AUS & NZ Business Franchisor Mar - Jun 2017

Australian & new zealand

Franchisor B u s i n e s s

VOL 05 ISSUE 03, 2017

See Uluru in a new light

franchising in 2017

attracting great franchisees BUSINESSFRANCHISOR 1

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Australian & new zealand BUSINESS FRANCHISOR VOLUME 5 ISSUE 3 CGB Publishing Pty Ltd TEL: 03 9787 8077 (AUS) FAX: 03 9787 8499 (AUS)

Franchisor B u s i n e s s

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 PUBLISHER’S ASSISTANT: Jorgia Rice

from the

Editor Griffith University’s Asia-Pacific Centre for Franchising Excellence has now released the full copy of the Franchising Australia 2016 report and whilst iT shows the reduction of franchise brands operating from 1160 to 1120, it also shows that individual brands have grown in numbers during a slow period of economic growth.

This edition of Business Franchisor is packed with advice from experts across the franchising

PRODUCTION: production@cgbpublishing.com.au ACCOUNTS: Renee Gould accounts@cgbpublishing.com.au GRAPHIC DESIGN: Jejak Graphics (03) 5977 8804 jejak@bigpond.com ON THE COVER: AYERS ROCK RESORT

industry.

On page 10, David Barzilay from Outfit explains the six ‘Dos and Don’ts’ to take your franchise brand to the next level, and on page 20, 2014 FCA Franchising Hall of Fame inductee Greg Nathan details the ‘Six steps to be taken for an effective field visit.’

Our cover showcases one of Australia’s best-known landmarks, Uluru, where nearby the monumental art installation Field of Light was unveiled in April 2016. Having received worldwide acclaim since its unveiling, it has been extended for another season. The brainchild of internationally acclaimed artist Bruce Munro, Field of Light’s 50,000 glass spheres bloom as darkness falls over the spiritual heart of Australia.

The nearby Ayers Rock Resort can cater for conferences – small or large - with state-of-theart facilities and a range of unique dining and touring options

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As always, there’s all this and much more, we hope you enjoy the read.

PLEASE CONTACT

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CGB PUBLISHING

Editor

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SUPPLIER FORUM

The information and contents in this publication are believed by the publisher to be true, correct and accurate but no independent investigation has been undertaken. Accordingly the publisher does not represent or warrant that the information and contents are true, correct or accurate and recommends that each reader seek appropriate professional advice, guidance and direction before acting or relying on all information contained herein. Opinions expressed in the articles contained in this publication are not necessarily those of the publisher. The publication is sold subject to the terms and conditions that it shall not be copied in whole or part, resold, hired out, without the express permission of the publisher.

Franchisor B u s i ness

8

volume 5, issue 3, 2017

10

CONTENTS

14

On the Cover

ALSO IN THIS ISSUE

6

Cover Story: See Uluru in a New Light

IFC The Energy Alliance

Ayers Rock Resort

18 Franchising in 2017:

Attracting Great Franchisees

4

News items:

Announcements from the industry

13 National Franchise Insurance Brokers

Gavin Culmsee, Bedshed

36 A-Z Directory IBC Jejak Designs OBC Franchising Expo

26 2 BUSINESSFRANCHISOR

18

18

20

24

26

30

Expert Advice 8

Making A Difference in Australian Franchising Franchise Council of Australia

10 Six ‘Dos and Don’ts’ to Take your

Franchise Brand to the Next Level David Barzilay, Outfit

14 The Changing Role of the CFO as

an Innovator and Strategist Matthew Goss, Concur

26 Explaining the Voluntary Administration

Process

Professor Lorelle Frazer, Asia-Pacific Centre for Franchising Excellence

30 What’s Hot and What’s Not in

Franchising 2017

Robert Toth, Marsh & Maher Lawyers

32 How to Franchise Your Business Simply

Brian Keen, Franchise Simply

20 The Six Steps of an Effective Field Visit

Greg Nathan, Franchise Relationships Institute

24 AGM Wash-up: A Perfect Time to

Review Shareholder Unrest Ralph Martin, RSM

32 BUSINESSFRANCHISOR 3

business franchisor

NEWSitems FORTY WINKS APPOINTS NEW CEO

Bedroom retail specialist Forty Winks has announced the appointment of its new Chief Executive Officer (CEO), David Edwards.

Edwards was appointed following an extensive search process - the role had been vacant since the former CEO, Con Dekazos, who served as the CEO of Forty Winks for two years, left the business in August 2016.

Bringing with him more than 30 years’ experience in retail, Edwards first held General Management roles at Myer across both buying and operations.

He later joined The Laminex Group, initially serving four years as General Manager of Sales and Marketing, followed by a further two years as General Manager of Operations. During this time, Laminex was acquired by Fletcher Building, providing Edwards with the opportunity to move to New Zealand where he served three years as CEO of Fletcher Distribution, which trades under the PlaceMakers brand: the country’s leading hardware retailer.

Returning to Australia, Edwards joined Mitre 10/Metcash, where he served as General Manager of Retail Trade and Sales, General Manager of Joint Ventures and Alliances and eventually as General Manager of Strategy Building Products. It was here that he also served on several of the most influential Mitre 10 Joint Venture Boards, where he developed a real passion for independent retail.

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They have also launched three best-selling books on business, won major culture and fast growth awards and raised more than $500,000 for charities around the globe.

Key Person of Influence is a 5-step method to becoming one of the most visible, valuable and connected people in your industry by Dent Global cofounder Daniel Priestley.

“I’m delighted to have the opportunity to lead Australia’s iconic bedroom retail specialist, Forty Winks. Independent business owners are the backbone of Australian retail, so I look forward to working closely with our dedicated franchisees across the country to achieve continued growth and success,” said David Edwards.

It turns out your ability to succeed in your business depends primarily on your ability to influence those around you. Many people think it takes decades of hard work, academic qualifications and a generous measure of good luck to become a Key Person of Influence, but Priestley offers proven strategies and tips for fast-tracking your way to the inner circle of your industry, refined from working with 2000+ entrepreneurs globally.

The announcement follows recent news of Forty Winks expanding its retail footprint, with three new stores opening in Victoria (Springvale), New South Wales (Marsden Park) and Queensland (Mackay).

Dent Global is offering a physical copy of the book FREE to readers when they go to: http://keypersonofinfluence.com.au/aff.php?p=a4514&w=partr.

The book is valued at $19.95.

4 BUSINESSFRANCHISOR

CELEBRATIONS ALL ROUND

New CEO Peter Lipinski, Fastway Couriers

New CEO to drive online international retail growth for Fastway Couriers Fastway Couriers Australia is set to deliver even more to the parcel delivery sector and the country’s $21.4 billion¹ online marketplace, with the appointment of Peter Lipinski as the new Chief Executive Officer (CEO). Peter’s new role sees the introduction of a wide range of innovative technologies and operational enhancements, including the development of ‘Fastway International’, which is expected to launch in mid-2017.

Peter Lipinski, new CEO of Fastway Couriers Australia said he will utilise his vast experience in parcel delivery operations, customer relationship management, strategic business planning, and managing a franchise network to realise the company’s vision to grow and offer customers even more than ever.

“I’m delighted to continue at Fastway Couriers Australia in my new role as CEO. We’re passionate about what we can offer our customers and have access to some of the best technology available, making 2017 an extremely exciting time for all of us. Over the past five to seven years, we’ve developed a strong reputation for being the parcel delivery provider of choice for online retailers, which has enabled us to expand and develop an impressive client base. Now, with greater technology behind us, the sky is the limit.”

Prior to his promotion to CEO, Peter spent more than six years with Fastway Couriers Australia with his most recent role as Chief Operating Officer (COO), working closely with his predecessor Richard Thame to grow the business. As a result, Peter brings: a wealth of knowledge on the business and the parcel delivery sector; a unique perspective on technology innovation; and the ability to provide a smooth transition to this change of role.

Peter’s predecessor, Richard, has been appointed to Regional Director of Aramex across Australia and New Zealand. Aramex, which purchased Fastway Couriers in January 2016, is a leading global provider of comprehensive logistics and transport, operating in over 60 countries. ¹NAB Online Retail Sales Index: November 2016

Accountancy franchise celebrates successful first year TaxAssist Accountants celebrated the end of its first successful calendar year in Australia with a special open day in Sydney. Karl Sandall, CEO of the TaxAssist Group, flew in from the UK to join Master Franchisee Terry Murphy, his Support Centre team and franchisees to mark the network’s first milestone.

The event was hosted by franchisee Colin Lua in his Sydney shop – the newest addition to the network.

Since the launch of TaxAssist Accountants’ Australian network in March 2016, Terry and his team have recruited three franchisees, including opening two shops and the conversion of Terry’s existing four offices to TaxAssist Accountants.

Cirillo’s First Franchise is a Perfect Match After almost four decades as the ACT’s only one stop shop for builders, homeowners and renovators, Cirillo Lighting and Ceramics (Cirillo) has sold its first franchise.

After comparing Cirillo to other franchise opportunities, the Moharami family will open a Sydney showroom after deciding it was the strongest business model. The family was also drawn to the design of Cirillo’s Italian products.

Managing Director, Joe Cirillo, identified franchising as the logical way to expand the third-generation family business in 2013, and has spent nearly three years refining the franchise offering.

CORE 9 Celebrates First Perth Franchise CORE 9, one of the most highly recognised and disruptive workouts in Australia, has announced the launch of its first franchise in Perth and a national expansion, as it looks set to dominate the fitness industry for the coming year.

“We believe that one of the reasons we will grow so quickly is our personal touch and unique proposition,” said Craig. “Despite our growth, we endeavour to make sure each and every instructor we have understands this vital part of the business. Fitness enthusiasts know that whatever the location, they’re going to receive the same dedication. We’ve translated this ethos into our franchise model too and worked hard to create a product and systems that set both members and franchisees up for success.”

BUSINESSFRANCHISOR 5

COVER STORY

See Uluru in a new light

Having received worldwide acclaim since its unveiling in April 2016, Field of Light, the monumental art installation near Uluru has been extended for another season, until 31 March 2018.

In addition, delegates can enjoy a host of unique

Advanced audio-visual equipment is seamlessly

activities at Ayers Rock Resort, from Indigenous

integrated throughout.

The brainchild of internationally acclaimed artist Bruce Munro, Field of Light’s 50,000 glass spheres bloom as darkness falls over the spiritual heart of Australia.

touring options. The conference complex itself

Adding extra sparkle to any event, Field of Light offers a range of options for delegates to immerse themselves in the artwork – from a sunrise experience to an exclusive bush tuckerinspired dinner under the stars, just footsteps from the exhibition.

6 BUSINESSFRANCHISOR

cultural experiences to guided tours to discover the captivating cultural landscape of Uluru -Kata Tjuta National Park.

Ayers Rock Resort’s conference centre, the Uluru Meeting Place includes state-of-the- art facilities and a range of unique dining and

With easy access from all east coast capital cities, Ayers Rock Resort encompasses a diverse offering of accommodation, from 5-star Sails in the Desert through to the authentic 3.5-star Outback Pioneer Hotel, ensuring all conference markets are accommodated.

includes two main conference spaces which

Outside the Resort’s four hotels lies a collection

can host 306 delegates and 420 delegates

of resort and community style facilities that

respectively with theatre style seating.

add depth to a delegate’s overall conference

The rooms can be sub-divided with acoustically

experience.

rated walls, or opened up to become one common space for exhibitions or trade shows.

For more information contact:

A light-filled pre-function area adds more

T: 02 8296 8067

flexibility to the complex while an outdoor

E: conferences@voyages.com.au

amphitheatre can host up to 350 guests.

W: www.ulurumeetingplace.com.au

BUSINESSFRANCHISOR 7

FCA

MAKING A DIFFERENCE IN AUSTRALIAN FRANCHISING It’s been a dynamic start for the new year at the Franchise Council of Australia, with exciting new initiatives and a continuation of successful endeavours that we are proud to provide for our members.

If you’re interested in knowing more about what we offer and how to be a member and join the great community that we strive to protect, educate and promote, then please contact our head office in Melbourne. Members of the Franchise Council of Australia (FCA) are part of a unique association where business lessons, experience and information are shared freely.

Membership means solidarity: As an FCA member you belong to an association where your peers work together for the betterment of the sector, a common method of doing

8 BUSINESSFRANCHISOR

business, not a common business itself. If you’d like to make an impact on the small business sector supporting Australian local communities, please feel free to contact us.

very fortunate to have an active Chair who

Here’s an update on what the FCA is doing for the franchising sector so far.

In the new year we will be stalking the halls

ADVOCACY One of our main responsibilities is to educate the Government, and all sector stakeholders, on issues of relevance to the sector. When the FCA represents franchising, we represent all people within the sector – franchisors, franchisees and suppliers – to ensure the Australian franchise sector is a healthy and sustainable place to do business.

We are fortunate to have access to a dedicated group of members who have formed numerous working groups and in particular, the Legal Committee which has been active in supporting the FCA advocacy efforts. A big thank you to those members on the Legal Committee and subsequent sub committees. We are also

knows politics well and who has been working the phones over the last few months quietly advocating on behalf of the members. of Parliament House and knocking on doors to ensure that the FCA position is well understood with respect to any proposed changes to the Fair Work Act. We had over 47 delegates attending the International Franchise Association convention from 29 Jan to 1 Feb in Las Vegas. We had an overwhelming response of how great the convention was and how valuable the sessions and networking opportunities were. If you have yet to go to the biggest franchise event in the world, we highly advise you go next year with the FCA! As an FCA member, you’ll get great discounts on the convention tickets and other exclusive inclusions especially for the Australian delegation.

We would like to congratulate David Lindsay,

founder of Salts of the Earth who came 2nd in the International NextGen competition. To be Runner Up against all the upcoming franchises in the world is an experience he won’t forget easily.

Royal Pines Resort because members said that

David Lindsay founded Salts of the Earth in 2010 after seeing first-hand the effects salt therapy had on his father oversees, a longterm sufferer of chronic respiratory illnesses.

“My father tried dozens of medications and unsuccessful surgeries to clear his airways,” Lindsay said. “He did salt therapy as a last resort, and it played a huge role in improving his health and even made his medication more effective.”

released!

Lindsay saw a gap in the Australian market, and knew there would be thousands of people with respiratory and skin conditions, or in need of sports recovery, who could benefit from ongoing treatment.

Salts of the Earth is now Australia’s fifth largest fastest growing franchise, and Lindsay said being part of the NextGen competition has been a huge asset for the company.

“The competition has provided great exposure for our brand, and an opportunity to showcase our company to some of the largest franchisors in the world,” Lindsay said.

“Our concept and business model are both unique, and we’re fortunate to be the first to market in Australia for salt therapy. We’ve already had some international interest, so our next goal will be to enter the US market.”

NFC17

was such a great venue.

Look out for more about the NFC 2017 on our website in the coming months and make sure you purchase your Earlybird ticket when they’re

EXCELLENCE IN FRANCHISING AWARDS The Regional awards program has been released and entries are now open and we

CFE post nominal professional development designation.

We want to make it even better, and we are working with a small group of educational supplier members to ensure that CFE candidates can get a better picture of the training and learning expectations that coincide with CFE point’s allocation. This is a work in progress and we expect to be able to provide you with more information in the coming months.

encourage you to enter!

CHIEF EXECUTIVE SYNDICATE

These awards and the awards process have

The CES creates additional value for our senior executives and larger members who want to remain connected to other industry leaders in franchising.

proven to be a huge benefit in raising brand awareness, creating opportunities and improving your business as part of the awards process.

If you have a franchisee or eligible member of staff that has gone above and beyond, then why not help them and nominate them for the recognition they deserve?

STATE EVENTS Our State Chapter teams are working through a great line up of events for all our members and the calendar is now available.

We know that one of our strengths is the capacity to share knowledge and experiences with others. This generous spirit, encouragement and energy that accompanies it, is the real value of the events program.

In 2017 I encourage you to engage with the members, share experiences with that generous mindset and look at the effect and

We have started planning for our own National Franchise Convention in 2017 and we have now established an advisory group of franchisor and supplier members to assist us create a program that is relevant, topical and focused on the areas of interest to the sector.

impact that you can have, helping others to

We are aiming to make the NFC in 2017 the best yet and we are returning to the Gold Coast

regard by the IFA who are responsible for the

learn, grow and be successful.

CERTIFIED FRANCHISE EXECUTIVE PROGRAM The Australian CFE program is held in high international accreditation and awarding of the

The CES groups in NSW and VIC are now well established with regular monthly meetings and some real dividends are being seen as a result of senior executives sharing information, knowledge and experiences in an environment that is free of competitive tension and under the umbrella of confidentiality.

With these two groups now successfully established, we are now working on the delivery of a Brisbane CES and we look forward to welcoming Brisbane members to a new CES in 2017.

Of course, there is more going on as we work to ensure we are member focused and deliver real value.

In 2017 this is the standard we want to set ourselves and as our members we would appreciate you celebrating with us when we excel and letting us know when we fall short.

Our intention is to make a difference to franchising in Australia by serving our members well.

On behalf of everyone at FCA, we look forward to a great 2017 for franchising. www.franchise.org.au

BUSINESSFRANCHISOR 9

David Barzilay

Six ‘dos and don’ts’ to take your franchise brand to the next level McDonald’s, Boost Juice and Bakers Delight immediately call to mind the products, prices, and people you can expect at these franchises.

McDonald’s means cheap and cheerful. Boost Juice means high-energy health.

Bakers Delight means freshly baked bread.

10 BUSINESSFRANCHISOR

These top franchise brands represent the same values for their customers through consistent branding and customer experience. This is no small feat: delivering a consistent brand experience for your franchise across many countries, to hundreds or thousands of stores and for millions of consumers is even more complicated by the billions of brand impressions consumers now have of your franchise on the internet.

they become instantly known and recognised.

With consistent branding customers will know exactly what their next experience with your brand is going to be like – whichever individual franchise they make contact with. In fact, a recent Nielsen study found that “nearly 6/10 global respondents (59 per cent) prefer to buy new products from brands that are familiar to them”. People flock to brands that they recognise, know and trust.

However, one of the big advantages for franchisees joining a franchise network is that

But achieving consistency is not an easy quest, for head office and franchisees

David Barzilay has more than twenty years of professional experience across digital and traditional marketing. He has worked in different regions and with organisations of varied sizes – from small enterprises to Global Fortune 500 companies.

process of aligning what you want people to think about your company with what people actually think about it. Every possible interaction your franchise has with its customers is part of your brand: your logo, slogan, service quality, Facebook page, product, price, marketing materials – you get the picture.

When you maintain clarity and consistency around these emotional (such as your slogan) and functional (e.g. your price point) brand elements in a way that cuts through to your customers’ needs and desires, your franchise as a whole will become that much stronger. My tip: start to think about your franchise brand as everything that connects your company to your consumer, as well as your franchise network, and you’ll be well on your way to start managing each of these elements to your best advantage.

alike. The increase in the number of digital marketing channels represents the challenge of maintaining brand consistency over a variety of online platforms. As Australia’s franchise sector matures (new Griffith University research shows a decrease in the number of franchises since 2014, but promising growth within the franchises that remain), branding emerges as a powerful way to make sure your franchise continues to grow and prosper among established competitors.

As marketing director of Outfit, a brand automation platform used by brands such as The University of Sydney, Health World and 12 Round Fitness to strengthen their brands, I’d like to share six ‘dos and don’ts’ to help you take charge of your franchise brand this year.

1

DO: get familiar with branding basics.

It may seem obvious, but I’ve discovered that while the majority of franchisees understand branding is an extremely powerful tool in any franchisor’s toolkit, many are less sure of how branding actually works. My definition of branding is a simple one: branding is the

2

DON’T: underestimate the importance (and difficulty) of maintaining brand consistency.

Achieving consistency at every point of contact between your franchise and your customers is crucial to building a strong brand and a loyal following. Easier said than done though right? One of the major headaches franchise marketers tell me about is wrestling with their design teams, multiple external agencies and their franchise network to keep tabs on how their brand guidelines are being followed.

The challenge becomes harder to manage with the rise of digital media such as blogs, social networks and websites. While they represent a big marketing opportunity for franchises, they have also opened up a can of worms. Take just one platform as an example – Facebook.

If you decide to say yes to having a franchise Facebook page, you take on the challenge of trying to manage as many Facebook pages as you have franchise locations.

Many say that your brand is how people describe you when you’re not in the room, so try asking some of your trusted colleagues,

customers and other stakeholders to draw your logo and write down your slogan. If you asked five people and have five very different looking logos and slogans you may have a branding awareness or consistency issue. If this is the case, a strong positioning statement and brand guidelines will help you take charge of how your franchise network and customers talk about you when you’re not there.

3

DO: stick to a strong brand position.

What does your franchise offer that no one else does? Boost Juice founder Janine Allis had a revelation about brand positioning during a trip to the US in 1999. She noticed their juice and smoothie market was booming, and that there weren’t many juice bars in Australia. She came back to start Boost Juice in 2000 with a brand positioned as “healthy and fresh”. It worked: Boost is now in 17 countries with more than 350 stores.

What is your franchise’s brand position? How do your customers describe your franchise? How do you want them to describe your franchise?

Grab a piece of paper and write down a quick brand positioning statement for your key target audience using the template below.

Your franchise positioning statement: For (your target audience) who wants / needs (what is the problem they are trying to solve), (your brand) is a (brand category/vertical) that provides (your key benefit). Unlike (your main competitor/s), (your brand) (your unique selling proposition/key differentiator).

Example: For health-conscious mums who want to know their kids’ lunch is pesticide-free, Healthy Tummies is a packaged food brand that provides organic children’s lunches. Unlike Nestle and Uncle Tobys, Healthy Tummies is 100% organic and just for kids.

Your new franchise positioning statement will be a useful tool to ensure you stay true to your brand, like Boost Juice has over many years.

BUSINESSFRANCHISOR 11

4

DON’T: forget about brand guidelines.

Your franchise brand guidelines are there to help your teams contribute to your brand consistency when they produce digital or print marketing material. If you and your franchisees all know your brand guidelines like the back of your hand, that’s great.

If not, here’s a short list of what to include in your brand book: • approved logo styles and placement instructions • photography style description • colour palette • fonts, font sizes, colours and heading style • in-situation examples of what to do, and what not to do • brand tone and positioning statement • instructions for sign-off, printing and display.

Your brand guidelines should be revised regularly – at least every two years. If any aspect of your brand is updated or changed, this should be reflected in your brand guidelines and shared with your teams. Brand automation software such as Outfit can save you a lot of time when you’re rolling out a new brand or updating your guidelines by synchronising your marketing materials across head office and the entire franchise network. It manages your brand guidelines for you, so you don’t need to worry about stretched logos, incorrect fonts or wacky colours.

5

DO: automate repetitive design tasks.

Shop signage, flyers, banners, profile photos, background images, social media posts, website images, digital ads... Part of branding

12 BUSINESSFRANCHISOR

in the digital age means you and your staff can automate tasks such as resizing existing assets to fit in different online and offline media, creating new assets from scratch, and collaborating on multiple rounds of design changes.

When you have your brand guidelines set, brand automation software works by locking in how you want your franchise brand to look in every possible online and offline scenario to avoid the brand inconsistencies that pop up when working across internal teams, external agencies, contractors and franchisees.

This helps your marketing staff and franchisees quickly create marketing materials that always comply with your brand guidelines, as they don’t need to manually check every piece for consistency.

6

DON’T: be a branding bore for your franchisees.

Finally, I’ve observed the delicate balancing act between franchisors, who are tasked with managing the overarching franchise brand and local marketing efforts, and their franchisees, who are trying to drive local business themselves.

You may have (or you may be!) what some call a ‘rogue franchisee’ – the owners within your network who start taking their local marketing into their own hands without head office’s knowledge. Unfortunately, it only takes one poorly designed or inappropriate advertisement or a negative interaction on social media from a ‘rogue franchisee’ to damage a carefully built franchise brand.

Of course, your franchises don’t have to be an absolute clone of each other. For example, they can each sponsor a local sporting team, promote local deals and content on social

The increase in the number of digital marketing channels represents the challenge of maintaining brand consistency over a variety of online platforms.” media or organise an event in their community, while you have the peace of mind that your brand is consistent across the entire network.

It’s all about staying fresh, unique and true to your brand positioning.

Turn these enthusiastic franchisee marketers into opportunities – you can partner with them on local marketing activities, while also doing what you can to keep the brand consistent.

Brand automation platforms can also be an empowering tool for franchisees, who can churn out marketing materials for their local initiatives that will always be perfectly on brand.

You will spend less of your time battling with one-time ‘rogue franchisees’ and more time actually collaborating with them. And once you get them working with you to generate cut-through local content and collateral, it’s one less design job that you need to deliver from head office! Importantly, this is also a way to make sure your entire franchise network is on-board with your plans to strengthen the franchise brand.

With these branding ‘dos and dont’s’, your franchise should be well on the way to achieving a strong, consistent brand, and some of the loyal customer following and growth that followed good branding for McDonald’s, Boost Juice and Bakers Delight.

The Outfit platform solved brand consistency and scaled marketing production for a global technology company across 85 offices in 35 countries.

Now we’re solving these challenges for franchises like yours. Request a demo at: http://outfit.io/

Matthew Goss

The changing role of the CFO as an innovator and strategist The role of the CFO has changed dramatically in the past few years and is likely to continue to do so.

With that change has come a significant increase in scope and responsibility.

The changes to the CFO’s role include a greater

According to Forbes, three-quarters of CEOs from

financial approach and mindset throughout the

high-performing companies believe the CFO’s

organisation to help other parts of the business

role will grow in importance more than any other

perform better2).

C-suite role1. Furthermore, there is an emerging

This broader scope puts more pressure on CFOs

trend that more CFOs are stepping up to the role

to understand every aspect of the business much

of CEO.

more. For example, most organisations are, to

14 BUSINESSFRANCHISOR

focus on strategy and whole-of-business leadership. According to Deloitte, CFOs are being asked to play four diverse roles: steward (preserving the assets of the organisation by minimising risk and getting the books right); operator (running a tight operation that’s efficient and effective); strategist (helping to shape overall strategy and direction); and catalyst (instilling a

some extent, sales-driven so it’s essential for the CFO to understand the sales process, including target markets, internal systems and processes, and barriers to success. Only with this granular understanding can CFOs act as a partner in finding solutions to propel the sales function forward.

To enable CFOs to manage all the additional responsibilities which come with the new scope of their role, they need to free up some time.

They can only do this if they can automate certain repetitive or mechanical tasks, which will then leave them with more time to focus on strategic goals.

Undoubtedly, the technology with the biggest impact for CFOs to date is the cloud. The new

consumption-based payment models alone have altered the way CFOs look at IT budgets.

Add to this the breadth and functionality of apps available more easily via the cloud, and it becomes clear that cloud services are a game changer for CFOs. Cloud-based systems that make it easier to manage and automate financial operations are exceptionally attractive to CFOs looking to add more value to the business. Because these systems are automated, they remove many of the barriers to compliance; users have no choice but to comply in order to receive expense reimbursements, for example.

Matthew Goss is the ANZ Managing Director at Concur. Matthew is a management executive with extensive experience in establishing and managing operations for cloud-based technology companies.

can successfully adapt to and adopt emerging technology can gain greater business insight and more efficient financial management.

These systems can also help reduce the risk of fraud by setting up policies and rules that can’t be circumvented. When integrated on a single platform, these tools provide a whole new dimension of data, which can be easily analysed to show spend patterns and potentially fraudulent activity faster, enabling CFOs to take action earlier.

CFOs are also now required to put considerable

CFOs are looking for ways to forecast cash flow accurately, improve working capital, gain deeper visibility into finances, integrate data into systems that are easy to use and intuitive, analyse data, and, most importantly, improve productivity. Advancements in technology is allowing them to achieve these goals. CFOs that

environment is the ability to find information, as

effort into staying on top of IT-related issues and manage risk for the organisation. To do so effectively, they need to embrace systems with automation and compliance features.

One of the essential skills that CFOs must demonstrate in this changing business opposed to data. They then need to be able to understand and present the information in ways that help the business make smarter decisions, faster. This focus on information is an evolution from the CFO’s traditional focus on accounting, control, and compliance.

They also face the challenge of connecting technology and bringing people along for the journey. They need to find ways to bridge the inevitable skills gap, whether that includes building in-house capabilities or strategically outsourcing to IT providers that can deliver help desk and administration functionality.

The finance team is usually the technology guinea pig, rolling out new systems and applications before the rest of the business.

This puts an onus on the CFO to understand and deploy solutions while leaving no room for error.

By automating other aspects of the IT function CFOs can take a more hands-on approach to this aspect of the business.

Different pathways to the role of CFO will contribute to a further evolution of the role itself. Smart CFOs will leverage existing and

BUSINESSFRANCHISOR 15

emerging technologies to automate as much of the accounting and compliance process as possible, freeing them up to focus on strategy and innovation.

This makes sense, given the changing nature of business, where technology is becoming integral to all aspects of operations. Successful CFOs will therefore make it a priority to put skilled team members in place to maximise the value of technology investments while focusing on risk minimisation and corporate growth.

The CFO’s role, and the world in which they must execute this role, will continue to change and evolve. CFOs are unlikely to go back to being simple number-crunchers. Instead, their sphere of influence will continue to expand and, consequently, they will need to demonstrate a new set of skills and capabilities.

To remain relevant, today’s CFOs must understand the drivers of change as well as how to remain relevant in the changing world.

16 BUSINESSFRANCHISOR

CFOs are looking for ways to forecast cash flow accurately, improve working capital, gain deeper visibility into finances, integrate data into systems that are easy to use and intuitive, analyse data, and, most importantly, improve productivity.”

Tomorrow’s CFOs are likely to have a vastly different background and experience to today’s CFOs, having in common only the ability to work with big data and analytics, and to solve problems creatively.

CFOs should make it a priority to know every aspect of the business so they can be a useful partner in solving business challenges. They should stay well-informed regarding emerging technology, and be ready to adopt solutions

that align with business goals. They can only do this if they are free from manual, time-intensive accounting tasks.

02 9113 7358 www.concur.com.au http://www.forbes.com/sites/forbesinsights/2015/01/05/ the-future-of-the-cfo/#40fff5973cdf

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http://www2.deloitte.com/us/en/pages/finance/articles/ gx-cfo-role-responsibilities-organization-steward-operatorcatalyst-strategist.html

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Gavin Culmsee

Franchising in 2017 attracting great franchisees

Earlier this month, Griffith University released its full Franchising Australia report to the market.

The statistics in the report made interesting reading for any franchisor, and overall tells a positive story for franchising, and particularly

Gavin Culmsee is the General Manager of Bedshed, a national bedding and bedroom furniture specialist.

With more than 30 years’ franchising experience, Bedshed has a long history of satisfied customers and successful franchisees. Bedshed is a trusted member of the peak body for Australian franchising, the Franchise Council of Australia.

retail; despite the flat economic environment Australia’s operated in over the last 12 months.

The report found that more than 470,000 people are employed in business format franchises, and that the retail industry dominates the sector, with 26 per cent of brands operating in this segment.

18 BUSINESSFRANCHISOR

While this is good news for the industry and attractive for prospective franchisees; the report did highlight a fall in franchise brands from 2014-2016. This means those considering a franchise may be looking to be selective with the franchisor they chose to join.

Franchisors therefore need to ensure they are doing the right things to attract the best candidates to join their franchise and see them into a prosperous 2017. These are the three things that franchisors need to get right

Franchisors must be astute to new opportunities in the market and be prepared to adjust their growth strategies accordingly.”

Know and communicate your USP Like it or not, prospective franchisees have a choice as to what brand to join. How are you going to entice them to yours?

Do you have a very collaborative process? Do you not require any input from franchisees?

Are there benefits (such as overseas travel) involved in joining? Be clear on who you are and what you’re offering. For example, at Bedshed we strive to differentiate ourselves by fostering an open, two-way healthy relationship between the Bedshed Central Office and our franchisees.

We ensure our franchisees are always aligned with the network and encourage them to get involved in decision-making processes as much as they wish.

The second thing is to think about if and how you are communicating that message. Is it clear in your advertising and communications?

If it is, you’re more likely to get more informed prospective franchisees through the door, who know what your brand is about and want to be part of the team.

Know your competition

Flexible growth strategy

and into the future. Franchises that do not

Franchisors must be astute to new

evolve and offer online sales will in all likelihood

opportunities in the market and be prepared to

be left behind. Consistent with this trend,

adjust their growth strategies accordingly.

Bedshed has been rolling out its own ‘click and

For sales based industries, online commerce is

collect’ model with astonishing success.

an obvious example of this opportunity. It’s no

This also translates to offline improvements –

secret that rapid technological advancements

as a franchisor, are continual improvements to

and disruption are a fact of life in contemporary

your customer experience part of your growth

commerce. In order to stay relevant and

strategy? At Bedshed, this is something we are

competitive in the market, it’s essential that

constantly striving to champion. For example,

franchisors are keeping abreast of the latest

we recently implemented an industry leading

technology and trends.

store fitout (we call it our evolution fitout)

The Franchising Australia report shows a third

which has been immediately effective in

of businesses engage in online sales, which I

engaging and captivating the imagination of our

expect will increase over the next 12 months

customers while in-store.

Industry knowledge is incredibly important to the successful franchisor. Though it’s important to have a USP, having blinkers on to the competition is a fast track to failure. Make sure you are aware of what your competitors are doing and how they are communicating to prospective franchisees. While it might be different to your own game plan, significant moves by competitors could be a catalyst to changing your own plans. You can stay aware of the landscape in conversations with suppliers and prospective franchisees.

The Franchising Australia report offers consolation to the franchising industry that the model is strong, and able to weather economic storms. But despite the success of the model, a business is only as strong as its people.

Attracting great franchisees is a high priority for most franchisors, and to do this, businesses need to make sure they are evolving their practices and conveying this improvement to the market. This will ensure that your franchise brand will not only survive, but grow and flourish. www.bedshed.com.au/franchising

BUSINESSFRANCHISOR 19

Greg Nathan

The Six Steps of an Effective Field Visit Each year I have the privilege of training hundreds of franchise support executives in our Field Manager Bootcamps.

These are the people who visit franchisees in the field to keep them engaged with the brand and improve the performance of their businesses.

20 BUSINESSFRANCHISOR

While a range of titles exists for this role, titles are not as important as the purpose of the role, the competence of the people performing the visits, and the processes they use.

In this article I am going to focus on a proven six step process for structuring an effective field visit where a franchisee is expecting you.

More details of the attributes of effective field managers and other useful processes can be found in my book The Franchisor’s Guide to Improving Field Visits.

Step 1 – Joint preparation You have probably heard of the 6 Ps – ‘poor

preparation produces pretty poor performance’.

This is particularly relevant to field visits. To prevent this, a week or so prior to the visit contact the franchisee, by email or text, with details of the visit including time, duration, what you would like to cover, and the process you intend to follow.

We call this process joint preparation because you also need to invite the franchisee to share anything they would like covered during the visit. And so a joint agenda for the meeting can be created.

This enables you both to prepare properly. In your case it may involve the review of KPIs for

Greg Nathan is a psychologist and Founder of the Franchise Relationships Institute (FRI), recipients of the FCA’s 2016 Supplier of the Year Award.

you arrived. So don’t jump to conclusions about anything you see that appears to be out of place. Just make a mental note to discuss this if, and when, the time is right.

Step 3 — Agree on the process If you have ever renovated a house or repainted a wall, you will know how important and time consuming good preparation is. For instance, it may take you five hours to sand and prepare a wall which then takes just 15 minutes to paint!

Yet we know that if you jumped in and started painting before preparing the wall properly, you would have a very rough wall and the paint would probably soon start to peel off.

their business or the gathering of information you think will be helpful. From the franchisee’s point of view, they may want to roster additional staff so they are free to talk without being interrupted.

Step 2 — Respectful initial contact The first ten seconds of the visit in particular set the tone. If things get off to a positive start the rest of the meeting will flow more smoothly.

Take a few minutes to prepare yourself mentally before entering the franchisee’s premises. Clear your mind of distractions or problems you have been dealing with and focus on the person you are about to spend time with. Review your notes and the agenda for the meeting. Remind yourself of the purpose of your visit and what you hope to achieve.

So while you may now want to jump in and get on with the business of the visit, there is still one more step to ensure you get a good result from your time together. This means going through the ‘what and how’ of the visit together - the topics you want to cover and the processes you will use.

First reconfirm the time you have allowed and check this is still okay. Maybe something has come up and the franchisee now doesn’t have as much time as he or she thought they would.

Observe the franchisee’s behaviour. How engaged do they seem? Do they appear happy to see you? Are they paying attention or do they look distracted?

Next go through the agenda, checking the franchisee is still comfortable working through these topics with you. You may need to remind them that the agenda was prepared together with their input.

It is a good idea to deliberately ignore any apparent operational problems until you have properly greeted the people in the business by name, including the franchisee’s staff.

Finally, agree on the sequence and the processes you will use. For instance, you may start by reviewing some agreed reports and figures together to arrive at a shared understanding of how the business has been performing.

Remember you are entering their space and you are not aware of what has been going on before

Then review progress on the franchisee’s business plan or goals. Then do a walk around

the business together. Finally, revisit the franchisees plans and action plans. Also there may be some new initiatives from support office that you want to discuss and get their feedback on.

This is a useful way to engage the franchisee as a partner in the visit and prevent the visit being hijacked by problems or distractions you are not ready for or prepared to discuss. Obviously you need to be flexible and responsive to a franchisee’s concerns, but not at the expense of the productive visit that you both have preplanned together.

Step 4 — Getting into the nitty gritty Now you can roll up your sleeves and get into the cut and thrust of the visit. Stick to your agreed agenda and process, and cover off everything you said you would. Here are some specific tips you might consider during this step: • Causally observe their behaviour and watch for signs of defensiveness, boredom or distraction.

• Consider whether you need to slow down or speed up depending on their behavioural style.

• Consider whether you need to focus more on facts and data, or on feelings and people.

• Ensure the physical environment is appropriate for the discussions you are having. Minimise visual distractions and ensure customers or staff cannot overhear you.

• Ensure you are both operating from the same set of facts and information, especially if there is a difference of opinion.

• Invite them to share their insights or interpretation of specific events that have impacted on their store or the network.

• Ask for their opinion on why certain numbers are trending in a particular way before sharing yours.

BUSINESSFRANCHISOR 21

• Remember to ask their permission before giving advice or launching into solutions to problems they may already have an answer for.

• Share information on the criteria or process you have used to arrive at certain conclusions.

• You may want to frame up a discussion by referring to, or drawing on, information and agreements from previous visits or discussions.

• Keep your phone off and focus on what is happening. If you are expecting an important call explain this to the franchisee.

• Link discussions back to profitability and brand alignment at every opportunity.

• Always keep in mind the visit should be done with the franchisee, not to the franchisee.

Step 5 — Review outcomes and check commitment Once you have worked through your agenda and process, review what has been achieved, discuss agreed outcomes and make a note of actions you or the franchisee will take. This will provide an opportunity to clarify any areas of uncertainty and give you both a sense of

22 BUSINESSFRANCHISOR

satisfaction that the visit has been productive.

Do not assume the franchisee will be committed to take action on agreed items.

Agreement that something is a good idea is not the same as agreement to act on it. You may want to check their commitment by asking a question such as “How do you feel about doing this?” or inviting them to share what specific action they are going to take.

If the visit has been emotionally charged, this is when you can both re-establish a sense of trust and commitment for the future. Keep the big picture in mind - what you are all here for - to maximise profitability and protect the reputation of the brand.

Step 6 — Positive end and follow up Field visits should ideally end on a positive note.

How this visit finishes sets the tone for the start of the next one. If either of you has been brash, pushy or obnoxious the next visit is unlikely to go well because residual resentment will colour the relationship.

At this point we recommend you ask the magic questions: “What aspects of the visit were useful?” and

“What could I do to make my next visit more useful for you?”

Never stay around at the end of the visit longer than you need to as you and the franchisee have work to do. A good practice is to send an email or text the following day thanking the franchisee for their cooperation. Also ensure you do what you have agreed and check back with the franchisee on how they are going with their actions.

Finally, a cautionary note. These suggestions are not meant to be overly prescriptive or to stifle your natural creativity. Be yourself and let your own personality and strengths shine through.

Field visits provide franchisor support executives with a powerful opportunity to make a real difference to the success and satisfaction of their franchisees. Thousands of field managers have told me these six steps help them to achieve this. Good luck.

For more information about FRI’s publications, Field Manager Bootcamps and Annual Franchise Operations Conference contact Greg directly at: gregnathan@franchiserelationships.com www.franchiserelationships.com

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ralph martin

AGM wash-up:

A perfect time to review shareholder unrest A spike in first strikes experienced by a handful of high profile listed companies this AGM season should remind directors that poor management of stakeholders’ expectations in the lead-up to the annual general meeting can seriously backfire.

Even for companies that didn’t experience a

A first strike was also recorded against blood

first strike, any notable rise in votes against

serum and vaccine manufacturer, CSL – which

its remuneration plans should trigger alarm

despite a 10 per cent drop in annual profit -

bells. To ensure it doesn’t become an ever

moved to a US-style remuneration plan where

bigger issue over the next 12 months, smart

bonuses are vested for clearing non-financial

boards will want to address the root cause of

hurdles and short-term incentives well above

smouldering shareholder unrest.

the Australian norm.

As recently witnessed with first strikes against

Here are four key things to consider when

stocks like CSL, Slater and Gordon, AGL Energy

it comes to managing expectations of

and Commonwealth Bank of Australia, a

shareholders and minimising the likelihood of

vote against remuneration plans is invariably

negative surprises.

By better tapping into the mood and

bothering shareholders.

Better disclosure

expectations of shareholders, listed companies

Slater and Gordon shareholder backlash over

Boards need to invest more time providing

are more likely to avoid deteriorating confidence

bonuses should also remind companies what

better disclosure, when a tough earnings

in their remuneration plans and a potential spill

happens when they gratuitously reward

outlook only fuels the reluctance by boards to

of their boards for the next year or beyond.

incompetence.

offer anything more than hard numbers.

24 BUSINESSFRANCHISOR

a lightning rod from the myriad of issues

Ralph Martin is the National Technical Director of RSM in Australia. He has over 15 years’ experience in accounting and auditing and is an expert on financial reporting and auditing standards. His previous experience includes work at PwC and Crowe Horwath, both in client facing audit roles, and as a technical specialist. Ralph has worked in the UK, Sydney, Perth and New Zealand.

Nevertheless, all companies, regardless of size, should consider how they are communicating their underlying narrative, both within the operating and financial review sections of the annual report and progressively throughout the year. That’s just as important for good stocks that, despite consistently delivering solid results the market’s come to expect, provide insufficient commentary to support the numbers.

The market can be quite harsh on stocks that underperform, and especially IPOs that fail to meet prospectus forecasts.

Align remuneration with performance Start by reviewing ways to make the company’s documentation more transparent around its remuneration strategy. What you should be trying to communicate within the remuneration report is how executive remuneration and greater shareholder value are directly aligned.

This is especially relevant for junior resource stocks and R&D-intensive technology companies that can, almost by default - through insufficient disclosure - risk losing support from shareholders who may perceive the company’s board and management to be asleep at the wheel.

The use of independent remuneration consultants may help to align remuneration structures with industry best practice, and avoid any perception of conflicts of interest.

Other things to think about include the terms of any share option schemes. How these are communicated will determine whether they’re

perceived to reward performance as opposed to entitlement.

First strikes matter Companies that think first strikes are little more than a quickly forgotten embarrassment should think again.

Even where there is no realistic prospect of a board spill resolution succeeding, first and second strikes are an avoidable distraction and expense.

Recently released research by Macquarie Wealth Management shows that trading is 35 per cent higher on the day of the AGM and for companies that receive a negative surprise, with the share price drifting down for the following six weeks and underperforming by an average 2.63 per cent in the 30 days after the meeting.

The best time to start working on building a better narrative for the business is in the aftermath of the last AGM, when shareholders have aired their key concerns. This presents an opportunity to review any other shareholder grievances that surfaced throughout the year.

08 9261 9374 ralph.martin@rsm.com.au www.rsm.global/australia

Meaningful commentary Clearly, there’s an art to providing meaningful commentary to shareholders and the broader market, especially when companies deliver disappointing results or remain years away from posting a profit. That’s equally true for companies in start-up phase that struggle with disclosure in fear of alerting new market entrants to the source of their competitive advantage.

there’s an art to providing meaningful commentary to shareholders and the broader market, especially when companies deliver disappointing results or remain years away from posting a profit.”

BUSINESSFRANCHISOR 25

Professor Lorelle Frazer

Explaining the Volun Administration proc With the recent increase in insolvencies and some industries faring poorly, it is perhaps timely to explain the Voluntary Administration process.

control of the company to an independent

What is the voluntary administration process?

2. Execute a deed of company arrangement

In short, the voluntary administration process allows a company experiencing cash flow or solvency problems breathing space from its creditors to restructure.

administrator.

In that month, the administrator secures and protects the assets and assesses the business to provide a recommendation to creditors on whether they should: 1. Liquidate the company; or (DOCA) – meaning compromise the debts in some way and allow the company to continue in existence; or 3. Return the company to the control of the directors.

It is generally a short period of approximately

Importantly, the final decision on the future of

one month, whereby the directors hand

the company rests with the creditors.

26 BUSINESSFRANCHISOR

Why do companies use voluntary administration?

Voluntary administration is used regularly by companies in distress, principally because directors are required to take steps to avoid trading whilst insolvent – and trading whilst insolvent can attract severe consequences.

Voluntary administration is specifically used as one of the major defences to insolvent trading in that the director took steps to avoid incurring debt and appointed an administrator.

It is a criminal offence to knowingly incur debts whilst insolvent. The maximum criminal penalty is two years in jail and a $250,000 fine.

In addition, a liquidator can pursue a director for insolvent trading resulting in the amount of

Professor Lorelle Frazer is one of the world’s leading and most highly respected franchise researchers and actively involved in franchising research and Australian franchise sectoral policy initiatives for more than a decade. She leads the Asia-Pacific Centre for Franchising Excellence, which was launched by Griffith University in March 2008.

The principal duty of a receiver is to the secured creditor and he or she does not represent all creditors (although there are some important safeguards to protect the other creditors).

Importantly, the voluntary administration process allows for a moratorium period whereby creditors, landlords, stock suppliers, personal guarantee holders and most other stakeholders are statutorily barred from taking action against the company until the voluntary administration is complete.

untary ocess the debts incurred after the point of insolvency being paid by the director personally, back to the creditors.

What’s the difference between voluntary administration and a receivership?

To initiate the voluntary administration process, administrators are generally appointed by the directors by a board resolution to take control of the company and represent all creditors’ interests.

A receivership is where a bank or a secured creditor appoints a receiver to recover assets on its behalf.

This can be particularly useful, for example, where a landlord on a retail business attempts to evict the tenant, thus severely devaluing the assets available for creditors.

appointment and the steps they should take to make a claim on the assets of the company.

What is the aim of the voluntary administration process?

Most restructures prior to the enactment of the voluntary administration regime were attempted outside of an insolvency procedure.

As a result, Australia generally had a poor record of restructuring businesses what would otherwise be quite viable businesses as it was always difficult to bind all creditors to the arrangements, and the directors were exposed to insolvent trading.

During voluntary administration, generally, a landlord would need to wait until the conclusion of the voluntary administration period before taking action under a lease. Receiverships have no such moratorium period.

The voluntary administration process was enacted to allow more companies to restructure and survive. It is intended to give the company a short period to restructure without having to deal with the demands of creditors, landlords, suppliers and other claimants.

What happens when a company starts the voluntary administration process?

The aim is to allow companies to restructure and return to health without the need to go through a painful liquidation process.

The administrator takes control of the company and the directors lose their power to contract on behalf of the company. The debts of trading incurred after the appointment of an administrator then become the personal liability of the administrator.

The administrator has a priority for those debts out of the assets of the company, however, administrators are very cautious about trading if it appears that by doing so substantial losses will be incurred, or they will exceed the assets available to them.

The administrator also communicates with all stakeholders at the start of the voluntary administration process, and advises them of the

Any restructure via a DOCA is binding on all creditors, as long as the majority are in favour and hence a small creditor cannot hold the restructure to ransom to advance their interests, as was the case prior to the voluntary administration regime.

What is the effect on stakeholders during the voluntary administration process?

There’s a number of effects on suppliers, landlords, creditors and other stakeholders.

Generally, all action to recover debt, or possession of assets is frozen, pending the resolution of the administration process.

BUSINESSFRANCHISOR 27

The voluntary administration process was enacted to allow more companies to restructure and survive.”

• If you are a creditor, your debt is frozen pending payment from assets realised or from any deed that may be proposed.

• If you are a landlord, you generally cannot take action to evict the administrator of the company during the voluntary administration period, unless that action has already commenced.

• If you have supplied stock under a Retention of Title arrangement, you cannot seek to

with the ultimate power to vote the resolutions at the meeting.

- Payment of a lump sum to meet all debts due

There are three possible outcomes that the

- Payment of a series of instalments

creditors can resolve:

- Trading and paying either instalments from profits or a lump sum from final sale

1. The company can be returned to the directors – however, this rarely occurs in practice and generally would only be if for some reason the company was solvent.

2. The second is liquidation. If the company is

- The sale of an asset and payment of proceeds (which may not be known) - DOCA’s have also been used to re-list insolvent companies on the ASX.

The company’s destiny is in the hands of the

put forward are many and varied. For

creditors. The administrator recommends the

example, the following types have been

Griffith University’s Asia-Pacific Centre for Excellence helps advance franchise sector best practice through independent research, education and the dissemination of information via the Centre’s website.

Working to transform research findings into practical outcomes for business, Centre members actively engage with key government bodies and franchise associations across the Asia Pacific, as well as with other franchise academics across the globe.

course, however, the creditors are the body

regularly used in practice:

www.franchise.edu.au.

repossess those goods (although your claim is taken into account by the administrator).

• Banks cannot exercise any rights under their security after a certain period.

What are the possible outcomes from the voluntary administration process?

28 BUSINESSFRANCHISOR

insolvent and there’s no other option, or if there is a deed, but it does not provide for a superior return than liquidation, companies will often go into liquidation.

3. The third possible outcome is a Deed Of Company Arrangement (DOCA). A DOCA is a compromise of the debts due by the company. It is a very flexible arrangement, and as a result, the possible arrangements

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Robert Toth

What’s hot and what’s not in franchising 2017

As a lawyer who advises many franchisees, I start from the basic premise that if the franchise opportunity does not work financially for the franchisee, they should walk away.”

30 BUSINESSFRANCHISOR

Franchising is a dynamic and changing industry.

There are opportunities for new franchise systems in a variety of growth industries.

Existing franchise systems cannot be complacent and must work to develop and reposition themselves in the market to meet consumer demand and stay ahead of their competitors.

Establishing a franchise system takes incredible commitment, resources and money.

What’s not hot 1. Rolling out a franchise system without proper planning and development.

2. Offering franchise systems without a detailed operating manual.

3. Offering a franchise opportunity without complete transparancy and disclosure.

There is a tendency for new franchisors to try to get into the market too quickly before they are ready and compliant. This is usually driven by enquiries from prospective franchisees and a desire to lock them in before they walk away and/or take up another opportunity.

Knowing what to do and implementing the things that need to be done to establish a franchise system, are two different things.

Getting the foundations in place will ensure a successful rollout of the system, limit exposure to risk to the Franchisor, and ensure longevity of the system. Seeking the right specialist advice will be the foundation of establishing a successful franchise model. A specialist franchise lawyer and franchise consultant will be able to lay the foundation to ensure compliance and establishment of your operating systems which will minimise legal and commercial risk.

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).

Franchising is a regulated industry and many other industries have their own independent regulation and requirements, for example building companies, real estate franchises, financial services and rental companies all have an overlay of their own regulation.

Getting the financial model right in advance for both franchisor and his franchisees is critical.

As a lawyer who advises many franchisees, I start from the basic premise that if the franchise opportunity does not work financially for the franchisee, they should walk away.

All of the other benefits of the system are meaningless, whether it is the branding, marketing, lifestyle opportunity,… if financially it does not work and the franchisee cannot draw a reasonable salary for their effort and obtain a return on their investment.

So where do you find the specialist consultants?

The Franchise Council of Australia, which is the peak body representing the franchise sector in Australia, represents franchisees, franchisors and service providers and they are an excellent resource and point of contact.

What’s hot in franchising in 2017 There are a number of industries that are experiencing growth in the franchise sector.

Sue Campbell from the consulting firm ‘Franchise Right’, highlights the following sectors as areas to look out for: • Aged Care - Based on our aging population over 65, which will substantially increase, this sector will provide long term business growth and sustainability; • Health Services - Particularly in areas such as physiotherapy, podiatry, skin and dermatology. This sector also includes

cosmetic and body services, which is following the European trend including weight loss, cosmetic injectables, and other body treatments; • Pet Services & Personal Homecare Services - This includes veterinary, grooming, daycare, boarding, and other pet services based on the increasing pet ownership in Australia; • Food & Retail - Smart new operators continue to bring innovation in food concepts by also controlling the supply chain.

Establishing a franchise system is one thing, however getting it out into the market and commercialising it is different challenge. Social media is now a must. Catherine Kimpton, director of ‘Beyond Business Sales’, who acts for a number of successful franchisor systems, states that engaging a business broker who has a wide and varied client base, and comprehensive portfolio businesses, can add real value to promotion of a franchise system including identifying potential sites and prequalification of potential franchisees.

Catherine’s firm has been appointed to act for ‘Tommy Guns’, which is a unique and new concept in male grooming and barber shop.

They offer a unique turnkey experience and currently have 12 stores across Australia with more locations rolling out.

Catherine also sees growth in the areas of childcare and early learning centres, which will continue to experience growth over the next few years.

There are exciting times ahead and it appears another year of exceptional activity in the Franchising sector. The best advice is to get the right advice – to do it once and do it right.

03 9604 9400 rxt@marshmaher.com.au www.marshmaher.com.au

BUSINESSFRANCHISOR 31

BRIAN KEEN

how to franchise your business simply FRANCHISING – MORE THAN JUST SYSTEMS?

Brian Keen, Australia’s most sought after advisor for business owners considering franchising, has worked in the franchise sector for over 30 years and truly understands the leverage franchising could provide for the right business. As a franchisee once himself, opening and operating seven stores in just five years, Brian has first-hand knowledge and experience as to whether a business owner should consider franchising as their core business model for growth and ultimately freedom.

A franchise without a system is like a car without wheels – it’s just not going anywhere.

Whether you are just starting up, you currently have 50 franchisees or are somewhere in between, if you are to franchise, you need a clear, simple and well documented system. Just as any well run business does.

Which is why we have just added a new part to our business, FranchiseSimplySYSTEM, a fabulous software system for holding your franchise system so it is simple to put together and easy to use.

But I have found during my 30 years dealing with every aspect of franchised business for

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both myself and others, success involves so much more than just systems and a set of documents. Converting to the franchise model will create change in almost all parts of your business.

Here are some examples:

BUILDING TWO BUSINESS STRUCTURES You are in fact building at least two very different but linked business structures, one for you as franchisor and one for your partners in business, your franchisees.

Your franchisees will take responsibility for dealing with your clients or customers and they bring in the money. Your franchisees will be doing much of the technical work your business now concentrates on.

You, as franchisor, and leader of the franchise group, need to make sure everything is working and that you provide support so your franchisees can cover their part of the bargain.

your product is presented to your tribe in a way which will satisfy their every desire.

And remember, it is the characteristics of this tribe of raving fans which will provide the details for you to work out your franchisee territories, which in turn feed into your fee structures. Great fee structures and profit will ultimately determine whether you have happy franchisees or not.

You are going to trade franchisee service for the money they pay and as they will be watching your every move to make sure they get value for money, you had better do your part well.

Secondly, looking after the brand, to make sure everything looks the same and works the same, so your franchisees have enough leads to keep them (and you) profitable and happy are central roles.

FRANCHISOR SUPPORT

You cannot afford to let your franchisees make changes to the brand as they wish. This doesn’t mean you cannot make adjustments to meet cultural differences in different localities, but those changes in service, product and the way your business looks and feels need to be carefully considered by you within the context of keeping the heart of the brand consistent.

Subway in India, for instance, overcomes local cultural needs by serving from two counters.

One a traditional Subway offering and the other with a vegetarian counter to suit religious requirements and cultural tastes. McDonald’s in Australia was the first to introduce the McCafe counter to meet the need we have for espresso coffee on the road. But these changes are made in a carefully considered way.

So yes, one of your core roles as franchisor is to look after your franchisees. And this will involve different skills with different franchisees as they grow in your partnership.

In the early days, you will be inducting them into the franchise. Teaching most of them exactly how you want them to do business. How to make up the burger to meet your customers’ expectations. How to interact with your customers. How to make your business look and feel. You will also be teaching many of them the basics of business. All about accounts, advertising, converting leads to sales.

As time goes on though, your interaction with this group will change. They know the basics and understand all the technical details. But they will be looking for change and maybe help in growing their franchises. Perhaps by adding more outlets so they, like you, will need to learn how to step out of the business and manage it from the outside.

As Tim Wise, founder of the Tap Doctor explained to me, as his franchise matured, he needed to change the way his staff interacted with franchisees and so he needed to adjust the skill-set of the staff he employed in his Support Office to match franchisee needs.

THE MARKET SAYS YES Looking after your brand and marketing is also a central task for any franchisor. Marketing in a franchise, as with any business, involves far more than just advertising.

First, and most important, you really need to understand the market that loves your product.

Make absolutely sure you have a product which has a sustainable tribe of raving fans. And then work out how big you want the franchise group to be. Marry the two and make sure

Thirdly, take control of how your franchisees get their customers. In many franchises, responsibility for supplying leads (advertising) to each franchise outlet is also held by the franchisor.

Jim Penman from Jim’s Mowing, for example, decided right at the beginning of his journey in franchising that he wanted people out in the field to be mowing lawns and bringing in the money. And that meant they should not be spending time doing office work they were simply not suited to doing well. So he decided the franchisor office would take every call for a lawn to be cut. The job was costed there and then allocated to the appropriate franchisee to complete.

The balance of how much advertising is undertaken locally will be different with each franchise group.

TWO SIDES OF THE SAME BUSINESS So yes, big or small, the secret is to realise you are building two completely different business

structures from your current business and you will be doing business completely differently in the future.

In order to tease out how you will organise these two sides of the business so they work together, I have found I need to look at every aspect of your business; not just marketing and support, but also how the money works for both sides of the franchise in the long term, who is going to do what exactly, how product is going to be supplied. The list of questions is endless.

To simplify the process I have an uncomplicated four step system, my Franchise Success Path, which covers every aspect. At the outset I have to say, I agree, franchising is not necessarily easy. It is hard work. But I know the process can be made simple.

These are some of the things I would be looking for in your business.

Expansion with Choice How big do you need your franchise group to be? Do you have a simple business method which will suit the largest number of potential franchisees or does the complexity in your business restrict the market? How skilled do you need your franchisees to be?

In the main, I have discovered people who choose to grow their businesses through franchising are entrepreneurs. They are always looking for something new and so most who come to me have businesses with many layers.

The trouble is, people who are attracted to buying franchised outlets are very different.

They are looking for a clear business idea, one which not only appeals to them but which they can see will work. It is the simplest franchise systems which appeal.

I had a client in the wedding industry who provided both the wedding ceremony (usually on a beach) and the wedding celebration afterwards. She found it was difficult, logistically, to organise clearing up after the ceremony and then running to the celebration venue with sand between her toes in time to greet the bridal party. And when she franchised she found the combined business was just too complex for one person to manage. So she split her business into two franchise groups – one to deal with the wedding ceremony and the other to deal with the wedding celebration. What she also then found was that the two franchises attracted very different franchisees, with very different profiles and skillsets.

Her story is not unusual. The thing is, these

BUSINESSFRANCHISOR 33

simple franchises appeal to a much wider range of people in the franchisee market, so you get more applicants giving you more choice so you are able to select the best franchisees available and making it easier to expand the group.

your group to grow, it’s about sustainability and your critical mass – what’s your tipping point with outlet numbers? Some say any less than 60 outlets and you will not succeed.

Money Makes the World Go Round

And neither does the market. The trend in the US is for micro franchise groups to grow, servicing a particular niche or a particular regional area.

Absolutely key is understanding the money.

As franchisor, you bring no money into the group. Your franchisees make it and pay you for services you bring to them. This simple fact is often at the bottom of disputes and where franchisees are not happy with your service.

The bottom line is you want happy franchisees who love you and it is profit – their profit – which will please your franchisees.

So, right at the beginning, as you design your franchised business, you need to work out the money.

• How much does each franchise outlet need to earn to be profitable enough to support you and them?

• How much does your product need to cost and sell for?

• How many items do your franchisees need to sell?

• Who are the people with the money and love of your product and what are their characteristics?

• Where do they live and what are their habits?

• What is the fee structure which will support your group as it begins and as it matures?

The list is long…

But once you know the answer you will be able to set the structure of fees. You really need to get this right as you will be stuck with it and not easily able to make changes.

Training and conferences will need to be accounted for and there may be accounting fees. Think about negotiating the purchase of products with suppliers to give you rebates, but be sure to disclose them to your franchisees so there is no feeling that you are making some extra on the side.

What about renewal fees? Goodwill? Fit out?

Plant and equipment? There is a lot to think about when setting your fee structure and professional advice is clearly the right avenue to take.

Returning to the question of how large you want

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I do not agree.

Certainly I know a number of smaller groups, satisfied with being where they are. A small family owed franchise group of bakers on the NSW Mid North Coast and its hinterland only have about eight outlets but this is enough to give the group what it needs.

Others work hard at growing the franchise group to meet the needs of a much wider audience.

The thing is, you stand to become successful faster if you work all of this out at the beginning.

Then be adaptable and move with the market into the future.

Be Adaptable or Die Remember the video store. First the huge expansion of free-to-air television, then online piracy. Now, with programs re-playable on demand, Netflix has taken over.

Any franchise group which has been around for years will not look anything like it did when it began. If you want to have a franchised business which goes the distance, you have to adapt. It’s Darwin’s Theory of Natural Selection all over again: Adapt or Die. I am watching Maccas go through its latest round of adapting in Australia. Originally just a burger store offering “chips with that”, they realised in the 90’s that if they were going to get the kids they needed something to attract Mum as well and McCafe and a suite of healthier food happened.

Today it is all about choice, they have just introduced a concept, new to them, the flexible burger – you choose what is in there. Shades of one of their biggest fast food competitors – Subway perhaps.

We’ve seen the rapid emergence of gourmet pizza with Pizza Capers and Crusty Pizza.

And now the third generation of local niche franchises such as New York Slice and Pizzarzzi cater to a new niche of foodies with palates influenced by My Kitchen Rules and Masterchef.

And don’t be fooled into thinking this does not apply to you because such changes apply to a lot more than food.

Keep an eye on what is going on in the market and adapt to keep up.

ARE YOU FIT TO LEAD? Franchising is not for everybody.

You may know everything there is to know about franchising but you have to ask yourself the question, “Is franchising right for your business?”

And more importantly, “Is it right for you?”

Do you have the business skills, the confidence and personality to make your franchise system work?

One of the other deciding factors when analysing whether a business is ripe to franchise, is the personality of the business owner or owners. Is that person a natural leader? Does he or she have the characteristics to lead a franchise chain?

However, as Jim Collins so succinctly puts it, leadership can be learned. Some of the most successful leaders in business and politics are just weird.

The key is to understand three things: • Be humble and listen to what others are saying to you and be able to respond. When things go wrong be prepared to sit down and discuss the problem. Hear what your franchise partners are saying; • Stand up for your franchise principles and be prepared to take the hard decision when needed; and • Understand how different character types and different skillsets fit into your business. Profiling will help ensure the right communication and decision making styles fit into the different levels of the franchise.

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

DON’T SELL – RECRUIT At last, as you move onto recruiting your franchisees, remember, it is about attracting really good people. As John O’Brien from

These days a broad range of people are interested in becoming franchisees.

A lot of younger people who previously would have gone into a career are now seeking more exciting opportunities.”

Poolwerx explains, “Think about it this way, you are not selling franchises, you are selecting franchise business partners and it is important to have that clear difference in mind.”

You are looking for people who are driven, who are energetic, who are experienced, and who have the skills and want to see the group succeed.

These days a broad range of people are interested in becoming franchisees. A lot of younger people who previously would have gone in to a career are now seeking more exciting opportunities. Perhaps they are uncomfortable in the job market where the hire and fire mentality combines with the vulnerable economy and promotes a sense of insecurity.

Owning a business seems a far more stable proposition and franchising is a perfect way to get started in their own business.

Franchising also attracts people of middle age. They may have come out of middle management, taken early redundancy and are now looking to invest in their own business. A lot of tremendously successful franchisees have come from those sorts of backgrounds.

But take care. There are people who just want to buy a job and that can be a bit risky for the franchisor. It really depends on the sort of franchise they are buying. Be sure that they

have the commitment, experience, and right goals in place to succeed in business.

Franchisees can come from anywhere. But make sure you have a good fit for your group.

AND FINALLY – IT’S TRUE – YOU REALLY CAN’T BEAT THE SYSTEM As I said at the beginning, the foundation of any good business, especially a franchised business, is a great system.

And the thing is, a systemised business gives you a great exit strategy. This was proved by a client of mine.

Speedy Lube is a car servicing business. My client was thinking of franchising and I worked with him to systemise the business. We got all the documents in place, uniforms and scripts for each employee to greet and treat customers.

Everyone needed to deal with clients in the same way.

My client became unwell and decided not to go down the franchising path but to sell the business. The systems and standards meant that the business sold fast and for significantly more than it would have otherwise done.

As a standard car servicing business the market would have been restricted to mechanics, not generally a group with easily accessible

funds. The purchaser of this business was not a mechanic, he was a professional businessman and car enthusiast with limited mechanical skills who knew that he could slip into Speedy Lube easily because the systems were there and the staff well trained.

Which is why we are a modern business and have systemised our processes, introducing our new software, FranchiseSimplySYSTEM to do two things. First, we use it to deliver our four step Franchise Success Path to you. And second, this same SYSTEM is there for you to easily develop your Franchisor and Franchisee Operations Manuals so they are simple for your future franchisees to use and abide by.

To conclude, if you are looking to franchise your business, remember you do need to look at how the whole franchise will be structured and to review each aspect of the business to make sure you grow a group of happy, profitable, franchisees. That way you will become happy and profitable too.

To Your Success!

BRIAN KEEN, Managing Director, Franchise Simply 1300 960 136 brian@franchisesimply.com.au www.franchisesimply.com.au

BUSINESSFRANCHISOR 35

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