchisees, or their staff or your staff along for the ride, the innovation dies on the vine. So you must really have an inclusive process on bringing people into innovation, so
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and train them well,” he said. Although Poolwerx took home two outstanding acknowledged his team. “Taking out the Established Franchisor of the Year is certainly a nice pat on the back for a job well done but I don’t claim the win as my own because none of the success we have generated would be possible without the sum of all our Poolwerx family,” Mr O’Brien exclaimed. It seems like their strategy is on track, as Poolwerx continues to pave their way into international waters, with a recent expansion into the USA 18 months ago in five states. The Franchise Council of Australia welcomed a new inductee for 2016 into the Franchise Hall of Fame, Murray d’Almeida, who formed the Retail Food Group and is Chairman of BPS Technology Limited.
“Work hard. Use your ears and mouth in the same proportion. Find a mentor, listen to them and never stop learning. If you keep listening to them, you will be a success.” The NFC also showcased NextGen in Franchising, a great initiative to support young entrepreneurs with a business model ripe for franchising. The Franchise Council of Australia (FCA) is uniquely positioned to play a pivotal role in attracting and developing future generations of franchising entrepreneurs. The NextGen in Franchising Global Competition provides the crucial link between future and established generations of entrepreneurs. It incentivises young people to take an active interest in the FCA business community and is a major FCA investment in creating an innovative environment for their professional development and growth. NextGen in Franchising is the beginning of an evolving dialogue with young entrepreneurs to understand their overall professional development needs and their business goals to empower them as business leaders for the future.
MYOB FCA Excellence in Franchising Award 2016 Winners Australian Established Franchisor of the Year – Poolwerx Australian Emerging Franchisor of the Year – Jump! Swim Schools International Franchisor of the Year – Pandora Jewelry
“Aptly themed ‘Innovation meets Opportunity’ the program included inspiring keynote speakers.”
Catherine Monson, CEO, FASTSIGNS International (USA)
Single Unit Franchisee of the Year, two or more staff – Chris Wall & Robyn Mitchell, Pizza Capers, Gungahlin, ACT
Three finalists from Australia competed to win a chance to represent Australia in 2017 in Las Vegas, at the NextGen competition at the International Franchise Convention and be mentored by one of the FCA’s Hall of Fame members. Finalists included Roll’d and Real Property Photography, with Salts of the Earth winning the coveted prize at the MYOB FCA Gala Awards night.
Single Unit Franchisee of the Year, less than two staff – Shaun Birley & Sam Orders, InXpress, Sydney CBD Franchise Woman of the Year – Natalie Brennan, Foodco, NSW
A total of 14 Excellence in Franchising Awards were presented on the evening, which was proudly sponsored by MYOB. Outstanding individuals and businesses were recognised across a range of functions including franchisees, suppliers, support staff and franchise systems. www.franchise.org.au
Multi-Unit Franchisee of the Year – Anthony Stahl & Daniel Mesiti, Boost Juice, Chatswood, Bankstown, Eastgardens & Top Ryde, NSW
Field Manager of the Year – Stephen Hall, Poolwerx Supplier of the Year – Franchise Relationships Institute Excellence in Marketing – Specsavers Dr Sam Prince, Founder, Zambrero
Images supplied by: www.AHCPhoto.com.au
Excellence in International Franchising – G.J Gardner Homes Franchise innovation – Boost Juice Bars Franchisor Social Responsibility – Bridgestone Australia Franchisee Community Responsibility & Contribution – Ryan Kirkham, Baker’s Delight, Kawana & Maroochydore, QLD Franchise Hall of Fame Inductee 2016 – Murray d’Almeida NextGen winner – David Lindsay, Salts of the Earth
Images supplied by: Peta Credlin, SKY NEWS Contributor
www.AHCPhoto.com.au
BUSINESSFRANCHISOR 9
Rowdy Mclean
Great w win in bu An entrepreneur and adventurer, Rowdy Mclean is an international Keynote Speaker and has presented to over 250,000 people across the globe. As a Leadership and Business Consultant, Rowdy provides clients with the inspiration, insights, systems and strategies to Play a Bigger game – how to achieve more, be more, do more and have more than they ever thought possible. His latest book Play a Bigger game has been published in seven countries.
Simplicity is the path to success in almost everything, particularly in the modern business world where change occurs so quickly. The lean, simple business has a greater ability to adapt, differentiate and diversify to meet the future needs of customers. I have the privilege of working with businesses across the globe and all too often the path to success lies in finding the simple things that
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If the game is not changing you are going stale and customers can smell a stale business.”
ways to business! allow you to win at the game of business. Here are four simple strategies to ensure your business remains relevant now and in the future.
1
Fundamentals Rule – you can’t win if you don’t!
When we talk about the future needs of our customers we should be careful that we don’t eliminate or diminish the things they love about us right now. There is a lot of talk in business about how we need to be early adopters of the
these ideas, you need to understand that, special doesn’t matter if the fundamentals are broken! Recent research by Esteban Kolsky from thinkJar shows that 67 per cent of customer churn occurs because of poor service, and that means their fundamental needs have not been met. There’s a hotel chain that gives you a warm chocolate chip cookie when you check in. That’s a nice addition, but it doesn’t count if the receptionist is rude or the beds are hard or the bathroom is dirty.
the next great idea, make sure you do the fundamentals well. Know EXACTLY what the fundamental needs of your customers are, and get those right 100 per cent of the time before you step it up and Play a Bigger Game.
2
Why you need to get your good news in front of everyone!
We live in the reputation economy. Social media has completely transformed the ability of consumers to share their thoughts and ideas on the quality of your businesses, place, product,
dark ages.
A company calls me to offer extra free data if I extend my mobile plan. I would love it, except it takes them two hours to answer the phone every time I have a problem.
Before you start to invest and implement in
So before you get all excited about introducing
That’s why you need to be creating and sharing
next trend, technology, latest gadgets, apps and ideas. We are told that if we don’t embrace these things, our business will be left in the
people and performance. On the surface that seems scary, because we all know that bad news spreads like wildfire.
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Make it a game and get your team in the game. If you’re not growing, you’re going bust and no one wants that!” your good news stories, with as many people as possible as often as possible. When people are looking at your profile on a social media site that rates a business performance such as TripAdvisor, Urbanspoon, Google Reviews and a host of others it’s important that there is plenty of good news to balance out any complaints or bad news. Its not just social media that matters, getting the good news in front of your employees is just as important. So if you support a great cause, participate in a charity event, make a customer’s day or have the best profit week ever, tell your employees all about it. This serves two purposes: 1. It helps the employees connect with the organisation and builds pride and morale and 2. Your employees will share it with others. PACK & SEND produce a book (they have thousands of copies printed) full of the great stories of how they have met and exceeded their customers’ needs and how their employees have made that happen. Everyone wants to be in that book, and that’s the key; in business, people want to be part of the good news stories, customers want to do business with companies that are doing good, so get them out there.
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3
The relentless pursuit of excellence – have a rigorous and robust improvement strategy Most businesses stumble from one week to the next, doing the ‘same old same old’ in the same old way. If they do think about playing a bigger game, it’s usually at the annual conference or it takes up the owners’ free time while they are taking that precious two-week holiday. It’s often said that we need to take time to work on the business, not in the business. This is so true. It’s easy to get caught up in the daily grind and before you know it another month or year has slipped by and all your best plans and ideas have gathered dust for another year! So, set aside the time and do the work, preferably weekly. When I am working with businesses we set their ‘non-negotiables’. These are the absolute must happens, without fail, to an exact standard every single time. We set them across the whole business and in all areas (just this simple concept can make a massive difference). Often the non-negotiable for the owner is to lock in (and I mean –LOCK IN) time to ask themselves two very important questions: “What’s working well?” (focus on doing more of this) and “What could work better?” (fix this) They need to be robust in the analysis and relentless in the execution. That’s how change happens.
4
Why all businesses need to play a bigger game for growth! In the modern business world if you are not green and growing you are probably ripe and going rotten. If you are not growing you are most likely going backwards, as your competitors streamline their businesses, adopt new ideas and new technologies, pursue new markets, new strategies and new products. If the game is not changing you are going stale and customers can smell a stale business. They look for go-getters, the disruptors, the business that is embracing the future. Growth is not just about profits. Growth can be about product margins, market share, employee engagement, customer satisfaction, product diversity, brand recognition, market penetration, community engagement, venue quality and diversity, speed of service and quite a few others. The key here is to decide what needs to grow or improve and measure it constantly, report it, create a scoreboard and track it. Make it a game and get your team in the game. If you’re not growing, you’re going bust and no one wants that! Do you have what it takes to Play a Bigger Game? Take the checklist at rowdymclean.com
question time
with robert cresanti, ceo of the international franchise association What are the benefits to an Australian franchisor by attending the annual IFA convention?
Furthermore, Australian franchisors will have the opportunity to meet franchisees who may be interested in investing abroad or in their franchise concept.
There are quite a few benefits involved in attending IFA’s Annual Convention. Firstly, as the premier annual event for franchising, Australian franchisors will be able to meet leaders in the international franchising space, hear from and meet experts in franchising, marketing, and operational excellence, and network with the very best of suppliers who enjoy working in the franchise space.
Franchising is wellestablished in both countries, do cultural differences make it difficult to cross over the water?
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To be frank, while Australians certainly do have a vibrant and unique cultural profile based on
a mix of many cultures, there are also many similarities to American culture which add to franchising’s ability to cross over, either into America, or into Australia. Firstly, the robust and stable economy and strong rule of law in Australia makes it an attractive target for American franchisors looking to expand into a new market, and the same goes for America. Secondly, the fact is that, English is widely spoken, so you have less of a communication barrier between the two cultures, which can help smooth a company’s entrance into a different nation’s market.
Over the last several decades, franchising has developed from a domestic engine of prosperity, into an international force of entrepreneurfueled growth.” and the inherently mutual beneficial relationship has built some of the world’s most recognizable brands. Franchising has stood the test of time and continues to add jobs at a remarkable rate. There are many changes though; today’s franchise markets are even more competitive – franchisors must be constantly adapting their marketing and products in order to retain customer loyalty. And social media has changed all the rules of the marketing game, so brands have to adapt to stay relevant.
What resources are available from the IFA to Australian franchisors who may wish to enter the US market?
Since the IFA inception in the early 1970’s, how would you say franchising has changed nationally and internationally?
The IFA has many resources available to franchisors looking to expand into the U.S. and we would love to have Australian franchisors join the IFA! We offer discounts on our many different events and conventions, and we also offer country profiles on our website which help describe different nation’s unique franchising industry. We also offer in-depth guides on each country’s differences in franchising law, which are really important for franchisors looking to enter different markets. Moreover, an Australian franchisor may wish to consult with a franchising professional to find out the best strategy – many consultants are listed in our Supplier Directory. Finally, we would recommend they look at our membership as well, and see what their competitors are up to.
Over the last several decades, franchising has developed from a domestic engine of prosperity, into an international force of entrepreneur-fueled growth. Every year brings new public policy challenges and opportunities to demonstrate the positive impacts of franchising on both economic growth and social mobility. Today, despite domestic regulatory challenges to franchising, globally, it’s a great time to be involved in franchising – there are more franchise brands than ever and financing options for potential franchisees are abundant.
Even so, there’s been an explosion of growth into new franchise formats, like professional services, staffing, and even social-focused non-profit franchises which help the developing world. We’re excited to see what the future will bring this successful business model and we’re confident franchising can overcome the public policy challenges currently facing U.S. franchised businesses. The International Franchise Association Toolkit is designed to be a core resource for IFA Members interested in international franchising. At the heart of the Toolkit are webinar courses that comprise a curriculum in franchising across borders.
What lessons have been learned over the years?
Cresanti received a law degree from Baylor University School of Law, a bachelor’s degree in Political Science and International Relations from Austin College. He also received a certificate of EC Law from the University of Glasgow Law School and completed master’s courses in International Relations from Johns Hopkins SAIS.
Over the years, we’ve learned franchising can be an extraordinarily powerful tool for growth,
For more information visit: www.franchise.org/InternationalToolkit
BUSINESSFRANCHISOR 15
Bill McMurray
Six strategies to develop a strong leader 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.
Your organisation’s leadership is a strong predictor of how successful the business will be. Leadership styles permeate the entire organisation,
Getting the right leaders in place is therefore
Both approaches are valid, and both approaches
trickling down from the
essential. The larger the organisation, the more
come with challenges.
difficult it can be to identify and nurture people
Promoting a high-achieving employee with a solid
top, affecting employee
with the right skills in your franchise.
understanding of the business into leadership
morale, performance, and
When filling leadership positions, businesses tend
positions can be less risky and less expensive
engagement.
to either promote from within or hire new talent.
than recruiting external candidates to take the
16 BUSINESSFRANCHISOR
natural-born leaders are rare and too many executives are promoted on the strength of their personal performance without consideration for their ability to lead people or to “think one-level-up.”
position. This approach offers the advantage that the potential new leader is already a known quantity and clearly fits into the existing company culture. However, natural-born leaders are rare and too many executives are promoted on the strength of their personal performance without consideration for their ability to lead people or to “think one-level-up”. Promoting someone before they are ready to deal with the pressures and challenges that come with leadership can threaten the business’s reputation and overall performance. Organisations that have identified potential leadership candidates need to put in place strategies to develop them into strong leaders to ensure the business has the best management team possible. High-potential leadership candidates are often problem solvers who enjoy being challenged and taking ownership of projects and issues. They often live the values of the organisation, and have a desire to progress themselves through their own hard work and dedication to their jobs. It is important that organisations nurture these candidates to help them develop to their full potential. There are six key strategies for developing potential leaders:
1
Set challenges
Giving a challenging project or problem to someone with leadership potential is an ideal way to start the ball rolling for his or
her development. It gives a potential leader the space to understand how to approach challenges, who can help, how to get assistance, and that they should consider different strategies before acting. How the candidate solves the problem or overcomes the challenge can tell you what you need to know about their current management competence and areas for further learning. While they might not approach the challenge in an ideal way, this is not necessarily the point of the exercise. What is important is that you give them room to make mistakes and learn from them because this can boost their confidence and ability.
2
Rotate roles
Rotating potential leaders into a different department or job function can help to give them a more well-rounded understanding of the franchise business. Rotating jobs means candidates gain hands-on experience to understand how different parts of the business
work and broader experience helps them better understand how they can support all areas of the business. This also gives you an opportunity to see how they interact with people that aren’t part of their usual team.
3
Facilitate mentorship and coaching
Mentors can share their personal experience, skills, knowledge, provide a listening ear, suggestions, and resources with the business’s potential leaders. Mentorships provide a nurturing, supportive, and effective way to develop leaders. Leaders are human and will make mistakes. Mentors can help them understand how to learn from and avoid repeating those mistakes. Coaches observe and assess potential leaders’ fundamental leadership skills, and create plans to help them improve. They can design exercises and training tailored to the individual candidate’s needs to help them better direct
BUSINESSFRANCHISOR 17
What makes a great leader is how well they deal with failure and plan to improve going forward.”
and delegate, and inspire and motivate people to listen, believe, and act.
4
Provide education opportunities
While learning on-the-job is the most effective way to develop leadership skills, franchisors may want to consider professional development and training, such as funding higher education, to give high-potential candidates a strong foundation in leadership theory and practice. Giving candidates access to different learning platforms, like webinars, sabbaticals, industry events, and professional associations, can help the business determine whether the candidate is committed to ongoing learning, which is a critical leadership characteristic.
5
Encourage selfevaluation
Organisations should encourage leaders to continuously evaluate their performance. Candidates that are trained to evaluate their decisions, including what worked and what didn’t, will have a clearer picture of what they need to improve to become a strong leader. Leaders that understand their strengths and weaknesses can
18 BUSINESSFRANCHISOR
map out strategies to improve and grow.
An essential part of developing leaders is to offer
It is also important that they receive encouragement from their colleagues to remain committed to improving their performance. The mark of a successful leader isn’t necessarily that they never make mistakes. What makes a great leader is how well they deal with failure and plan to improve going forward. Therefore creating a workplace environment that promotes open, fair, and supportive dialogue between candidates, their peers, and management can help boost morale and help the team to grow stronger around the common goal of improving.
them the opportunity to participate in a 360-
6
easy-to-use VoC platform. This enables an
Listen and ask questions
It is important that businesses listen to leadership candidates’ thoughts, concerns, and feedback as it can help guide how the business chooses to develop individual leaders. For example, if a candidate expresses that they are uncomfortable rallying teams to focus their efforts around a business goal or objective, the business might consider investing in training that could help strengthen their communication skills. Asking potential leaders questions about their progress can also help them to think more strategically or outside their comfort level.
degree employee feedback program. These 360 programs provide the individual with feedback on their strengths and weaknesses from a variety of sources – managers, peers, direct reports, and external evaluators. Organisations should run a full function, sophisticated platform to implement 360 programs quickly and to gain feedback in real-time. Qualtrics provides the balance of fullfunction capability, with a scalable and 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
ODY, MIND, BUSINESS.
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Theo Noel
Key Success Factors for Email Marketing
20 BUSINESSFRANCHISOR
Theo Noel is a Regional Director, APAC at Return Path and has over 10 years’ experience as a General Manager and over 12 years’ experience in digital marketing with a focus on all things email, from deliverability and reputation to fraud and brand abuse. A digital enthusiast and established figure in the email marketing world, Theo is dedicated to leading the APAC team, and enabling local e-marketers to benefit from Return Path’s email intelligence and brand protection solutions.
When it comes to retail marketing, email reigns supreme. While it’s not as flashy or as viral as other forms of digital marketing, email still offers high return on investment. But email marketing’s impact goes beyond just revenue. It helps support business goals – increasing lead generation, improving brand awareness, improving data quality, and increasing website traffic. Though email marketing can be one of the most effective tactics for reaching these goals, many retail marketers struggle to run a successful email program. But it can be done. The basic rules are comparatively straightforward. In this article we outline seven key success factors for valuable email marketing.
Your reputation is critical to reaching the inbox Successful emailers make sure the messages consumers really want are delivered to the inbox, and unsolicited messages and spam are not. Just like banks use a credit score to make
lending decisions, mailbox providers consider your sender reputation when determining whether your messages are legitimate and should be delivered to the inbox. A poor reputation will land your messages in the spam folder. There are many factors that contribute to your sender reputation. Luckily, the most important factors are within your ability to control and correct: • Create a reason to engage • Understand and track engagement • Find the right frequency to boost ROI • List quality is essential for Inbox placement • Spam Complaints damage reputation and deliverability • Avoid Blacklists • Take advantage of Whitelists. The following factors can help you run more successful email marketing campaigns.
1
Create a reason to engage
Your email messages are not the only ones your customers receive. There is a lot of competition, so creating an engaging experience is critical not only to protect your deliverability, but also to stand out in the inbox. Below are four tactics
to help you increase and maintain subscriber engagement. On-boarding: The easiest time to build engagement is at the beginning of the relationship. A consumer who chooses to receive your email is actively expressing interest in your brand and your products. Take advantage of this enthusiasm—start engaging them right away. Send a confirmation: Confirmation— or opt-in—emails not only help spark engagement, they also serve as a way to maintain a clean list. By sending a confirmation email, you are able to verify that the address belongs to an active user and ensure you have permission to continue emailing them. Welcome messages: Whether it is a simple “Thank you for subscribing” message or a multipart series highlighting the different benefits and content subscribers can expect, the goal is to start off strong. Test everything: Email allows you to test and optimise all the elements of your campaign.
2
Understand and track engagement
Mailbox providers determine engagement based on how a recipient is interacting with their mailbox. Do they ever access their mailbox? Do they read and take action on your messages or do they ignore your content? Worse yet, do they actively complain about your messages? Continuing to email subscribers who are not engaged with your program will not only hurt your engagement metrics, it will impact your reputation and therefore your deliverability. These categories allow us to help
BUSINESSFRANCHISOR 21
our customers identify which subscribers to focus on and which to remove to protect their program.
3
Find the right frequency to boost ROI
Since every email has the potential to drive sales, sending more email should result in higher ROI, right? Unfortunately, that’s not quite how it works. Your optimal sending frequency requires a delicate balance between over-mailing and under-mailing. When you mail too much, you risk subscribers tuning out and ignoring you or you risk annoying your subscribers to the point of higher unsubscribes and spam complaints. Mail too little, and you risk getting overlooked in a subscriber’s bulging inbox, your subscribers forgetting your brand, or why they signed up. Neither of those situations are ideal. To find your frequency sweet spot—just as you should for any other element of your program—you need to test.
4
List quality is essential for inbox placement
While every retailer would like to have a huge list of loyal, engaged customers, quality is much more important than quantity when it comes to your email list. List quality is the second major factor mailbox providers assess when deciding whether to deliver your messages to the inbox or the spam folder. To protect the quality of your email list, you
5
Spam complaints damage reputation and deliverability Poor email reviews, in the form of complaints, can be damaging to both ROI and your brand’s overall image. Receiving a complaint from a user not only damages that customer relationship, but it also impacts a brand’s reputation as a sender. Complaints begin to impact your sending reputation if your email complaint rate exceeds 0.1 per cent. It is crucial to have a strategy in place to immediately handle complaints when they occur. One of the best ways to do this is by using feedback loops. Feedback loops provide a way to identify and remove subscribers who complain about email they receive via the “This is Junk/Spam” button. Subscribers can complain for a number of reasons at different points in the sales cycle. If complaints happen early in the subscriber relationship, it could be that they didn’t intend to sign up for your email program, or don’t remember doing so.
6
Avoid Blacklists
A blacklist is a list of domains and IP addresses reported to be known sources of spam. Retailers can land on a blacklist for many of the same reasons that cause damage to their reputation—spammy behaviour. To prevent your brand from landing on a blacklist: • Collect clean data. Avoid buying and renting email lists.
need to constantly monitor your list to identify
• Monitor and remove spam traps.
and remove any unknown users, spam traps,
• Remove any inactive subscribers who have not responded to a re-engagement
and inactive subscribers.
22 BUSINESSFRANCHISOR
campaign, as these have the potential to become recycled spam traps.
7
Take advantage of Whitelists
A whitelist is a list of senders that have proven themselves to employ best practices, and as a result, are rewarded with a few perks. The perks differ depending on the whitelist and the mailbox provider, but typically they include less stringent spam filtering and consequently higher inbox placement rates. In addition to whitelist services for specific mailbox providers, there are a few deliverability companies that offer a whitelist service that provides enhanced benefits across multiple mailbox providers. While senders with great sending reputations do see high inbox placement, whitelisting services help increase and protect inbox placement—particularly around crucial times like the holiday season. Return Path analyses the world’s largest collection of email data to show businesses how to stay connected to their audiences and strengthen their customer engagement. Our data solutions help analysts understand consumer behaviour and market trends. We help mailbox providers around the world deliver great user experiences and build trust in email by ensuring that wanted messages reach the inbox while spam doesn’t. +61 2 8188 8700 www.returnpath.com
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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
FC Business solutions
The new face of the Franchise Operations Manual FC Business solutions, an integrated consultancy firm that specialises in developing, growing and marketing franchise systems, is building franchise operations manuals on a new platform that has revolutionised the way franchisors communicate with their franchisees. One of the most appealing aspects of franchising is that it offers business
24 BUSINESSFRANCHISOR
opportunities to those who may have had little or no experience with the tools and resources needed to run a successful operation.
archaic model that is dense, daunting, inflexible, and often relegated to the filing cabinet before it is read.
The franchise system is, essentially, what the franchisor sells to its franchisees. It is a business in a box – a template that encompasses methods, processes, procedures, tools, forms, checklists, documents, and everything else necessary to have a successful business.
Jessie Caudry, Franchise Support Systems Specialist of FC Business Solutions, says that the printed Operations Manual is an outdated and ineffective model.
The system is the franchisee’s tool-box that underpins their business’ success, so its documentation is critical. Documentation takes the form of the Franchise Operations Manual, and every one of Australia’s nearly 1200 franchise systems should have one. However, not all operations manuals are created equal. Many are still based on an
“With so many emerging mobile systems, you can’t expect franchisees to carry hard copy manuals with them,” Jessie says. “Hard copy manuals are a waste of time and paper, and belong in a bygone era.” Many franchisors have, over time, neglected their documentation and processes. They create a system that works, document and distributes it to the franchisees as they join, and then forget about it. As the business evolves, the system is
With so many emerging mobile systems, you can’t expect franchisees to carry hard copy manuals with them... Hard copy manuals are a waste of time and paper, and belong in a bygone era.”
an encumbrance on the already-busy day of a franchisee.” OpDocs enables complete branding, so users see and feel the culture of the franchisor’s brand. There is nothing generic or OpDocsbranded. Version control means that whenever a policy or procedure is updated, a new version number is set, and a record is kept of the time and admin user that made the update. A notification of the new version is sent to all user groups that are marked as ‘mandatory’ on that policy. Each policy and procedure has its own permission controls that determine which users can and cannot access the policy, and who must read and understand each update. OpDocs is a cloud-based system, optimised for any device. This provides your whole company with 24/7 access to any policy or procedure to which they have been granted access, without the need for any IT infrastructure or resources. All content is accessible using a desktop computer, laptop, tablet, mobile decide or via your company’s private Operating Docs mobile app.
progressively developed and enhanced so, over time, version one of the system is now version five. Yet, while the system has grown and refined, the Franchise Operations Manual is still stuck at version one – the current processes are often not those that were documented in the first place. Franchisors are thus doing injustice to their franchisees, with manuals that do not contain up-to-date, relevant information, and are written in a way that does not resonate with the end user. As part of its service suite, FC Business Solutions builds operations manuals for franchisors. Over the past twelve months, they have begun to deliver them on a platform called Operating Docs (OpDocs), by Vortilla, with startling results. This platform is slick, modern and built specifically with franchise systems in mind. The platform grants access to all user groups within a franchise system – the franchisor, the franchisee, store managers, and employees. It is live and accessible by anyone who has permissions. “The OpDocs platform has entailed four years of constant development,” says Josh Cairns, Director of Vortilla. “Unlike many other systems, the goal from day one was to build a great system for managing manuals.”
The development came about when a government organisation wanted a platform that would educate staff whilst also managing the compliance aspect. Vortilla has received funding from government organisations and major retail groups within Australia to build a system that actually works. The result is a contemporary, user-friendly platform that enables video content, version control, permission management, compliance reporting, and induction. Importantly, OpDocs allows administrators to make updates and send notifications at any time. “OpDocs allows you to update one policy, and send notifications to everyone affected by that policy,” Josh says. “You can then see if they’ve clicked on the policy and acknowledged their understanding of the content, which allows for full transparency of compliance. With the compliance aspect of the system, there’s no going under the radar for staff or franchisees. “In the past, an operations manual would have been a Word document, which may have been more than 500 pages long,” says Josh. “To update one important policy – such as how to greet customers – you would have to edit and send out the entire document again. After it was sent, there was no way of knowing if your franchisees had read through the entire document to pick up on the changes. It was
The use of video is by far the most engaging way to educate and train staff to execute the important tasks and responsibilities that make your business great. “Forget the old notion of policies, procedures and best-practices being restricted to text, imagery and tables,” Josh says. “Clients use video within Operating Docs to demonstrate such procedures as how to greet customers, fold clothes, prepare food and more.” Compliance reporting is critical for any business that intends to build a consistent operating model, particularly those operating in regulated industries such as food preparation or construction. OpDocs makes it easy to get a real-time snapshot of your company’s current compliance position. You can even schedule an exported PDF version to be emailed to key people each day, week, or month. “OpDocs has left no stone unturned in the development of its platform,” Jessie says. “It has truly changed how franchisors communicate with franchisees, and franchisees with their staff, revolutionising the way they share information.” For further details or to arrange a demonstration contact FC Business Solutions on: 03 9533 0028 www.fcbs.com.au
BUSINESSFRANCHISOR 25
Filipe Barbosa
Innovation proven key to success for
Innovation is a vital element that provides a sustainable advantage for companies competing for a share of voice in a saturated market. To maintain competitive advantage, there is a need for businesses to constantly review service offerings and products and invest in innovation in order to maintain profits. With widespread appeal, the gelato market is dynamic and expanding. Gelatissimo is in a competitive environment where its ability to compete depends heavily on its ability to innovate. It is vital that the Gelatissimo team never get complacent and continually challenge themselves to stay fresh and relevant by bringing new and inspired creations to the table. The staff at Gelatissimo are continuously striving to push the boundaries and create inspiring and new gelato flavours. As new research confirms, it seems the teams dedication is paying off, with the brand holding its own in the fiercely competitive market with 17 per cent brand awareness, beating other leading brands. This strong indicator, that Gelatissimo is at the forefront of people’s
26 BUSINESSFRANCHISOR
minds, is also translating into increased growth and sales for the brand. Having just opened its 39th franchise this July as well as expanding into China, there are no signs of Gelatissimo slowing down anytime soon. Gelatissimo has seen a steady growth rate and predicts solid development into the future. This growth rate is attributed to the brand’s ongoing commitment to delivering innovation. To stay competitive, Gelatissimo prioritises innovation and supports research and development with an in-house team. The team comprises of a Master Gelato Maker and researchers who study up-and-coming food trends and also monitor cultural developments to reinvent each viable opportunity into the context of gelato. As the days of plain chocolate and vanilla are long gone, the research and
development team work tirelessly to create these dynamic products and flavours without ever compromising on taste. Most recently was the Doggie Gelato creation, which was an enormous success, and a perfect example of Gelatissimo pushing the boundaries in the quick service space. Armed with the knowledge that Australians love their dogs, Gelatissimo created a product that welcomed the whole family to take part in the cafĂŠ
experience. The design saw Gelatissimo feature in mainstream media such as The Living Room and Weekend Today, as well as local news around the country. Stores around the country sold out of the gelato within its first week of sale, highlighting just how a creative product can significantly capture the imagination (and appetite) of customers. Food trends come and go, yet Gelatissimo is nimble enough to create its own. The gelato doughnut is an example of this creative thinking that took the Gelatissimo brand name far and wide. Taking the classic ice cream sandwich and injecting it with new life, the gelato doughnut proved to be popular with customers and media alike. Media complimented Gelatissimo on the creation and it was a part of the news conversation for weeks. Something as simple as an ice cream sandwich was taken and turned on its head, to bring to life a dessert that is popular nationwide. The sheer popularity of the gelato doughnut is seen in the wide breadth of coverage received. Popular culture website, Buzzfeed, and food publication, Good Food, covered the doughnut, showing that innovation is the key to talking to a wide range of people. It is this innovation, coupled with Gelatissimo’s trusted artisan expertise that keeps people coming back time and time again. The
Filipe Barbosa has been in the hospitality industry for 25 years and has worked at all levels of the food service industry. Over the past 14 years Filipe has devoted his time to growing the Gelatissimo brand across a multitude of roles that have seen him manage various divisions of the business, leading to his appointment in 2013 as CEO, a role which he loves and strives to improve in everyday as a way of driving continued growth for the brand and its franchisees.
Gelatissimo brand is known for creating authentic gelato and service with a smile. These qualities are what sticks in the customers mind and what converts them into loyal customers. For Gelatissimo, it is a fine balance between tradition and being bold. In the Australian dessert market, locking yourself into tradition will likely see you perish so as a business, Gelatissimo must evolve whilst still remembering its roots. First and foremost, the focus is on serving fresh and authentic gelato. When people hear the word innovation, they instantly think of new products. Yet there are many ways businesses can be innovative. One in particular that Gelatissimo has focused on is distribution with a partnership with the notorious food delivery start-up, Deliveroo. The partnership has proved to be a success with Gelatissimo offering customers home delivery at selected stores across Australia. It is important for a business to evolve along with the trends within an industry. The food delivery market is booming and has developed into a premium offering, which now matches
Gelatissimo’s positioning. Fundamentally, this partnership was driven by listening and adhering to customer’s habits and desires. It provides choice and convenience. Customers demanding healthy and natural products is a trend that isn’t exclusive to the food industry. The team at Gelatissimo has acknowledged this by incorporating flavours that have significant health benefits such as Green Tea and low calorie options such as the Low Sugar Range which was launched in 2014 with each flavour containing maximum of 135 calories per serve. There are few industries that are as fast paced and constantly changing as the food industry. Brands must be flexible and adaptive to maintain a competitive advantage and survive. At the end of the day it’s survival of the fittest and innovation keeps brands fit. There are countless brands competing for a share of voice in a saturated market and to be heard, creativity and uniqueness are key. Gelatissimo’s continued growth and success is a prime example of innovation and creativity’s power for a business. Filipe Barbosa | CEO | Gelatissimo
It is this innovation, coupled with Gelatissimo’s trusted artisan expertise that keeps people coming back time and time again. The Gelatissimo brand is known for creating authentic gelato and service with a smile.”
BUSINESSFRANCHISOR 27
Franchising Expo
new venue, new features for Sydney Franchising Expo The Franchising & Business Opportunities Expo will kick off 2017 with the Sydney show on 25-26 March at the brand new ICC Sydney at Darling Harbour. Featuring a striking contemporary design, leading technology and multipurpose spaces, ICC Sydney is located in the heart of the city in the active precinct of Darling Harbour on Cockle Bay. “Next year the Expo is celebrating 30 years and the show will have a fresh new look with an advice centre and central seminar stage,” says Exhibition Manager Fiona Stacey. “Stand bookings are already well advanced, so I would advise exhibitors to not delay in contacting us to secure their preferred space at this stunning venue.” Stacey adds that the first one-day showcase held this year in Perth was very successful and the 2017 event is expected to sell out quickly. “We also offer a limited number of sponsorship opportunities at each show to really give your company high visibility.”
Franchising & Business Opportunities Expo 2017: Sydney: 25-26 March at International Convention Centre, Darling Harbour Perth: 7 May at Crown Perth Brisbane: 22-23 July at Brisbane Convention & Exhibition Centre, South Bank Melbourne: 26-27 August at Melbourne Exhibition Centre, South Wharf
28 BUSINESSFRANCHISOR
The recent Melbourne Franchising & Business Opportunities Expo held in August was a great success, with a record number of exhibitors and thousands of visitors thronging through the Melbourne Exhibition Centre. “Following very strong shows this year in Sydney and Brisbane, the Melbourne show was an outstanding success, in terms of both visitor and exhibitor numbers,” says Stacey. “It clearly shows the appeal of meeting face to face with the people behind the brands. Most importantly, our exhibitors are reporting good quality leads to follow up after the show, with qualified, investment-ready visitors.” Visitor Steve Caleo came all the way from Adelaide to meet with Jeff Rankin from Portermark at the Melbourne Franchising Expo. “There’s no doubt that meeting face to face is the best way to do business, that’s why I drove over from Adelaide to meet Jeff, and it’s been very worthwhile,” he says. “You want to know who you are dealing with,” Steve explains. “Investing in a business, you are taking a risk, so you want to be sure. I think the fact that Jeff is exhibiting here sets him apart from other businesses that you only find on the internet.” Jeff Rankin launched Portermark, his innovative beer line cleaning franchise, at the Sydney
Franchising Expo in March. Since then he’s expanded around Australia and most of his franchisees are people he met at the Expos in each state. “This is the best show I have done, I’ve sold seven franchises and have lots more good leads to follow up,” he said as he packed up his stand in Melbourne. “But it’s not just about selling franchises… what I really enjoy is the networking, you never know who you’ll meet!” For more information go to www.franchisingexpo.com.au. For information about exhibiting in the Franchising & Business Opportunities Expo contact Fiona Stacey on: 03 9999 5464 Fiona@specialisedevents.com.au
Bob Beaumont
Bob’s Business Beliefs
Bob Beaumont has been at the helm of Beaumont Tiles for 38 years. His philosophy of ‘don’t think big, think huge’ has resulted in a small South Australian business growing into a multi-million dollar enterprise with 108 stores across most of Australia. Bob oversees a company owned and franchised retail model. For him, business success takes drive, vision and risk taking, innovation, uniqueness and a dash of unconventionality.
Each week Beaumont Tiles
Getting people to love your product and getting it
challenges however we’ve been quick to take on
delivers nearly 100 shipping
into their homes and building projects across the
new opportunities and back ourselves.
containers of tiles, stone
nation takes a massive effort.
We had our own computer back in 1972, the size
A well-oiled international buying, marketing,
of a very large desk; for a small business to have
warehousing, distribution and retail model, and
a computer at all was unbelievable – it was about
the ability for all these elements to work together
around the globe - Europe,
equivalent to having a private jet! We also started
seamlessly, is crucial.
to advertise on TV in 1976 when no one else in
Asia, Asia Minor and the US.
Beaumont Tiles has faced and overcome many
the market was doing it.
and bathroom ware, much of which is sourced from
30 BUSINESSFRANCHISOR
Instilling a real ‘spirit’ in a business and building a ‘confident culture’ in an organisation so that brave decisions can be made is just as important as having the right systems and structures to support the life and product cycle of a business.” can be summed up in the four Ps: Passion to be the best, Professional attitude in all business dealings, respect for People (customers, staff and suppliers alike), and a love for the Product (or service) you’re selling. The four Ps are a guide to help people make good decisions, and are a great foundation to think through when operating a business.
PASSION Without passion, everything is a slog and feels like hard work. With passion, your interest and energy levels are high and you‘re naturally more resilient to the ‘hard yards’. Don’t think big, think huge. In 1992 Beaumont Tiles was nearly broke and struggling. I set a goal of a turnover of 100 million dollars by 2000. I was called all sorts of things – idiot, irresponsible and the only person that believed in me was my wife. Sure as eggs, in 2000, we made our $100 million turnover target. And it took passion to get there.
PROFESSIONALISM Instilling a real ‘spirit’ in a business and building a ‘confident culture’ in an organisation so that brave decisions can be made is just as important as having the right systems and structures to support the life and product cycle of a business. It’s these tangibles and intangibles that can be found in most successful businesses and they can be applied no matter what the business size or ownership model. They are elements
A golden rule is to do to others what you would want done to you. Don’t over promise; don’t say it’s going to be there tomorrow if it’s going to be the following day. Ethics should run through your veins – it truly is the lifeblood of a business. If you do the right thing, people will always want to deal you. You might lose business or money in the short term, but in the end, customers will support you and recommend you.
that hold equally true for a franchise.
PEOPLE
When you have your own business you need to
higher than strategies and structures – they
Let’s face it, people are a challenge. We’re all people, we’re all individuals, and we’re all challenging at some time or other. Now put that aside. In business, as in society, we need common goals, beliefs and shared values to operate effectively.
are a way of thinking, imagining and doing and
When Beaumont Tiles introduced a value
be prepared to work 80 hours a week because there are many areas that need your attention – it’s not just about selling a product or service. There are some important philosophies that sit
statement in the 1970s, we received a great deal of criticism because no one did things like that. Values help steer the ship – in fact they are your navigation. Values are never old fashioned, they can’t be replaced. There are of course a few values that change around the periphery – socially engineered into society today, but values are values. Creating loyalty, while challenging, is the most cost effective way of doing business if you get it right. I am not a proponent of staff churn. Loyal staff will easily go above and beyond and always act in the best interests of the business. There’s a tangible sense of spirit at Beaumont Tiles. There’s a culture, something special and people tend to stick around for a long time. I think it’s incredibly important to hold onto staff. Loyal customers will not only come back to you time and again (significantly cutting the cost of acquisition) but they’ll recommend your products and the experience they have with you to other people. The economics are simple.
PRODUCT Tiles are a fashion item and trends change all the time. What’s in fashion today maybe wasn’t fashionable two years ago. Beaumont Tiles has to be on the leading edge, not the bleeding edge of style. We’ve seen radical changes over the years and constant transitions. You can’t short change the public – it has to be good quality. As a business owner, you need to absolutely believe in your products and services. When I built my first house in the early 1970s and put tiles in the living area (as well as the bathroom), people thought I was nuts. I told them that I believed in my product. I still do. www.beaumont-tiles.com.au
BUSINESSFRANCHISOR 31
Peter Buckingham
What makes a good franchise executive? 32 BUSINESSFRANCHISOR
Peter Buckingham is the Managing Director of Spectrum Analysis Australia Pty Ltd, a Melbourne based Geodemographic and statistical consultancy. Peter is both a Certified Management Consultant (CMC) and a Certified Franchise Executive (CFE) – the only person in Australia with both!
well shoot the dog!” Whilst he was considered a real autocrat, as I now look back, I think I agree with what he would say to us. In my view a good manager is strategic and focuses more on managing their direct reports; letting them do their designated jobs. I become very frustrated when I see either
Five points I recognise in a poor manager:
1 2
Always saying they are overworked, too
Rarely answers the phone (always too
young managers trying to do too much, or older managers who have probably been over promoted; trying to do the day to day business, not the strategic work that is required of their role.
3
Contactable. Can be located by phone or email and will normally give some response. May not always be what you want to hear, but will give a decision, and
4
realistic timeframe – but handled.
2
Firm but fair. Will call a spade a spade (old saying). Will address an issue and give a reasonable response and not just avoid it
Many managers want to do everything. They think it is their job to oversee every
and leave issues unresolved.
3
As I am getting older, I am becoming more concerned by these trends which I see are partly due to technology improvements, and possibly staff reductions in many organisations. I feel organisations do not invest in training of managers, partly due to people changing jobs on a regular basis. I feel we see this in the quality of many managers who are probably over promoted due to their technical ability, and not because of their management skills.
person whose job is to handle the issue.
it.
and manage the person who has to resolve
4
Understands their role is about long term strategic issues (as well as the day to day stuff). Whether they assign a specific
the day to day operations.
time, or just make it their business to
What they don’t do is what
handle, a good manager is thinking in terms of the longer term of the business,
they are actually paid the the Business!
than worrying about their staff or the people whose lives they affect with their decisions. Usually thinking more about their next promotion than their current position.
recognised and has been passed onto the
manage all the executives,
big money for – Managing
Always trying to impress their boss rather
Summary
Good managers know where the issue lies
product, and handle all of
5
moving from one problem to the next, rather than fixing the cause of the problems (often themselves).
Delegates. Happy to hear the issue is
part of the business, microundertake the sale of every
and always telling you how this needs to be referred to other people in their department, other managers or a committee of no-bodies. They leave issues unanswered and seem to go around in circles.
No forward thinking. They are too busy
not over complicate the simple things. More complex issues are handled in a
busy), and even though you leave a message on their voicemail (which tells you that they will call back) – they never do.
Indecisive. Cannot make a decision
Five points I recognise in a good manager:
1
busy and how could the business run without them!
not the immediate crisis.
5
Plans. Has a vision for the company, or the part of the business they are responsible
An old boss of mine used to say “If you have a
for and are always trying to envisage the
dog and have to bark yourself…..you may as
big picture.
There are good managers and poor managers, and naturally they all think they are doing a great job, irrespective of how others see them. Maybe more 360 degree feedback analysis and other similar tools may give them a dose of reality. peterb@spectrumanalysis.com.au
BUSINESSFRANCHISOR 33
Robert Toth Robert Toth is a Partner of Marsh & Maher Lawyers, with over 30 years of experience in franchise law. He is an Accredited Business Law Specialist with expertise in franchising, licensing and distribution and franchise dispute resolution (acting for both international franchisors and franchisees).
Franchisee Recruitment:
The times - they are a changing Mature franchisors are finding it more difficult to recruit quality franchisees and newly established franchisors are finding it hard to attract the right new franchisee.�
34 BUSINESSFRANCHISOR
The market has changed and the franchisee’s expectations have also changed as to what they expect a franchise system to deliver.”
Franchising recruitment has changed considerably over the last five years. The days of consultants offering franchisee selection services, which were not highly successful, don’t work now. Mature franchisors are finding it more difficult to recruit quality franchisees and newly established franchisors are finding it hard to attract the right new franchisee.
So where do you find your prospective franchisee?
attention including marketing collateral, it can be an effective way to gain brand exposure and interest, but there is no one magical solution so it may be a combination of all the above.
1) Your existing customer that loves the brand and services that you offer;
3) Your website and social media use such as Facebook, Twitter and LinkedIn, all avenues to market and promote the brand. Contacting editors of journals and magazines (like Joanne!), and getting advertorial content is also useful in announcing your new business brand and opportunities in the market. As they say, if you don’t sing your own praises, no one else will.
A mobile franchise client recently attended the Specialised Events Melbourne Franchising Expo and received 13 leads from which he secured two prospective franchisees. Although attending franchising expos is costly and involves time and
It takes time to properly develop and establish a franchise system. Cutting corners will land franchisors in hot water with the ACCC for failure to comply with the Franchise Code and possible litigation. A recent case last week published by the ACCC highlighted the need for franchisors to ensure they give full and honest disclosure. You cannot contract out of the 14 day disclosure period so if you have potential franchisees interested they need to be patient and wait until you are ready and fully compliant!
2) Don’t aim too high!
The 80/20 rule applies - that is – 80 per cent of your time will otherwise be spent on the wrong franchisee, leaving 20 per cent of your valuable time to support the rest.
4) Franchise entry costs is your offer attractive and competitive in the market?
Franchisees can now readily compare new systems and offers without leaving their home or office.
The trend is to reduce franchise fees not increase them.
The market has changed and the franchisee’s expectations have also changed as to what they expect a franchise system to deliver. Franchisors should be mindful of their obligations of disclosure. The recent commentary by Dr Michael Schaper in the recent ACCC proceedings against Morild Pty Ltd
The days of rolling out 12 franchises in quick succession are gone.
Focus on rolling out 2 or 3 franchises in a controlled and supportive way to ensure your first franchisors are successful, happy and financial. They are your best marketing tool.
where he said, “People who decide to
Slow and steady is the message.
disclosure by the franchisor.”
Franchise Expos There are a number of franchise and business expos these days (some might say way too many so choose wisely!)
on.
Here are some tips:
1) Don’t rush!
If you feel at the outset they are not right for the organisation then don’t take them
How to secure long-term successful franchisees
They may be right before your very eyes:
2) Your existing manager and/or staff, who enjoy working in the business; and
(Pastacups) and their former director need to be borne in the mind of all franchisors buy into a franchise system often put their savings on the line and, in doing so, should be able to make informed business decisions on the basis of full and accurate
3) Choose your franchisee carefully!
03 9604 9400
www.marshmaher.com.au
The applicant who has the money may not be the right franchisee, so don’t take their money.
rxt@marshmaher.com.au
BUSINESSFRANCHISOR 35
Raynia Theodore
EXCLUSIVE FRANCHISE TERRITORIES – DO THEY EXIST? Many franchise networks
Exclusive Territory
that every business owner must assume.
promote that their
It is quite common to see franchise agreements where the franchisor agrees not to establish a competing business or allow another franchisee to establish a competing business within a defined territory.
National franchisors with some clout with shopping centre landlords may be able to negotiate a restraint that prevents a landlord from granting leases of nearby premises to competitive brands, but this is rare.
This is often a good selling point for a franchisor because a franchisee will be attracted by the fact that he or she will have the franchise brand to themselves within their territory.
Whilst it is common to see franchise agreements containing exclusive territories, it is equally common to see these territories narrowly defined. For example, in a retailing context, the territory might be limited to a strip retail shopping precinct or a particular section or level of a shopping centre.
networks offer franchisees “designated or exclusive territories�. An unsuspecting prospective franchisee who has their heart and mind set on being their own boss and buying a franchise may neglect to fully appreciate the difference between an exclusive and non-exclusive territory and that the existence of a territory does not necessarily provide the degree of competitive protection that they were hoping for. In this article we explore the different types of franchise territory provisions contained in franchise agreements.
36 BUSINESSFRANCHISOR
It is important to note that this does not necessarily mean that the franchisee will have no competition! I do not know of any franchise network that has no competitors and, whilst a franchisor may promise not to compete with a franchisee within its territory or allow another franchisee to do so, the franchisor cannot prevent a competitive brand opening business nearby, even next door! This is a normal risk
Some franchise agreements limit the territory to the site at which the franchised business is located. Whilst there is nothing legally wrong with these types of agreements, they can easily mislead an unwary franchisee. Generally, a franchisor will not want to limit
MST Lawyers has over 25 years’ experience in franchising, representing clients throughout Australia and internationally in a variety of industries. Written by Raynia Theodore, Principal, in the Corporate Advisory and Franchising Team at MST Lawyers.
in many franchised territories. Usually, in such a case, a franchisor would not permit such advertising, unless the other franchisees within the territory agree to be part of the campaign. Marketing restrictions usually also prohibit franchisees from maintaining their own website and social media sites.
Non-Exclusive Territory A non-exclusive territory is one where other franchisees or the franchisor may conduct business within the franchised territory. Some of the service-based franchise systems will allocate a territory to a franchisee and when allocating work (usually coming through a call centre) will give the franchisee in the territory where the work is to be performed a first right to the work. If the franchisee is too busy or is unable to perform the work within the territory, the franchisor is permitted to allocate the work to another franchisee.
its opportunity to sell franchises by making territories too large. Despite this, some franchisors are happy to do so, but protect themselves with provisions allowing them to split or reduce the territory if the franchisee is not meeting pre-determined performance criteria. Franchisees faced with these types of territorial provisions must consider the location of their likely customer base and factor into their assessment of the franchise the impact on sales of another franchise opening just outside the territorial boundary (just as they should consider other competitive factors such as a rival brand opening within the territory).
Service-based franchise systems also often contain provisions whereby the customer’s wishes are honoured. For example, a customer may use a particular franchisee for its garden maintenance and form a good relationship with a particular franchisee. The customer may move to outside the territory but insist that the same franchisee maintain their garden. Rather than losing the customer, the franchise agreement may allow the franchisee to continue to service the customer even though that customer is in another franchisee’s territory. Where a franchisee is granted a non-exclusive territory he or she will usually be permitted to work outside the territory, within the rules and guidelines contained in the franchise agreement and/or the Operations Manual. In addition, such franchisees will usually not be restricted in performing work in areas which are not the subject of existing franchises.
Exclusive territory provisions also often restrict
Territorial Encroachment
the ability of a franchisee to market outside
Territorial encroachment arises where the territorial rights of a particular franchisee are infringed by a neighbouring franchisee working or conducting business within the territory of
the territory. This sometimes causes problems where a franchisee might want to place an advertisement in a publication that circulates
the first mentioned franchisee. This causes anger and discontent within the network and usually a huge headache for the franchisor. Some franchise agreements define territories by reference to municipal boundaries or postcodes. When the municipal boundaries or postcodes change the territory will change and this may mean a franchisee can no longer service some customers. The internet also does not sit well with territorial provisions. The ‘world wide web’ is truly worldwide, meaning that a franchisor or any franchisee could theoretically market to the whole world through the internet. How would a franchisee with an exclusive territory feel if another franchisee or even the franchisor was effectively competing through internet sales? Many franchise agreements now reserve the right of the franchisor to sell via the internet. Prospective franchisees should consider these clauses carefully and try and incorporate into their franchise agreement some form of benefit to them arising from internet sales by the franchisor or other franchisees in their exclusive territory. Franchisees should also bear in mind that unless the franchise agreement reserves this right to the franchisor, it will be breaching the exclusive territorial rights of franchisees by selling goods or services online or allowing other franchisees to do so in the exclusive territories of those franchisees. Franchise agreements may contain other provisions that water down a franchisee’s exclusive territory. For example, a franchisor may be allowed to sell the products available in the franchised business from non-branded retail outlets in a franchisee’s exclusive territory (e.g. supermarkets). A franchisor may also be permitted under the franchise agreement to operate or allow other franchisees to operate mobile or temporary franchises inside a franchisee’s exclusive territory (e.g. at sporting events). It is critical that franchisees obtain legal advice in relation to the territory provisions so that
BUSINESSFRANCHISOR 37
they understand what rights are provided to them and what exceptions there are to any exclusivity offered. The Franchising Code of Conduct (‘the Code’) requires franchisors to give a prospective franchisee a ‘Disclosure Document’ in a prescribed form and the franchise agreement in the form in which it is to be executed by a franchisee at least 14 days before the franchisee enters into a franchise agreement or pays any non-refundable money. Although the legal position in respect of a territory is ultimately governed by the terms of the franchise agreement, the Code requires franchisors to disclose in their Disclosure Document certain information about territories in order to assist franchisees to better understand their rights. The information required to be disclosed is as follows: 1. Whether the franchise is for an ‘exclusive’ or ‘non-exclusive’ territory or whether the franchise is limited to a particular site. 2. Whether, within the territory the subject of the proposed franchise agreement: (a) other franchisees may own or operate a business that is substantially the same as the franchised business; (b) the franchisor or an associate of the franchisor may own or operate a business that is substantially the same as the franchised business; (c) the franchisor or an associate of the franchisor may establish other franchises
38 BUSINESSFRANCHISOR
that are substantially the same as the franchised business; (d) the franchisee may operate a business that is substantially the same as the franchised business outside the territory of the franchise; (e) the franchisor may change the territory or site of the franchise. 3. The policy of the franchisor or an associate of the franchisor, for the selection of the territory in which the franchised business is to operate. 4. Details of whether the territory (or site) to be franchised has, in the previous 10 years, been subject to a franchised business operated by a previous franchise granted by the franchisor and, if so, details of the franchised business, including circumstances in which the previous franchisee ceased to operate. 5. Details of whether the franchisee, the franchisor or an associate of the franchisor or other franchisees may make goods or services available online. It is evident from the above disclosure obligations that regulators of the franchise sector see prior disclosure of matters pertaining to territories as critical.
Conclusion When assessing a franchise network (in particular the price the franchisee is paying), there are many factors that a prospective franchisee must consider to determine whether they will be getting value for money.
One key factor is the territorial protections, if any. Even if an exclusive territory is granted, franchisees should not place much value on this, because this does not prevent all competition. Franchisees must initially carefully read the franchisor’s Disclosure Document, particularly Items 9 and 13, however, the Disclosure Document does not define the relationship with the franchisor - the franchise agreement does. Franchisees must therefore: • read the franchise agreement carefully; • determine whether territorial protection is essential for the business venture and be prepared to walk away if it is essential and the franchise network does not offer adequate protection; • look at the territorial boundaries and be satisfied that they are accurately defined, so there can be no argument in the future; • understand what territorial restrictions are imposed on the franchisee (for example, marketing outside the territory); • understand what forms of encroachment might be reserved to the franchisor (for example, internet sales or an ability to split the territory or re-define boundaries). Territorial protection is the ultimate protection from competition. Clearly if a business concept is a successful concept, others will copy and this cannot be legally prevented, however, in a franchise network it is important to understand what competition will come from within the network itself. www.mst.com.au
mark hoppe
Franchisors should heed the
warnings of increasing bankruptcies 40 BUSINESSFRANCHISOR
The Australian economy is facing headwinds in 2016 and 2017 following the decline in commodity prices. Local bankruptcies are expected to rise by
Mark Hoppe joined Atradius in Sydney in 2006 as the Head of Client Service, which saw him responsible for all the day to day client and broker issues. Mark was appointed as Managing Director for Atradius Australia and New Zealand in August 2014, with more than 17 years’ experience in the insurance industry under his belt.
eight per cent, according to Atradius forecasting, so it makes good business sense to look for ways to reduce risk exposure to let the company trade confidently.1 Australian franchisors must start implementing strategies to avoid being another bankruptcy statistic. After a sharp increase in Australian business insolvencies between 2008 and 2009, and a steady, historically-high level between 2010 and 2013, insolvencies decreased by almost 20 per cent in 2014.² However, thanks to the commodities slump and the situation in China, business insolvencies are estimated to have increased again during 2015 by up to 10 per cent, according to Atradius research.³ This rising insolvency trend appears to be continuing. From January to May this year, there were 3,634 insolvencies according to ASIC data.4 It’s no surprise that the mining, oil and gas, and construction industries make up the majority of businesses facing increasing insolvency rates. The mining sector has been experiencing difficulty for some time thanks to the slowdown in China putting pressure on the insolvency landscape, and the continuing slump in the commodities market.
Speaking to an expert is a great way to further understand business risks, and how to protect your products and profit.” Between January and May this year, the metals, mining and steel industry saw 167 insolvencies. The construction industry was the hardest hit by insolvencies during the same time period, with 625 insolvencies recorded in Australia.5 However, start-ups and small businesses are also feeling the pinch. SMEs with assets under $100, 000 make up 85 per cent of collapses in this category.6
countries before you invest in exporting can create huge problems.
Insolvencies are being felt across Australia. In Q3 FY15/16, a total of 658 NSW businesses entered into external administration. This was followed by 594 Victorian businesses, 444 Queensland businesses, 102 in South Australia, and 241 in Western Australia.7 These statistics highlight the need for businesses to actively implement a risk-management plan. This includes thoroughly researching the potential customer and supplier, and the market it operates in, before signing a deal.
For more information contact:
Speaking to an expert is a great way to further understand business risks, and how to protect your products and profit. For example, not fully understanding the impact of import duties on the market value of your product in various
Franchisors need to recognise that, with the increase in bankruptcies putting pressure on the entire market, they need to protect themselves. With a clear idea of the potential risks, businesses can begin to plan to minimise their exposure.
02 9201 5222 info.au@atradius.com www.atradius.com.au 1
Atradius, Insolvency Forecasts August 2016
2
Atradius, Country Report Australia 2016
3
Insolvency Forecasts: Atradius Economic Research; Atradius; February 2015
4
http://asic.gov.au/regulatory-resources/find-a-document/statistics/ insolvency-statistics/insolvency-statistics-series-1a-companiesentering-external-administration-by-industry/.
5
ASIC insolvency data, 2016 - http://asic.gov.au/regulatoryresources/find-a-document/statistics/insolvency-statistics/ insolvency-statistics-series-1a-companies-entering-externaladministration-by-industry/
6
http://asic.gov.au/about-asic/media-centre/find-a-mediarelease/2015-releases/15-337mr-asic-reports-on-corporateinsolvencies-2014-15/
7
http://download.asic.gov.au/media/3928291/asic-insolvencystatistics-series-1-july-2016.pdf
BUSINESSFRANCHISOR 41
consultant close-up
Close-up with
Grant Garraway Grant Garraway is a 30 plus year veteran of the franchise sector, with around 15 years spent working with major franchisors and over 16 years owning and operating a franchise consultancy – The Franchise Shop. The Franchise Shop works with both new and established franchisors to help them for their franchise owner recruitment campaigns, and develops small and medium businesses into franchises. CGB Publishing recently caught up with Grant to delve more into his background and The Franchise Shop.
What are your qualifications? Grant is a post Graduate qualified accountant but asks you not to hold that against him! “Accounting training makes you conservative, and I think that is a strong trait in a franchise consultant,” Grant said.
What is your franchise experience? “I got into franchising over 30 years ago almost by mistake. I got a job as a Financial Controller with Dial a Dinos Pizza, not even knowing it was a small rapidly growing State master franchise. Over the next 2 and a half years the network
42 BUSINESSFRANCHISOR
grew to over 100 shops, the Victorian master franchise I worked for bought 50 per cent off the Franchisor, dominated several states and sold to Pizza Hut. But it was a wild ride for an undercapitalised company that nearly went broke a couple of times during that period before selling for many millions of dollars goodwill alone. “There were no consultants, magazines, or franchise specialist websites to help in those days. Just turn up each day, establish what went wrong in the shops the night before, and then fix it. But a great but hard way to learn about franchising!” He then became Financial Controller and Company Secretary for US owned car repair franchise Midas when a mid-life crisis struck and he transferred into the franchise operations area at the same company and has worked in that space ever since. “Midas could not have been more different to Dino’s,” Grant said. “They had over 3,500 franchises worldwide, had been trading for around 40 years, and had policies for everything, great experience, and were outstanding teachers of their systems and managers and motivators from a great International Head Office team in Chicago. It proved an equally good learning experience; a wonderful seven years or so.” Grant then became General Manager (Franchising) for a 200 plus store retail network spread from South Africa, to Australia, New Zealand and Fiji. “We totally restructured franchising operations to make it more responsive to our franchise owners’ needs. We grouped all the people who dealt with franchise owners, whether in accounting, property, store construction, warehousing and distribution or franchise relations and put them all together so they could work as a team to ensure maximum co-ordination of our efforts to support our franchise owners. It was revolutionary at the time.” Grant moved then into consulting and has worked with more than 50 small to large franchisors. His firm The Franchise Shop has turned over 30 brands into franchises, sold over 300 individual franchises, and more recently six Master franchises including the just completed
Not all wisdom flows from the franchisor to the franchise owner, much flows the other way!” master Franchise sale for Australia for the Canadian based Fibrenew brand, and before that a master franchise for the UK’s Time for You cleaning franchise into Australia. Having also sold masters for UK and USA brands into Australia as well as Australian brands into Asia, “it is an area of work I really enjoy,” said Grant.
from them. Which ones are critical to their future success. This is an idea noted franchise consultant Greg Nathan introduced me to over 25 years ago, when I was at Midas, and I have been working on it and refining it since. If you can get new franchisors to focus on this area their success rates will improve dramatically.”
What do you look for if a business comes to you about becoming a franchisor?
The biggest change in franchise owner recruitment in your time?
“We look to see what makes them different. I have said many times I do not want to be the consultant who develops Australia’s 27th franchise pizza shop chain. You need a point of difference, a great product or service niche, hopefully difficult for competitors to imitate, ideally a product or service which is purchased regularly so the franchise is rewarded by establishing brand loyalty, and strong potential profit for both the franchisor and the franchise owners.”
“The death of newspapers! Even 20 years ago The Age would have 2 - 3 broadsheet pages of ads every Saturday. - now there are none! The rise of magazines, and their associated websites has been a game changer.”
Can you give us an example? “Sure, two of our most recent clients meet these criteria easily. Prestige Australian Financial Services can offer Bookkeeping, Accounting, Tax and financial products under one roof – so a franchise owner gets a client and can work with them to offer a range of services and therefore sales over time. Another client DrugSafe Communities offers drug and alcohol testing to employers, and this is done regularly for their staff and contractors. Decent margins, high barriers to entry due to the qualifications needed by the franchisor, and repeat business. Both meet our basic conditions to become a franchisor.” When asked what the key is to good franchise owner selection Grant said it is all about knowing who you want to be your franchise owners. “Know what attributes you want
We understand The Franchise Shop is also a franchisor? “Yes,” said Grant. “We started that many years ago now when Jane Lombard purchased the NSW/ACT franchise, and I think both Jane and I would call that deal a success. It has helped me understand the emotional reactions a new franchisor goes through much better as I have experienced them as well. Jane brought great selling skills from her two real estate franchises, and that has helped The Franchise Shop get better in that area as well. Not all wisdom flows from the franchisor to the franchise owner, much flows the other way!”
What is the next trend? “I have a view that medical services will be a new frontier, and personal services are not fully done yet either.” Grant Garraway | Director The Franchise Shop 1300 139 557 | MOB +61 (0) 408 129 035 grant@thefranchiseshop.com.au www.thefranchiseshop.com.au
BUSINESSFRANCHISOR 43
Melissa Penn
7 Things
You Can Do Today
To Become A Better Manager When you’re the manager of a business, you may think it’s your job to run
isn’t about numbers, or money, or task delegation, it’s about people. Unless you’re a solo operator, your business
1
Don’t raise yourself above others
Unfortunately, on occasion, managers let their
relies on others for its ongoing success. The
the show. In a roundabout
positions of increased power go to their heads.
most successful businesses are those that have
While it’s true that, as a manager, you will be
way, that may be true, but
satisfied employees. In turn, the best way to
taking on more responsibility, and you may
it’s certainly not the full
have satisfied employees is to actively include
become more integral to the organisation, this
them in the success of your business.
does not make you more important than people
To help you be the best manager you can
in other positions. Every position in a given
picture. The best manager doesn’t run the business; they organise others to run the business for them. When it comes down to it, management
44 BUSINESSFRANCHISOR
be, here are seven tips that will make your
business is important. If it wasn’t, it would
management position enjoyable, effective, and
become redundant.
exceptional.
Every person in your organisation, from the
cleaner to the CEO, is a valuable human, that has been employed to fulfil a specific task. A great manager will see the integral worth of every business position, and will treat each position equally. If you treat all employees with the same amount of respect, you will see increased personal satisfaction in all areas of your business.
2
Melissa Penn is the National Franchise General Manager at First Class Capital, one of Australia’s most progressive lenders, and supporters of small business. She has more than 20 years’ experience in management, media, and marketing roles, as well as extensive experience as a creative entrepreneur. Taking great pride in helping others succeed, Melissa is motivated to share her extensive knowledge on all aspects of business, management, and personal growth.
Listen to everyone
As a manager, you are not expected to know how to do every job in your organisation. An intelligent manager employs people who have expertise and training in a specific field, and utilises the inherent skills of each person, to fulfil specific tasks. As a manager, it is important to listen to the opinions of employees in every position. Their life skills and previous experience may give them insights that can increase productivity for your company.
nature of any organisation means that people who work for you will always come up against new challenges. They will then require your expertise in order to discover the best way forward. A great manager will never make their staff feel rushed, or less important than other tasks, and will make time to assist their staff in all relevant business processes.
organisation. If you frequently assign tasks that
It is also important to actively listen when your employees are dissatisfied with aspects of their position. If you are seen by employees as taking a proactive role in improving their working life, you will gain both respect for yourself, and loyalty for your company.
4
ways to get the most out of your staff. You
Delegation is key to the role of an effective manager. However, there is the potential for delegation to be approached poorly, which will result in decreased performance, and disgruntled workers. It is important in delegating tasks to mold the role to the employee, and not the reverse. By offering tasks that utilise an employee’s existing strengths, you will not only increase efficiency, but will give your employees a sense of responsibility and importance within your
3
Be generous with your time
As a manager, one of your key responsibilities is to be available to your team. The malleable
Delegate intelligently
your staff are unfamiliar or uncomfortable with, though, you not only run the risk of a decrease in productivity, but can also foster self doubt and dissatisfaction among your employees.
5
Lead by example Leading by example is one of the best
don’t need to do every job, but if you show that you are working just as hard as the people you’re managing, you will be more likely to garner their respect. It is even more important to lead by example when it comes to attitude. If you show negativity towards your workplace, employers, policies, and staff, all of the people who look to you for guidance will feel it too. Even if you feel these things, consider the greater good of your company, and keep your team’s spirits up.
BUSINESSFRANCHISOR 45
6
Be transparent
You will get much more out of your staff if you tell them why they are performing particular tasks, than if you just ordered them to perform those tasks with no explanation. Trust in the intelligence of the people that work for you, and treat them as equals when it comes to project information. If possible, let them know budgets, timeframes, and results of meetings, as this will allow them to be much more invested in their jobs. Further this by giving your staff ownership and accountability over their jobs. You will find that people will often rise to the challenge, if they feel that the things they are doing are of importance to the overall company or project.
7
Recognise a job well done
All too often, staff are only approached by management to be informed of their failings, as it is assumed that doing a good job is just part of the job. While that may be true, the
46 BUSINESSFRANCHISOR
Leading by example is one of the best ways to get the most out of your staff... if you show that you are working just as hard as the people you’re managing you will be more likely to garner their respect.� acknowledgement of excellence will motivate your staff much better than reprimands and negativity. It is a very small thing for a manager to take a minute to offer words of encouragement and appreciation, but it will make a world of difference to your staff. Financial incentives are also an amazing motivator, and if you are in a position to offer this, it will serve to improve staff morale if it is given when deserved. It is the recognition, though, more so than the money, that will continue to elicit quality performance from your employees.
The most important thing to remember, as a manager, is that your management style should not be one fixed thing. Your management styles should reflect the personalities and responsibilities of your employees, and should be tailored individually to fit each one. By being an adaptable manager, you will achieve greater success for yourself, your team, and your business. Find out more at: www.firstclasscapital.com.au
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Griffith University
Survey shows
franchising on the rise
in Australia Despite a relatively flat economy and retail environment, Australia’s franchise sector continues to grow in total sales turnover and employment and its franchisors are confident of further growth in the next 12 months. 48 BUSINESSFRANCHISOR
According to the biennial survey of franchising in Australia, the total annual sales revenue for the country’s entire franchise sector is estimated at $146 billion, up from $144 billion in the previous survey in 2014.
Franchising Excellence and supported by the
The total number of people directly employed in business format franchising in Australia also continues to rise now reaching 472,000 permanent, part-time and casual employees, up from 461,000 two years ago.
has been updated every two years since.
These are some of the key findings of the Franchising Australia 2016 survey, undertaken by Griffith University’s Asia-Pacific Centre for
Franchise Council of Australia. This year’s survey marks the 10th instalment of this definitive benchmarking study of Australian franchising. The survey dates back to 1998 and The headline findings of the Franchising Australia 2016 survey were released at this year’s Franchise Council of Australia National Franchise Convention in Canberra. The full report will be available in January 2017. Mr Bruce Billson, Executive Chairman of the
franchising is a robust, vibrant and exciting part of the economy, accounting for approximately 4 percent of all small businesses in Australia.
Franchise Council of Australia, said franchising is a robust, vibrant and exciting part of the economy, accounting for approximately 4 percent of all small businesses in Australia. He said the survey results show Australia’s franchising sector has continued to perform strongly, against the backdrop of relatively slow economic growth. “The Franchising Australia 2016 survey points to a maturing sector, holding its own in a transitioning economy following the end of the mining boom,” he said. “Total sales turnover for the sector has risen slightly, while employment has steadily risen and created more permanent full-time jobs. Franchisors are also predicting growth in franchise numbers over the next 12 months.”
“Franchise brands have continued to merge and consolidate to remain sustainable and to grow,” she said. “Whilst the number of brands has declined, individual franchise systems have grown internally with modest increases in the number of franchise units.” The 2016 survey shows a total of 79,000 units operating in business format franchises in Australia. Whilst the number of franchised units has slightly increased and company-owned units decreased, there has been no net overall change in the number of franchise units since the 2014 survey.
According to the Franchising Australia 2016 survey, there are now an estimated total of 1,120 franchise brands operating in Australia, compared with 1,160 in the 2014 survey.
The retail (non-food) industry dominates the Australian franchising sector, with 26 percent of brands operating in this segment. Behind this, 19 per cent of franchise brands are found in accommodation and food services, 15 percent in administration and support services, and 10 percent in other services such as personal services, automotive repairs and IT.
Professor Lorelle Frazer, Director of Griffith University’s Asia-Pacific Centre for Franchising Excellence, said this gradual reduction in franchise systems is expected as the sector continues to mature.
Professor Frazer said the franchising sector continues to be impacted by intense competition in retailing, particularly non-food retailing. “Food retailing has been more resilient with consumers responding well to variety
and innovation in food concepts,” she said. “However, we can expect to see plenty more turbulence in the retail sector moving forward.” A real positive for the Australian franchising sector is its employment growth, which has been on a steady rise since 2012. Significantly, the proportion of people employed on a permanent, full time basis has increased, suggesting a more optimistic outlook ahead.
Headline Findings of the 2016 Franchising Australia survey: * $146 billion in total sales revenue * 1,120 franchise brands * 79,000 business units * 472,000 people employed The Executive Summary of the 2016 Franchising Australia survey is available here: https://www.griffith.edu.au/ franchise/home/research/franchiseaustralia/?a=916486
BUSINESSFRANCHISOR 49
topfire media
Three Questions to Ask Yourself About Your Franchise Recruiting Website Matthew Jonas, President of TopFire Media, an award-winning integrated public relations and digital marketing agency specialising in franchise marketing and consumer branding. TopFire Media was established to provide a strategic and synchronised method for digital marketing in the franchise industry. Matthew has built a career dedicated to delivering an integrated marketing approach that achieves client success and long-term relationships.
Are you getting good site
agony of a basketball miss is not unlike the
traffic but not enough
feeling you get as a franchise brand when you
leads? It’s time to do a quick
producing no leads. It leaves you wondering
self-audit and figure out what you could be doing better.
see your website getting plenty of traffic, but what you should have done differently to achieve the results for which you hoped. Sure, you might have the most beautifully designed, aesthetically pleasing website, but if
If you ever played basketball growing up, you
you have few or no franchise leads to show for
know that feeling of building anticipation while
it, what is it worth?
taking practice penalty shots at the hoop. I
All too often, franchisors forget to put
bet you also remember (even if you hate to admit it!) the disappointment you felt when you instead missed and dejectedly head to the bench.
themselves in the shoes of a potential franchisee. From a franchisee’s point of view, your website is an indicator of whether your concept is something worth buying into. The
Let’s shift this analogy to your franchise’s digital
site should be organised and informative, and
marketing tools, specifically your website. The
effectively convey what your company and
50 BUSINESSFRANCHISOR
opportunity are all about. The key is to design a website that requires franchisees to use as little energy as possible to develop interest, navigate pages, and request more information. Think about user experience, and about what, ultimately, you want users to do.
Ask yourself these three questions when evaluating your website:
1
What kind of first impression are you making? You have 30 seconds — or less — to make a good first impression with any website visitor. When a potential franchisee first visits your site, ask yourself: “Is it easy for them to get the
franchising is a robust, vibrant and exciting part of the economy, accounting for approximately 4 percent of all small businesses in Australia.
Make sure you have succinct copy, compelling images and visible callsto-action so that users grasp your central theme, and know how to take the next step.”
main idea?” Make sure you have succinct copy, compelling images and visible calls-to-action so that users grasp your central theme, and know how to take the next step.
2
Does the messaging hit home?
First, you need a message that speaks directly to your target audience. Maybe your content presentation is too consumer-focused, and therefore confusing or misleading to franchise prospects. Or, maybe once prospects start reading, they decide it’s not worth their time. How do you even know if people are connecting with what you’re saying? A good place to start is by digging into your website’s analytics. If you see warning signs such as high bounce rates or users spending one minute or less on your website, chances are, your message isn’t hitting home for many folks. Plus, if your website conversion rate is low — in the 1 per cent to 2 per cent range — you really need to do a deep dive into your message. If it is not effectively targeting your intended audience (franchisee prospects), both you and your website visitors are going to be wasting time.
3
Do franchisees have functional next steps?
Are you providing franchisees with accessible information or easy-to-complete forms? If you make navigation or form-filling too complex, potential franchisees likely will get frustrated and move on to another website or concept. You need to lay out your website in a logical and clear manner that gives franchise prospects a precise path to their final destination — your inquiry form. Once there, best practices include enticing users with a free “report” or “digital brochure,” something tangible they can take away with them after you’ve captured their information. After considering these tips, it’s time to step back onto the court and take aim. As a
franchisor, you must make it as easy as possible for franchise prospects to decide yours is a company worth investing in. And, remember that website development is a continuous process, and your site should never be a static marketing vehicle. It may take regular attempts to refine and update your website’s appeal, to continue to attract quality leads. The key is to keep your head up and stay focused. The very nature of franchising means that you won’t always be able to have a perfect ‘shot’ average with franchise candidates. But in the words of basketball great Michael Jordan, “Some people want it to happen, some wish it would happen, others make it happen.” www.topfiremedia.com
BUSINESSFRANCHISOR 51
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BENGA DESIGNS
Benga Designs Signage Services include; • Servicing Australia-wide • Custom Manufacture • Supply and Installation • Project Management • Rollouts State & Nationwide Benga Designs is a proud member of ASOFIA, ASGA, BAA and FCA. Contact – Danny Sinclair 07 33526972 danny@bengadesigns.com.au www.bengadesigns.com.au
Established in 2003, Benga Designs is a major supplier to the national franchise & retail Shopfitting industries. Benga specialise in the manufacture & installation of custom made signage including but not limited to; 3D illuminated signage, neon & LED signage, plastic fabrication, internal and external signs, shopping centre signage, large format graphics & vehicle wraps. Their success is directly attributed to Benga’s refined project management skills, where upfront planning, communication and liaising with clients and shopfitters are paramount. Benga ensure every job is delivered on time and on budget.
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FC business solutions
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With services including documentation standards; marketing, communications and PR; action based training; executive recruitment; system development; business operations and HR solutions, FC Business Solutions have the team and resources to assist you in all aspects of your franchise business.
Franchising & Business Opportunities Expo
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The team are actively involved members of the Franchise Council of Australia (FCA), regularly attending events, participating in committees and ensuring their skills and knowledge remain cutting edge and current. With a solid reputation based on relationships and results and a dedication to raising the profile of franchising in Australia, FC Business Solutions stand by their motto of “We help businesses grow”. For more information contact: 03 9533 0028 www.fcbs.com.au
Council of Australia and has been delivering great results since 1987. The show runs annually in Sydney (March), Perth (May), Brisbane (July) and Melbourne (August). For further information please contact Fiona Stacey on tel 03 9999 5464, email fiona@specialisedevents.com.au or visit our website www.franchisingexpo.com.au.
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National Franchise Insurance Brokers NFIB meets the Australian demand for a dedicated online provider of insurance cover for franchisees, franchisors and franchised businesses. Our service is fully automated, compliant and
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provides you with full documentation. Put simply, NFIB is the fastest, most affordable way to get the most appropriate level of cover you need to protect your business. For more information call 1800 776 747, email info@mynfib.com.au or visit www.mynfib.com.au.
JEJAK GRAPHICS
a lasting impression
CREATIVE DESIGN SOLUTIONS
LEAVING A LASTING IMPRESSION Jejak Graphics is a freelance graphic design business based in Melbourne, Australia working with clients worldwide. With over 18 years experience in the design and print industry specialising in magazine layout and advert design as well as offering a number of other graphic design services and print solutions including: t "EWFSU %FTJHO t $PSQPSBUF TUBUJPOFSZ t #SPDIVSFT BOE nZFST t 1PTUFS BOE CBOOFS EFTJHO t &EVDBUJPOBM NBOVBMT t 4QPSUT QSPHSBNT t .POUIMZ /FXTMFUUFST t 1SPEVDU MBCFMT BOE QBDLBHJOH Artwork is tailored to your brand and focused on your message and target BVEJFODF /P KPC JT UPP CJH PS TNBMM $POUBDU NF UPEBZ UP EJTDVTT IPX +FKBL (SBQIJDT DBO NBLF ZPVS DPNQBOZ or organisation leave ‘a lasting impression’.
P: 03 5977 8804 M: 04222 676 39 E: jejak@bigpond.com www.jejakgraphics.com.au
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