The Franchise Review | Issue 41, Edition 1 2015 by Executive Media

ISSUE 41 EDITION ONE 2015

The

FranchiseReview

OFFICIAL JOURNAL OF THE FRANCHISE COUNCIL OF AUSTRALIA

Bakers Delight celebrating 35 INSIDE Page 14: Changes to the Australian Small Business Commissioner Page 16: The reasons many franchise recruiters are failing â&#x20AC;&#x201C; and what you can do about it Page 26: The challenges of taking your franchise overseas

years of success

OVER 500 FRANCHISE CONVENIENCE STORES AND GROWING! You may not be aware that Caltex Australia operates one of the largest convenience retail networks across the country, with both company and franchised stores operating predominantly under the ‘Caltex Star Mart’ brand. Caltex is a well-recognised and reputable brand with outstanding systems and tools to enable operational success. New franchisees entering the business will be provided structured training and support on all key operational elements to set them up for success in their venture. The franchise community is strong and supportive with organised franchise councils and regular communication meetings, to ensure franchisees contribute to the brand success. Caltex has also held international conferences every 2 years with significant franchisee attendance, in locations such as China, Mauritius, Vegas and the most recent event was held in Dubai. This conference rewards high performers and is a highly anticipated event on any franchisees calendar. To find out more about our Franchise Opportunities, visit www.caltex.com.au and click on ‘Franchising at Caltex’.

T H E

F R A N C H I S E

R E V I E W

Contents 4

8 14

INSIDE

A message from the Chairman By Warren Wilmot, Chairman, Franchise Council of Australia

Do you know your State Chapter?

FCA leads the way on changes to the Australian Small Business Commissioner

The $50 million question: Why are many franchise recruiters failing?

By Raffael Fernandes, Head of Franchising Group, Cirrus Media – franchisebusiness.com.au

How your franchise business can get more value from social media

The challenges of opening a business in global markets

Franchisors on…

Q&A with Gelatissimo, Just Cuts and Snap-On Tools

Using technology to support growth and recruitment strategies

By Jono Britton, Managing Director, Shift8

Supporting franchisees on their emotional and business journey

By Greg Nathan, Founder, Franchise Relationships Institute

Reaping the rewards at Bakers Delight

48 52

By Tim Lele, Keep Left

By Ian Martin, Chief Executive, Noodle Box

Q&A with Gerry Gerrard, General Manager of Bakers Delight

An inside look at the International Franchise Convention Meet the Young Entrepreneurs in Franchising winner

Q&A with Rhys Richards, winner of International Franchise Association’s NextGen competition

Are you a lender-friendly brand?

By Darryn McAuliffe, CEO, FRANdata Australia

Franchisee recruitment tips for franchisors

By Professor Lorelle Frazer, Director, Asia-Pacific Centre for Franchising Excellence

FCA Events Calendar

Published by: Executive Media | ABN 30 007 224 204 430 William Street, Melbourne VIC 3000 Tel: (03) 9274 4200 | Fax: (03) 9329 5295 Email: media@executivemedia.com.au | Web: www.executivemedia.com.au The editor, publisher, printer and their staff and agents are not responsible for the accuracy or correctness of the text of contributions contained in this publication, or for the consequences of any use made of the products and information referred to in this publication. The editor, publisher, printer and their staff and agents expressly disclaim all liability of whatsoever nature for any consequences arising from any errors or omissions contained within this publication, whether caused to a purchaser of this publication or otherwise. The views expressed in the articles and other material published herein do not necessarily reflect the views of the editor and publisher or their staff or agents. The responsibility for

the accuracy of information is that of the individual contributors, and neither the publisher nor editors can accept responsibility for the accuracy of information that is supplied by others. It is impossible for the publisher and editors to ensure that the advertisements and other material herein comply with the Competition and Consumer Act 2010 (Cth). Readers should make their own inquiries in making any decisions, and, where necessary, seek professional advice. © 2015 Executive Media Pty Ltd. All rights reserved. Reproduction in whole or part without written permission is strictly prohibited.

Get the tools to build bigger. Grow your business by 400%* with Australia’s largest franchised home builder. Do you know a builder wanting to take their business to the next level? G.J. Gardner Homes is looking for ambitious, business-minded builders who want to grow their revenue, increase their profits and become the largest and most highly regarded builder in their community.

Less sweat, more rewards - with business and marketing tools, systems & support. Our integrated sales and construction software, systems and marketing support will empower you to build your business and give you more time to enjoy the rewards of your hard work. You can also rest assure knowing that when you’re ready to retire, a G.J. Gardner Homes franchise is a proven asset that you can sell. * Based on the average of Australian Franchisees who were previously operating residential construction businesses. Annual revenue compared from the final financial year before joining G.J. Gardner Homes to their 3rd Financial year with G.J. Gardner Homes.

If you’d like to join Australia’s Number 1 franchised home builder visit gjgardner.com.au/franchise

Join Australia’s No. 1 HIA franchise builder Become a part of G.J. Gardner Homes - the franchised building company that is expanding across the globe. Discover the incredible benefits of being a part of a team that is dedicated to your success. Enjoy your work, your lifestyle and your cash flow. We are looking for licensed quality builders and entrepreneurs in QLD, NSW, Victoria, South Australia and Western Australia, who want: + to grow their business and increase their profits + to gain exposure by joining forces with a well branded company + building management systems capable of allowing you to grow with less employees + an asset to sell when you retire Quick Facts: + G.J. Gardner Homes has built over 20,000 homes worldwide + G.J. Gardner Homes currently has over 110 franchises in Australia, New Zealand and the U.S.A + G.J. Gardner Homes was established in 1983. It is recognised as honorable, stable and professional with a reputation for good value, good service and competitive prices

Local Franchisee Testimonials “I started my business scratching around putting one job in front of the other, building three to five homes a year. Since joining the G.J. franchise group we now build in excess of 75 homes a year. The G.J. Gardner Homes system has enabled us to handle this volume.” Dave Cummins - Builder/Owner G.J. Gardner Homes Gold Coast North Franchisee - 9 years

“As a smaller builder we were frustrated trying to compete against ‘the big guys’. We struggled with buying power and a build system to help us make the next step in our business. The G.J. system has given us the tools to compete and manage all factors of the business and the support from our master franchisee office has been spot on. Our G.J. Gardner Homes franchise has changed our life for the better, and secured a bright future for our family.” Rob & Karen McMaster -

Visit gjgardner.com.au/franchise to view our video testimonials.

Builder/Owner G.J. Gardner Homes Ballarat Franchisee - 5 years

T H E

F R A N C H I S E

R E V I E W

A message from the Chairman BY WARREN WILMOT, CHAIRMAN, FRANCHISE COUNCIL OF AUSTRALIA

I want to both welcome you to my first article as Chairman of the Council, and thank you all for welcoming me into the role. I need to start by thanking the outgoing Chairman, Michael Paul, for his work with the Council, and even more so for staying on as Co-Vice Chairman to assist the Board and me in the role. Jason Gehrke is also staying on as the other Co-Vice Chair, so I know I have great support, and the Board and Council are the beneficiaries of both new blood and experience. In the last year, the Board worked to ensure that the government introduced the new Code of Conduct with as much sensible balance as could be achieved. I believe that the Association was well served by the members of the Board and the individuals who played a part in assisting; they have achieved a much healthier outcome than may have otherwise been the result. So, now we all get on with business, bring our systems into compliance at the appropriate time, and get on with serving franchisees and the end customer. Several people have asked me what my vision for the FCA and the Board will be. I often say that my leadership style is to lead from the middle, and I believe that the Chair’s role is to tease out the issues of the business (or Association in this case), and to use the team to achieve the best result. In Board meetings to date, I’ve done a lot of listening, and I think that there is a bit of a mood for change. The previous Board had commissioned some work to define the opportunities for how the Board might work better, broaden its base of support by bringing in more members, and regain engagement with the ‘big’ brands. I am clear that the Association is for every member – spreading best-practice franchising, representing small to medium systems and our model of doing business to government, and educating

our constituents and their staff. But the larger brands need to be encouraged to participate in this, because much of what maturing brands are learning and experiencing, the big brands and wellestablished systems have already been through. So, one of my personal goals is to gain more support and engagement from the larger brands. I am also keen to improve our Association’s processes from the Board down. The Board is a fantastic group of dedicated representatives who willingly give up their time to serve the franchise community. So, I want to ensure that they are well equipped to do this, and that they can serve efficiently and effectively on behalf of all members. This will start with the Australian Institute of Company Directors working with the Board. I hope that this will lead to a strong association with that organisation, and to their presence at the National Franchise Convention (NFC) this year. I’d encourage all franchisors to consider development for their teams in the very important area of what happens in a Boardroom. As mentioned above, the last Board commissioned some work with input from Directors and from many members – even some who have been disengaged. This has given us a raft of suggestions to consider; some are small, but a number are significant enough to need consideration and discussion. One of my key objectives will be to ensure that we review these, and that we work to implement those that are achievable in a careful and considered manner. After the next Board meeting, we will report back to the membership on this. We are already working on the speaking content and schedule for NFC15. I thought that last year’s content was of a very high standard, and it’s a great base from which to go forward (and in a much better facility – the RACV Royal

Pines Resort). Our challenge is to keep building the content to ensure that it is the absolute ‘must attend’ event for the franchise community each year. We’d love to hear any ideas from the broader community on content, or about great speakers you have recently seen. That information can be channelled back through Kym De Britt (kym.debritt@franchise.org.au). We have a stable regulatory environment, and a reasonable economy to operate in (perhaps with some rocky bits for those around the edges). We all need to continue the main focus of building sales, improving franchisee profitability, growing franchisee capability and generally growing the franchisor’s business. If there is anything I can do to help, either as Chair or as a worker in a larger brand, please feel free to approach me (warren.wilmot@franchise.org.au). One of my many failings is remembering names, so don’t be afraid to introduce yourself several times. I’ll get it eventually. Good luck to all in the franchise groups for 2015. I hope that your businesses flourish, and that you continue to see the value of your membership and participation with FCA.

Aon are the only approved insurance broker for members of the FCA

Bespoke insurance for your franchise system?

Sorted! Why Aon? • Tailored insurance program • Dedicated, local client manager • Competitive premiums • Risk management and claims support

Chris Ristevski

(03) 9211 3149 chris.ristevski@aon.com | 0414 453 805

A DAY IN THE LIFE OF A SNAP-ON FRANCHISEE The day starts early for a Snap-on Tools franchisee. By 7am, John Sinclair is in his truck and on the road in Hornsby in Sydney’s north-west. It’s a full day for him – John has 120-plus clients in his territory, and he tries to see them all regularly. “The aim of the game is to see them weekly,” he said. “But that doesn’t always happen, it’s so busy. “Your boots are on fire all day in this job. It’s go, go, go.” He wouldn’t have it any other way. Being a Snap-on Tools franchisee has been John’s way of life for 23 years, selling the ever-growing range of tools, storage and diagnostics equipment to an ever-growing list of clients, old and new. “I was young when I bought the franchise. I was 21 and I wanted to start my own business,” he says. “When I started, there were only 10 Snap-on trucks in Sydney. I got in at ground level and I was part of an expanding system.

“A lot of guys want to be in business but they haven’t got the capital to buy a workshop and start up on their own. This is an easier way of financing a business.” The pleasure and pride of running his own show has been the attraction for John, as it is for many franchisees. “I like the variety of people I get to deal with, and I’m never in one spot for too long. It’s also very satisfying to have long-term customers and to have their trust – their business is supporting my business and vice-versa.” The success of his business depends, to a great extent, on how hard he is prepared to work. John could head home at 5 or 5.30pm, but the end of the day is also the end of new sales possibilities. “The longer you’re out there, the more chances you have,” he says. “The more shots you take at the goalposts, the more likely you are to score goals. “It’s about trying to be proactive in supplying more people with more

tools. I’m always trying to find the guy that hasn’t got Snap-on tools and then give him my best shot. “And then there’s the expanding product range for the people that have got Snap-on tools.” The range is growing all the time, particularly in tool storage and diagnostics. This is where John is making a lot of his sales, and it often requires the support of head office. Promotions from Snap-on Tools such as the Rock n Roll Cab Express (a roadshow of the popular range of Snap-on toolboxes) help to sell the big-ticket items and the credit support systems from Snap-on gives franchisees the confidence that their customers will come through on the bigger purchases. “I use what the Snap-on system and processes provide and I always make the most of it,” John said. “Recently I had the diagnostic services specialist on my truck and it really helps me make a sale.” However he also knows that the tools don’t sell themselves.

www.snapontools.com.au/franchise Call 1800 762 766 (AUS) 0800 762 766 (NZ) Les Coppin (Franchise Recruitment Manager) AUS 0419 609 794 or NZ +61 419 609 794

A proven, established and profitable business model

Global leader in tools and franchising

Great office views Mobile showroom

Extensive training and support Give customers personal service, premium products and finance solutions

Be your own boss

A market leader for mechanics

“It’s one thing having access to great tools, but the crucial way to win a sale is to have a great relationship with the customer.” Relationships are what John’s days on the road are all about: calling on his customers regularly and building on the trust they have developed over the years. Trust is what helps sell the tools – they trust you to give them the right advice.”

John has a spread of regular customers and he knows them well. He knows that he has irregular buyers who don’t buy often, but when they do, they buy big. There are others who consistently buy smaller items all the time. His job is to incrementally increase the smaller purchases, as well as convince the irregular larger purchasers to buy more often.

“Trust is the most important thing with all of these guys – whether they spend big or small. I think it’s important that you turn up when you say you are going to, you put in their order for something you might not have on the truck, and you stand by your work and the brand all the time. “You’re part of a franchise, a brand that has really strong values.”

Snap-on Tools is one of the largest and most successful franchises in the world and has been operating in Australia since 1988. Snap-on Tools invites you to join our online Discovery Tour to find out if we’re the right business for you. Check it out at snapontools.com.au/franchise

T H E

F R A N C H I S E

R E V I E W

Do you know your State Chapter? The Franchise Council of Australia (FCA) is run through a national office based in Melbourne. It would not be possible, however, without the help of our voluntary state committees, which work tirelessly each year to create valuable events for you to attend, to provide expert advice on the FCA stand at various trade shows, and to engage with FCA members and external stakeholders in each state. The committees and State Presidents are each selected by the membership via an online election held in August each year. Committee members serve two-year terms. There have been a few changes since the last election, including two new State Chapter Presidents. If you would like to get involved in your local Chapter, look out for the nomination email, which will be sent to members in July, or contact your local State President via info@franchise.org.au. Western Australia State President and FCA Director: Tamra Seaton Tamra is a director of law firm MDS Legal. She practises in the area of franchising and licensing law, and in the related areas of competition, trade practices compliance, intellectual property and commercial property law. Tamraâ&#x20AC;&#x2122;s franchising work includes the establishment and ongoing administration, development and corporate governance of state, national and international franchise schemes, and also the sale and acquisition of franchise networks. She counts several large franchisors among her long-term clients, as well as several new and emerging franchise systems. Tamra also advises and acts for masterfranchisees and franchisees. Tamra has been on the committee of the Western Australia Chapter of the FCA for approximately 10 years. Tamra was elected State Chapter President at the end of 2014.

South Australia State President and FCA Director: Rose Vis Rose Vis is the co-Founder and director of V.I.P. Home Services, a company established in South Australia in 1972, and the first home services company in Australia to franchise, which it did in 1979. Today, V.I.P. has more than 1100 franchisees across Australia and New Zealand in home cleaning, lawns and gardens maintenance, and commercial cleaning. V.I.P. won the FCA Franchise System of the Year (entry capital under $50,000) in 1998. Rose was the proud winner of the Franchise Woman of the Year 2005 for South Australia, and in 2012 she was recognised by the FCA for her contribution to franchising. V.I.P. has been a member of the FCA since its inception in 1983, and Rose has served on the committee of the South Australia Chapter of the FCA for the past 10 years. Rose was elected State Chapter President at the end of 2013.

T H E

F R A N C H I S E

R E V I E W

Victoria/Tasmania State President and FCA Director: Gary Carter Gary Carter is General Manager Franchise Operations at FC Business Solutions, providing fully integrated franchise operations services, including franchise feasibility studies, business system development, growth strategies, system diagnostics and strengthening, training and development, network planning, and health checks in all operational matters. As the former Tatts Lotteries General Manager Retail Operations, Gary has more than 30 years’ experience in leading and managing large multi-site franchise and retail networks, and has also worked with other well-known brands, such as Bevilles Jewellers. Gary was elected State Chapter President in 2011.

New South Wales/Australian Capital Territory State President and FCA Director: Sean O’Donnell Sean has been actively involved with the FCA and franchising for more than a decade. He has a prominent profile in the sector, and is a longstanding member of the NSW/ACT Chapter of the Franchise Council of Australia. Professionally, Sean is a partner at HWL Ebsworth Lawyers. Sean is a leading franchise and dispute resolution lawyer, with many years’ experience resolving disputes and litigation throughout Australia. He is a well-known litigator and is the preferred dispute lawyer for many national franchisors when a serious issue arises. Sean also acts for master-franchisees and franchisees, and has assisted many franchisees, sometimes on a pro bono basis, providing advice and helping resolve franchise disputes. Sean was elected State Chapter President in 2011.

Queensland/Northern Territory State President and FCA Director: Warren Ballantyne Warren Ballantyne is the founder, owner and managing director of Gutter-Vac – the world’s first and largest gutter-cleaning franchise, which is revolutionising the gutter-cleaning industry. Warren invented and developed the gutter vacuuming technology in 1995, and commenced franchising in 2000. Gutter-Vac now has around 50 franchises across all seven Australian states and territories, and is in the process of expanding its franchise system into North America (launch set for United States’ autumn in 2015). Warren is also the founder, owner And Managing Director of Ballantyne Safety – a height safety concept that was created by Warren in 1995 to complement the Gutter-Vac operating system. Ballantyne Safety’s range of temporary roof safety equipment provides workers across Australia with a fast and effective method to safely work at heights. Warren is also Chairman of Gutter-Vac International Pty Ltd, and the Chief Operating Officer of Gutter-Vac LLC (the North American franchise company). Warren has enjoyed serving on the FCA Queensland State Chapter for five years, and is dedicated to franchising in Australia and abroad. Warren was elected State Chapter President at the end of 2014.

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

A R T I C L E

ARE YOU SUPERSTREAM READY? The government has changed the way that employers must pay super contributions.

The changes were introduced to speed up the processing of rollovers and contributions, and reduce the number of lost accounts and unclaimed super. The new SuperStream legislation requires you to pay your employees’ super using standardised data within an approved online payment system. This means you will soon be unable to make super payments by either post or using a non-compliant online system.

What you need to do Under the changes, you’re required to make contributions through a payment system that lets you: • make super payments electronically • provide employee data online in a standard format • link money and data with a unique payment reference number. If you have 20 or more employees, the reforms started on 1 July 2014*. If you have 19 or fewer employees, SuperStream applies from 1 July 2015*.

We can help you comply QuickSuper†, AustralianSuper’s free online payment solution, can help you meet your SuperStream obligations. It meets all of the new government super requirements and lets you pay your employees’ super into multiple funds with just one payment. QuickSuper is suitable for all types of businesses, and benefits include that: • it’s free to use

A 10

• it’s government compliant

• it’s secure • it’s all completed online, so there’s no paperwork • it improves accuracy by pre-validating your submitted data and letting you know if there are any missing details • you can pay by file upload (for many employees) or by direct entry (for few employees).

More information To learn more about SuperStream or how to register‡ for QuickSuper, see www.australiansuper.com/PaySuper. You’ll need to have your company details and AustralianSuper employer number handy when you register for QuickSuper. If you don’t have an AustralianSuper employer number, you can join us at www.australiansuper.com/join. And if you have any questions about SuperStream or need help setting up a QuickSuper account, call us on 1300 300 273. * If you have 20 or more employees, the Australian Taxation Office (ATO) may provide some flexibility on your start-up date, provided you’re making a genuine attempt to implement and have a firm plan to do so by no later than 30 June 2015. If you have 19 or fewer employees, the ATO will be flexible provided you have a plan to apply SuperStream by 30 June 2016. † QuickSuper is a registered trademark and a product owned and operated by Westpac Banking Corporation ABN 33 007 457 141. Westpac’s terms and conditions applicable to the QuickSuper service are available after your eligibility for the free clearing house service is assessed by AustralianSuper. A Product Disclosure Statement (PDS) is available from Westpac upon request. ‡ You can choose to submit your contributions using a different service, but it needs to meet the government’s minimum data standards as legislated. See www.australiansuper.com/StrongerSuper for more information.

Super Super admin admin costing costing your your business business too too much much time? time? PP AA YY

AA LL LL

SS UU PP EE RR OO NN EE

YY OO UU RR I I NN

HH I I TT

SUPER SUPER

* * With Withaccess accesstotoaafree freeclearing clearinghouse house through through AustralianSuper AustralianSuperyou youcan canpay payall allyour yourstaff’s staff’ssuper super ininone onehit, hit,no nomatter matterwho whothey’re they’rewith. with.

Find out Request a more: call back today at: australiansuper.com/clearinghouse australiansuper.com/clearinghouse It’sAustralian. Australian.And Andit’s it’ssuper. super. It’s *QuickSuper *QuickSuper is a registered is a registered trademark trademark and aand product a product owned owned and operated and operated by Westpac by Westpac Banking Banking Corporation Corporation ABNABN 33 007 33 457 007 141. 457 141. A Product A Product Disclosure Disclosure Statement Statement (PDS)(PDS) is available is available fromfrom Westpac Westpac uponupon request request This This document document was was prepared prepared in February in February 20152015 by AustralianSuper by AustralianSuper Pty Ltd PtyABN Ltd ABN 94 006 94 457 006 987 457 AFSL 987 AFSL 233788 233788 the Trustee the Trustee of AustralianSuper of AustralianSuper ABNABN 65 714 65 394 714 898 394 and 898 may and may contain contain general general financial financial advice advice that does that does not take not take into account into account your your personal personal objectives, objectives, situation situation or needs. or needs. Before Before making making a decision, a decision, consider consider your your financial financial requirements requirements and read and read the relevant the relevant Product Product Disclosure Disclosure Statement, Statement, available available at www.australiansuper.com/pds at www.australiansuper.com/pds or byorcalling by calling 13001300 300 273. 300 273.

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

A R T I C L E

A CUT ABOVE THE REST Just Cuts’™ Chief Executive Officer and Founder Denis McFadden has set the pace for the hair and beauty industry, implementing a new marketing, communications and POS system (JustOnline) that drives direct communication between the B2B and B2C markets – exclusive to Just Cuts™.

With cutting-edge technology, innovation and expansion, the future looks bright for the largest hairdressing franchise in the southern hemisphere.

JustOnline has streamlined both internal and external communications from the international support office in Sydney (Just Cuts™ Academy).

Just Cuts™ is proving to be a cut above the rest with its recent investment in its own business. With 64 per cent of franchisees being multi-site owners, Just Cuts™ has a ‘genuine business system’ that is second to none; but what is the company doing to remain profitable in the future?

A cloud-based operating tool, JustOnline drives 360 communications from remote locations between the Just Cuts™ Academy, franchisee, salon (stylist) and client in real time.

The answer to this is internal growth. With a strategic vision to double its market share by 2017, Just Cuts™ has looked within its current systems to ensure that it remains an industry leader. Developed by a working group of Just Cuts™ franchise owners, JustOnline has systemised and simplified daily operational tasks for stylists, allowing real-time remote access for franchise owners. JustOnline gives franchisees a real-time snapshot of their businesses, allowing them to work on their business, rather than in it.

A 12

Tracking consumer behaviour, the system has been developed to communicate national marketing campaigns and capture the data of the 80,000 clients that Just Cuts™ franchises style every week. This information has given greater return on investment (ROI) for franchisees, driving more clients into the salons and ensuring that more intelligent local area marketing and national marketing campaigns are continually moving forward. JustOnline is an extension of the systems, policies and products that are in place to ensure that Just Cuts™ franchise owners remain profitable and continue to grow. It was launched at Just Cuts™ international conference in August last year, on the one-year anniversary of Just Cuts’™ exclusive retail range, JUSTICE Professional™.

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

A R T I C L E

Why Just Cuts™? Iconic franchise powerhouse Just Cuts™ has paved the way for franchising in Australia for the past 25 years, building a system that puts the franchisee first: • fixed franchising fee • 78 per cent brand awareness in the market • spend less than 30 hours per week working on your business • you do not have to be a hairdresser to own a franchise • on average, franchisees go on to own 2.3 salons each • exclusive professional retail range • national support and training team • national advertising and marketing campaigns • in good and bad times, hair grows! For more information, contact National Business Development Manager, Luke Manning at: M: 0439 130 499 | E: bdm@justcuts.com W: justcuts.com

About Just Cuts™: • celebrating 25 years of franchising in 2015 • currently styling 80,000 clients’ hair every week!

The conference also saw three new products launched to market to satisfy the needs of both Just Cuts™ stylists and clients: JUSTICE Professional™ Scalp Treatment Shampoo, Pomade and Firm Clay. This salon professional styling and care range has been extended to 17 unisex products, allowing clients to maintain their Style Cuts™ cut in between visits to the salon. But innovation has not stopped here; the Just Cuts™ kiosk now joins the traditional inline salon as a cost-effective entry point for stylists making the transition to business owners. Mitigating early financial risk, the kiosk runs at both a lower purchasing price (from A$85,000) and lower operational costs. Just Cuts™ Chief Operating Officer Amber Turnbull also sees the kiosk as a key factor in the future growth of multi-site franchisees, moving into additional satellite sites in high-foottraffic shopping centres. ‘We have developed a training program that encompasses all areas of the business, with an ongoing support program in place to ensure that the transition from both stylist to owner, and owner to multi-site franchisee, is seamless,’ Turnbull says. Just Cuts’™ growth can also be credited to promoting Style Cuts™ cuts for everybody! Currently boasting a client base of 50/50 males and females, Just Cuts™ markets to the whole family.

• 186 salons currently operating across Australia and New Zealand • pursuing master franchisees for international expansion in 2015 • JustPowerCoaching introduced to assist new owners to increase salon profitability • charity partnerships – we have raised more than $365,000 for the Royal Flying Doctor Service, thanks to the kindness of our teams, owners and clients • we broke a Guinness World Record with Wesley Mission to raise awareness for homelessness. We broke the record for the most haircuts completed by a team of 10 over an eight-hour period – we cut the hair of 375 people for FREE that day in Martin Place, Sydney • Just Cuts™ was the official hairdresser for the Australian 2000 Olympic Games, giving athletes and coaches free Style Cuts™ cuts. More than 100 stylists from Just Cuts™ salons across Australia and New Zealand participated. We were basically on tap to cater for the needs of the thousands of athletes, sports officials and media representatives over the 54 days of the Games.

B 13

T H E

F R A N C H I S E

R E V I E W

FCA leads the way on changes to the Australian Small Business Commissioner At the time of writing, the federal government has announced a consultation period on changes being made to the Office of the Australian Small Business Commissioner. Next financial year, the government will transform the Commissioner to a Small Business and Family Enterprise Ombudsman (the Ombudsman), who will be a Commonwealthwide advocate for small business. In late March, the Department of Treasury released draft legislation and opened consultation through to Easter. The new office of the Ombudsman is expected to be operational from 1 July this year. The Ombudsman is an office of the Australian Government and part of the Department of Industry. It is designed to extend the role of the Small Business Commissioner to help businesses and individuals understand their obligations under federal regulation. It will also act as a ‘concierge for dispute resolution’. Currently, there are a number of resources available to deal with disputes in franchising, including the Office of the Franchising Mediation Adviser and state-based Small Business Commissioners. It is expected the Ombudsman will assess disputes and direct parties to the most appropriate resolution process, and will also counsel the parties in how to deal with disputes. The Office will also act as an information source to make smaller businesses aware of other advice, programs and services available from the government.

It is expected the Ombudsman will assess disputes and direct parties to the most appropriate resolution process, and will also counsel the parties in how to deal with disputes

The FCA’s view In April 2014, the Department of Treasury, incorporating the Office of Small Business headed by Minister for Small Business Bruce Billson, first released a discussion paper and invited submissions on the proposed changes to the Commissioner’s office. The FCA provided a detailed submission on the powers of the proposed Ombudsman. It was important to ensure there was no needless crossover of jurisdiction between the Ombudsman and other federal and state-based resources. The FCA supported the move to make the Ombudsman a concierge for dispute resolution, with a number of stipulations. Communication tools and support such as mediation have proved to be very effective in resolving issues in the franchise sector. During the consultation phase, the FCA agreed with the Ombudsman acting as a kind of ‘triage’ service; that is, undertaking preliminary discussions with the parties and determining the best course of action. That could include

T H E

F R A N C H I S E

R E V I E W

The FCA felt there were already appropriate government bodies in place to deal with further investigation (ACCC, ASIC et cetera), and to grant these powers to the Ombudsman would cause duplication and create confusion in the investigation process

referral to a state-based Small Business Commissioner or an industry-based mediator (like the Office of the Franchising Mediation Adviser) to enter into a dispute resolution process. The FCA also supported a provision that would allow the Ombudsman to impose financial costs associated with nonattendance at mediation.

From here, the legislation will need to clear both houses of Parliament before coming into effect by the governmentâ&#x20AC;&#x2122;s proposed 1 July start date. For more information on the Ombudsman, the FCA submission or the consultation process, visit www.treasury.gov.au or contact the General Manager at FCA head office on 1300 669 030.

Importantly, the FCA did not support the Ombudsman being granted the power to investigate business complaints, including obtaining information from involved parties. The FCA felt there were already appropriate government bodies in place to deal with further investigation (ACCC, ASIC et cetera), and to grant these powers to the Ombudsman would cause duplication and create confusion in the investigation process. It is felt once the decision to further investigate or initiate mediation has been made, the Ombudsman should then refer parties to appropriate agencies. This leaves the Ombudsmanâ&#x20AC;&#x2122;s office with resources to fulfil its other duties, which include small business advocacy to government and other stakeholders (including independent consultation on proposed legislation) acting as an information resource to small and family businesses, promoting best practice principles in business, and working with Commonwealth, state and territory governments to ensure a coordinated approach to the small business sector in Australia. The above is by no means an exhaustive list, but, in all, the FCA supported the move as a way to provide more clear and cohesive support to small business owners, incorporating both franchisors and franchisees, across Australia.

What happens next? The federal government intends to introduce the Small Business and Family Enterprise Ombudsman to the landscape by way of legislation. At the time of writing, draft legislation has been released for consultation. Pleasingly, many of the stipulations in the initial FCA submission have been acknowledged in the draft. Consultation closed on 7 April. The FCA has provided a submission further cementing both its support and stipulations for the proposed Ombudsman.

Minister for Small Business Bruce Billson

T H E

F R A N C H I S E

R E V I E W

The $50 million question: Why are many franchise recruiters failing? BY RAFFAEL FERNANDES, HEAD OF FRANCHISING GROUP, CIRRUS MEDIA – FRANCHISEBUSINESS.COM.AU

For the past 18 months, I’ve spent a great deal of my waking life preoccupied with understanding a complex series of events that I’ve now come to know as ‘the franchise buyer journey’. This preoccupation (and I don’t use that term loosely!) was born out of a desire to understand how the franchise brands I’d been working with could generate higher sales. In order to do that, I had to get a handle on how, when and why franchise buyers interact with companies at the point of first enquiry. Hearing feedback from both sides over the past six years, it seemed evident that there were huge disconnects between what the two groups were telling us: • Franchise sellers: ‘95 per cent of leads are tyre kickers. They don’t return emails, and don’t even leave their phone numbers. #@+#% useless time wasters!’ • Franchise buyers: ‘I’m trying to understand which brand is the best fit for my financial and work/life goals. I need helpful information to review in my own time without being hassled by a sales rep, as I’m not quite ready to buy, and I don’t want to have to give up all my details to get it’. Both statements will sound very familiar to most of us. But for me, something still didn’t quite add up, and I was determined to find out why. My belief was that if we could understand how to improve this primary interaction between both parties, then a huge amount of inefficiency could be decreased.

My belief was that if we could understand how to improve this primary interaction between both parties, then a huge amount of inefficiency could be decreased

I started to ask every franchise brand that I came across – mature and emerging, retail and service – about their typical lead generation and follow-up practices, and the answers were pretty interesting. 1. Most franchise brands were using external franchise media to generate leads.

T H E

F R A N C H I S E

R E V I E W

2. Most franchise brands were generating strong – sometimes the strongest – leads via their own website forms; although, in many cases, these people were referred to the site by an external franchise medium.

It’s becoming apparent that there is a science to lead generation, and many franchise brands still weren’t measuring the basics

Okay. No surprises so far. 3. Many, but not most, franchise brands had a good understanding of their overall lead-to-sale conversion rate (anything from one in 30 to one in 100). 4. A few, but not many, franchise brands had split conversion rates between lead to candidate, and candidate to sale (the latter was typically much higher than the former). 5. Less than half of the franchise brands were measuring these metrics and conversion rates monthly, and implementing tactics to keep improving them. It’s becoming apparent that there is a science to lead generation, and many franchise brands still weren’t measuring the basics. And, as we all know, you can’t manage what you don’t measure. 6. Many, but not most, franchise brands hadn’t fully reverseengineered their lead generation volumes to achieve their sales goals, based on average conversion rates.

Say what?! (I recently met with a franchise development manager at a leading national brand whose face drained of blood when it dawned on him that he needed to meet with 40 candidates per month consistently for the next year just to have a fighting chance of achieving the sales key performance indicators (KPIs) loaded on him by his boss.) 7. Most franchise brands would send an enquiry follow-up email within 24 hours.

How is your brand represented on ... The Official Directory of the • Over 1200 franchisors listed • 80,000 potential franchisees visiting every month • Measureable, cost effective lead generation - Email leads - Web clicks - Phone calls • Expert advice from legal, financial and business consultants To discuss your listing and how it’s working for you... Email: fb@cirrusmedia.com.au or call 1300 206 812

T H E

F R A N C H I S E

R E V I E W

Lead nurturing is defined as ‘the process of building relationships with qualified prospects (often by delivering highly valuable content that helps them progress along a buying path) regardless of their timing to buy, with the goal of earning their business when they are ready’ Phew, you’d hope so... 8. Many franchise brands would send an extensive follow-up email, including requests to complete a lengthy application process and confidentiality agreement in order to further the process. 9. Many franchise brands were sending a brief follow-up email, requesting a telephone conversation to get to know the enquirer and discuss the opportunity further. 10. In both instances 8 and 9, however, brands were experiencing low lead to candidate conversion rates, and were frustrated and wondering why. This last point is the one that I am really interested in. Why would a sane person, who has taken several very distinctive steps to research a franchise brand or opportunity and send an email, suddenly drop off the face of the earth? It’s the $64 million question, isn’t it? Well, not quite. It’s possibly closer to being a $50 million question, which is the approximate cumulative spend on franchise recruitment advertising every year in Australia, based on data from the Griffith University 2012 Franchising survey. With so much being spent to acquire prospects, and so many prospects being written off before the first hoop has even been jumped through, the potential for wastage is equally high. The key missing link to improving conversion lies, in my opinion, in the very specific best-practice of how to ‘nurture’ a lead into a candidate, and ultimately into a buyer, at scale, with consistency and with maximum cost-efficiency to the business. Lead nurturing is still a relatively unheard of term for many franchise marketers, but elsewhere, it’s a multi-billion-dollar industry. Lead nurturing is defined as ‘the process of building relationships with qualified prospects (often by delivering highly valuable content that helps them progress along a buying path) regardless of their timing to buy, with the goal of earning their business when they are ready’. In Australian franchising, it seems that if a candidate is not ready to buy, or is unwilling to enter into a discussion about buying as yet, in many cases, they are dismissed as a tyre kicker. Sales teams will naturally focus on the ‘low-hanging fruit’, but when potentially 80 per cent or more of prospects are still in earlier stages of the purchase journey, then pipeline practice is critical.

Sure, many of these supposed tyre kickers may sit on a database and receive a regular monthly company newsletter in the hope that they re-engage, but, really and truly, is the brand actually providing any meaningful content that is going to nurture a prospect closer to the buying point? In most cases, it seems that it won’t, and that largely comes down to brands not fully understating which content can achieve this goal, or not having the capacity to act like a publisher as well as focus on the core business activities. It’s a very common problem for franchise brands of all sizes, sectors and levels of maturity. Think about that last time you bought a car, a home or a holiday: • Did you do research before engaging a sales representative? • Did you want your own time and space to digest the information? • Would you have had a higher likelihood of returning to the provider that helped you by providing valuable information to make a better purchase decision? • Would you have liked to have been written off as a tyre kicker if you chose not to give up all of your information or sit through a sales pitch the first time you walked into a car showroom? • Would you have continued your buying journey elsewhere, and ended up purchasing from a provider that offered more information up-front and allowed you the time and space to come back when ready? I certainly know what I would do. It’s clear that franchisee research behaviours and enquiry patterns have changed. As Australian consumers, we have developed an increasingly low tolerance for product-push advertising, and for sales reps being the gatekeepers of information that we can gather in our own time and on our own terms. When we are ready to buy, we increasingly go to those who we perceive to be trusted experts that have added value to our purchase decision. It’s time for franchise marketers to catch up, and content marketing-driven lead generation and lead nurturing is the way forward. Raffael is a leading expert on content marketing and lead generation for franchisee recruitment, and is currently head of the franchise media portfolio at Cirrus Media, which includes the Franchise Council of Australia’s official directory, franchisebusiness.com.au.

GOOD HAIR HAS ITS REWARDS JOIN THE LEADING HAIR AND BEAUTY BRAND

HAIRHOUSE WAREHOUSE is Australia’s leading hair & beauty brand, with plans to expand its network by 20% over the next 3 years, across the nation. We are looking for passionate people with a desire

Do you have what it takes to be successful?

to strive for results and take control of their own destiny. Whilst hairdressing experience is not required,

Franchisees are able to own their piece of one of

strong work ethic and drive is essential.

Australia’s largest retailer, and build their business

What sets us apart from the rest?

faster. So if you want to start achieving your goals, now is the time to join, with Hairhouse Warehouse

• A proven profitable turnkey operation

offering up to 30% reduction in the entry costs for

• Multiple revenue streams, including retail,

all new stores. Locations are available in all states

hair salon, piercing and beauty services

and territories in Australia.

• Extensive training and support from

a dedicated team of professionals

• Exclusive stockists of world leading brands

and the most lucrative merchandising terms

Watch our video here

CONTACT PETER FIASCO for a confidential discussion on 0451 370 060 hairhousefranchising.com.au

hairhousefranchising.com.au

Visit our website

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

A R T I C L E

RECIPE FOR SUCCESS A brand loved by Aussies nationwide, Gelatissimo is a unique gelato business that rewards not only its customers, but also its franchisees. Making brilliant gelato is a complex task, and so is building a brilliant gelato business, but Gelatissimo has mastered the recipe for success! With a combination of quality artisan products and simple instore production systems, the company has created a superior product with a huge dose of its trademark flair.

Since the brand’s first concept gelateria was unveiled in 2002, the franchise has gone from strength to strength, and with an experienced and skilled management team, Gelatissimo now has 34 stores nationally and 51 stores globally, making it the largest gelato franchise in Australia. Partners have enjoyed the independence of operating their own businesses, while being part of a strong, supportive and simple system based on proven methods. Gelatissimo has a passion and commitment to creating premium gelato without compromise. The brand concept is truly unique, using secret traditional Calabrian family recipes and the finest quality ingredients, with all products made fresh in store – this is all part of the distinctive Gelatissimo experience. The brand’s stores immerse customers in an authentic Italian experience, with the help and expertise of their master gelato-maker, Italian-born Anna Temellini, who brings with her more than 20 years of experience. Anna helps with training and product development, ensuring that Gelatissimo’s offering is always inspiring and puts a smile on people’s faces. Always striving to delight customers with something innovative and surprising, Gelatissimo has also recently introduced an exciting new range to its ever-expanding franchise, with Eat in Desserts. The first Eat in Dessert café opened in 2014 in Watsons Bay, New South Wales, turning the store into a destination experience for customers. The novel offering of

A 20

gelato delicacies, including Sushi Gelato, Noughts and Crosses, and Milk and Cookies, makes the exclusive new menu a tempting treat for all the family! Given the immediate popularity and success of the range, the brand is now rolling out the concept further to Adelaide, where three Eat in Dessert cafés have opened this year alone. Firmly establishing themselves as family destinations, the stores also offer coffees, milkshakes and gelato cakes, meaning that the Gelatissimo experience can be enjoyed all year long. The developing range is testament to the brand’s reputation as a frontrunner and a pioneer in the gelato market. Gelatissimo is an established franchisor, and in addition to the Eat in Dessert cafés, the brand offers its franchisees three styles of outlets: shopfront, kiosk and café, as well as full training and continuous support from the professional, operational and marketing teams, enabling them to showcase their passion and hunger for success. The brand is currently seeking franchise partners who share its values of dedication and dynamism, as it continues to expand and cater to the world’s timeless desire for indulgent gelato. Gelatissimo has some outstanding opportunities available, both nationally and internationally, with stores across Australia, the Philippines, Kuwait, Singapore and Saudi Arabia, making it one of the most envied and highly favoured franchisors currently in the marketplace.

taste the

SWEET REWARDS of becoming a Gelatissimo franchisee

To change your lifestyle through investing in a business that is fun, flexible and rewarding contact Karen at Gelatissimo on (02) 8845 0100 or email franchise@gelatissimo.com.au. rtificial f no a la

urs vo

ific

ial colours

gelatissimo.com.au

T H E

F R A N C H I S E

R E V I E W

How your franchise business can get more value from social media BY TIM LELE, KEEP LEFT

In 2015, it’s no longer about whether or not your brand has a social media presence; it’s about whether or not you are making the most of that presence to grow your business. There are a staggering 13 million active Facebook users in Australia, and LinkedIn has more than five million, while 2.8 million people tweet. Business continues to make up an increasing number of these profiles. Australian franchise brands leading the way in social media span industries from fast food and retail, to trade and professional services. Social media is not just a channel to increase customer engagement; more and more, it’s being used for professional networking and career development, and to drive franchise recruitment. One of the great things about social media is that it’s a true leveller. No matter how big or small your franchise is, every brand has the ability to create a strong digital presence that showcases its unique values, and provides a voice to communicate with customers, suppliers and even potential franchisees. The reality is, even if you don’t have a Twitter, Facebook or LinkedIn profile, your customers, competitors and peers are most likely already talking about you there – both the good and the bad. It’s simply a matter of whether you are prepared to join those conversations and influence your stakeholders, or risk losing the engagement opportunity all together. Social media also provides an efficient way for those in the franchising space to expand their professional networks, share with peers, and learn from the brightest minds in the industry, while building a personal brand that can help advance their careers. So, how can you get more value from social media and take your franchise to the next level? Here are my top four top tips:

Social media also provides an efficient way for those in the franchising space to expand their professional networks, share with peers, and learn from the brightest minds in the industry, while building a personal brand that can help advance their careers

T H E

F R A N C H I S E

Develop a clear plan It seems obvious, but you need to think about social media the way you would any other professional marketing or communications tool. Too many businesses simply decide to set up a Facebook page and share a few updates and images, and then get frustrated when the likes don’t come flooding in. A social media plan needs to map your target audiences, research what social media platforms your market is active in, and develop an effective content plan through which to engage with them. You need to decide the voice and tone of your communications. Are you fun and cheeky, or are you considered and authoritative? This is your business personality, and should be unique and consistent to set you apart from your competitors.

Create content plans Next, you need to decide the content pillars that will make up the majority of your posts, and map them out over a month or a week to develop a content schedule. Whether it’s images of healthy food, the latest economic figures, or social events that are taking place in the local area, you need to think about the topics and themes that reflect your brand, and that resonate most with your target audience. The content consumed through YouTube, Facebook and Instagram is different to that on blogs, LinkedIn or Twitter, so consider the type of content you have to share, and which channels are best to reach your audience. Endota Spa is a great example of a brand that knows its audience and shares original content that their clients want to engage with. Scroll through the beautiful images on their Facebook and Instagram profiles, and you can’t help but feel relaxed – you can almost smell the lavender oil!

Professional development and networking Social media shouldn’t only be about your brand’s presence. As a leader, your personal social media engagement can be a great advertisement for your company, while providing new networking and learning opportunities.

R E V I E W

The Franchise Council of Australia's own LinkedIn discussion group is a good place to start. With around 350 members from a wide cross-section of the Australian franchising community, including franchisors, franchisees, consultants and industry experts, the group is a fantastic forum for open discussion about everything to do with franchising. Having some of the industry’s leading minds available to answer questions and share their thoughts is a useful resource for all FCA members, as well as everyone in the franchising community.

Endota Spa is a great example of a brand that knows its audience and shares original content that their clients want to engage with. Scroll through the beautiful images on their Facebook and Instagram profiles, and you can’t help but feel relaxed – you can almost smell the lavender oil!

Participating in LinkedIn group discussions is one of the best ways to build new connections online. Another way is through joining the social media discussions at conferences and events. At last year’s National Franchising Convention, the #NFC14 hashtag was a hive of activity, with images and conversation being shared from all over the event, including the FCA’s official handle @FranchCouncilAU.

T H E

F R A N C H I S E

R E V I E W

Franchise recruitment While your brand persona on social media can help attract potential franchisees, LinkedIn is a platform where you can actively target new recruits. A LinkedIn company page should be the digital shopfront of your brand. It is where you can share company updates and career opportunities, and gather powerful testimonials from customers and employees. When setting up your company page, make sure it is properly set up for search engine optimisation (SEO) with the keywords that your customers use. Surprisingly, very few Australian franchise brands are using LinkedIn company pages to their full potential. FCA members Aussie and Smartline Personal Mortgage Advisers are two bestpractice examples. In addition to their keyword-rich and regularly updated company pages, each has a ‘careers’ tab that includes YouTube videos depicting what it is like to work for the company. They highlight referrals from franchisees and employees, and advertise franchise opportunities and other corporate positions that are available. In addition to listing your franchise opportunities under the careers tab, another great trick is to post these to the careers tab of the LinkedIn groups you belong to – like the FCA group.

Endota Spa's Instagram inpires its customers

Tim Lele is an Account Manager at cross-media public relations agency Keep Left. For more information, visit www.keepleft.com.au.

THE DOS AND DON’TS OF SOCIAL MEDIA

Dos

Don’ts

•

Do have a constant supply of content to share with your audience that is relevant and insightful.

•

Don’t mix your personal profile with a business profile – this can create a wrong impression of the brand to customers.

•

Do make sure a strategy is put in place before embarking on a social media program.

•

Don’t bombard followers with private messages – this will only create negativity.

•

Do encourage your franchisees to get involved in social media activity and ensure that they are provided with all the tools that they require.

•

Don’t ignore difficult questions or complaints about the business; that’s what the issues management plan is for.

•

Do have an issues management plan.

Don’t delete negative commentary or posts unless it is defamatory or offensive, and make it clear that this is your policy.

JOIN THE

DREAM TEAM

Vendor finance now available* *Available to approved applicants.

We are looking for dynamic people who love dealing with others and are passionate about retailing. The Snooze brand has a strong history of over 30 years in retailing and has built a very solid franchise system. We provide franchise partners with a stable platform to start their business and offer support across the entire business including: • Marketing and Promotional Support • Product Development and Buying Power • Proven operating system that includes comprehensive product and sales training • Business Management support from our on the ground field team • Assistance in site selection and property negotiations • Business finance available to approved applicants

For more details visit snooze.com.au or call Alistair Browne, our Franchise Network Development Manager on 0427 401 169

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

T H E

F R A N C H I S E

R E V I E W

The challenges of opening a business in global markets BY IAN MARTIN, CHIEF EXECUTIVE, NOODLE BOX

Many franchisors plan on taking their franchise overseas and introducing their service or product to a new market. But we all know business is riddled with franchise expansion plans gone wrong. For every international success, there are a dozen failures. Is it possible to avoid the pitfalls? Throughout my career, I have identified that there are some basic steps an internationally ambitious company can take before it sets out on the path of expansion. These steps can work towards securing the health of a venture, but there are always myriad different things that can go wrong. Noodle Box was well established in the Australian market before we decided to head overseas to Saudi Arabia, adding

Ian Martin

T H E

F R A N C H I S E

to our existing international outlets in Mauritius. We’ve opened two restaurants in the Saudi region, and there are plans to open more. But before we set off, we did our homework. It is essential that you understand the political, economic and environmental difficulties of the market you’re entering. This is one of the crucial first steps. Our team made sure that Noodle Box had a thorough understanding of the hurdles we were about to face in opening in Saudi. One of the fundamental exercises before you embark on any type of international expansion is to make sure you’ve got your trademark registrations sorted out. Unscrupulous operators have already hijacked many brand names, holding them to ransom until the rightful owners hand over extortionate amounts of finance to buy them back. Alternatively, they may be legitimate businesses in the region that carry the same name as you, but are none the wiser about your brand. You can find yourself spending a lot of time and effort on planning a market entry, only to discover that you cannot register your business because someone with your brand name is already trading there. Sometimes you can do something about it if you can prove that the activity is unjust – specifically, if the brand name has been registered but it is clear that the business is not trading – but this often depends upon the jurisdiction; for example, it is easier to take action against brand-name hijacking in Europe than in some other parts of the world. It is also important to ensure that you don’t get lost in translation. Expanding overseas is not simply a matter of picking up your brand and expecting it to work in a new country; there are all kinds of cultural differences to consider – from the colours of your logo to the name of your business – and they might not all be appropriate for your new market. Consider all aspects of your branding, and whether they are culturally appropriate and not likely to cause offence. Even the big guys can get this wrong: KFC had problems in China when its slogan, ‘finger-lickin’ good’, translated as ‘eat your fingers off’. The next thing to check is whether you can actually get your product into your target country. Some countries have difficulty

R E V I E W

Even the big guys can get [their branding] wrong: KFC had problems in China when its slogan, ‘fingerlickin’ good’, translated as ‘eat your fingers off'

sourcing certain dairy items, for example, or serving pork may be a problem in Muslim countries. Do your research and make sure your offering is actually feasible in a new market. Next comes the big step: finding a franchise partner. It is easy to be swayed by companies that offer an open chequebook – and this will certainly provide short-term benefits – but the true strength of a franchise partnership is in the strategic alliance you can both bring to the deal. It is crucial that there is communication at the managing director level in both companies. This level of conversation helps to ensure that both companies have the same vision. You could clearly say, for example, ‘We want to see five outlets opened in the next six years, all of them in shopping centres’ – and if the vision is the same, then both companies can agree what success would really look like. Finding the right franchise partner is a combination of personality and paperwork. You have to analyse their business and their organisational structure, but the personal relationship is important, too. Are they up-front with you? Do they show good will? The business plans and management personalities need to be

T H E

F R A N C H I S E

aligned, but when things move to the market-entry stage, you need to be 100 per cent focused on the documentation, and must take all personal issues off the table. When Noodle Box moved into Saudi Arabia, we ensured that our relationship with our franchise partner was strong. We shared clear objectives and business directions, and we knew that our partner had core capabilities that worked very well with our business model. Our partners already operate two food franchise brands in the region, and they have deep commercial real estate and property experience, so we are reassured that they will be able to secure good sites for new Noodle Box restaurants. Our franchise partner ticked all the boxes for financial strength, and has committed to opening 65 Noodle Box restaurants over the next five years – and that is very much in keeping with our vision. Our partner decides the speed of the restaurant openings, but we know we are working towards an agreed number in an agreed time frame. There can still be surprises after the deal is struck. Even the best relationship can go sour; for example, when there are management changes with the franchise partner, which can upset your strategic alignment and throw the agreement into doubt. Take a close look at the market you are about to enter, and assess whether or not your offer is competitive. Take noodles, for instance. If we were assessing the noodle industry in Australia with a view to launching a new brand here, we would consider this region to have low profitability. This is because there are many different players in the market, with low barriers to entry and a concentrated distribution network. If you don’t already have a strong brand identity, such as Noodle Box, you will struggle to make your name here. You also need a good relationship with your distributors, because Australia is a large country with a lot of transport difficulties.

R E V I E W

If you don’t already have a strong brand identity, such as Noodle Box, you will struggle to make your name here. You also need a good relationship with your distributors, because Australia is a large country with a lot of transport difficulties

So, you have you ask yourself: ‘Is this the right market for my brand?’ We always ask, ‘Where does Noodle Box want to be?’ and to answer that question, we look at the culture of the prospective market and whether we are likely to be successful. Noodle Box looks to open in markets that have a similar taste profile to our own, have strong takeaway eating habits, and are familiar with franchised food options. Overwhelmingly, it is these similarities that drew us to Saudi Arabia – even though culturally you might think Australia is very different. People in KSA eat at home a lot, and men and women usually eat separately. But they also dine out regularly, and families eat together at restaurants. There is a strong dinner culture, rather than lunch, and that is perfect for Noodle Box. Our openings in KSA have been met with great success so far, although it is still early days. We will be ensuring we proceed with care, and monitor our guests’ responses and reactions. We are quietly confident about the future, and looking forward to the next stage.

T H E

F R A N C H I S E

R E V I E W

Franchisors on... The Franchise Review asks members about their national and international operations, and gets the lowdown on how they stay current and successful in an evolving and challenging market. THIS EDITION, WE TALK TO GELATISSIMO, JUST CUTS AND SNAP-ON TOOLS.

On franchising…

On recruitment…

GELATISSIMO

Since commencing franchising in 2004, Gelatissimo has expanded nationally, and throughout South-East Asia and the Middle East. What one piece of advice would you give to someone taking their brand overseas?

Do you approach recruitment in Australia differently to overseas? Why?

Make sure that you choose the right franchise partners. Set strong foundations for your franchisees to set them up for success, and passionately support them on the journey. JUST CUTS What is the number-one challenge franchisors face in Australia? How does this differ from what you have seen overseas Denis McFadden, CEO and founder: In Australia, we are very lucky to be living a relatively affluent life. If you are in fulltime employment (which is still the case for many of us), your lifestyle is pretty good. What we have observed overseas is that the only way you can work towards achieving what you are really worth is to have your own business – so franchising is better understood, as it provides an opportunity. Because of our comfortable lifestyle in Australia, our mindset is more risk-averse. The implication for franchisors is that the market is more limited here in Australia than the United States. SNAP-ON TOOLS How has the Snap-on brand continued to adapt from its United States origin to the Australian market?

Yes, we do. The investment level needed for a local franchise is a lot lower than an international one. The profiles of investors between the two are very different, so we approach the recruitment and support differently for both. JUST CUTS What does Just Cuts do as a business to retain quality franchisees? Denis McFadden: Just Cuts encourages and helps our franchise owners to acquire multiple salons by offering reduced initial fees when they invest in their second salon. Just Cuts owners are welcome to approach us with a new opportunity, and our ‘Cut Above Club’ franchise owners are offered first choice of any new locations we have available. Amber Turnbull, Chief Operating Officer: A relationship of mutual respect is also very important to us. In 2014, we conducted an independent 360-degree review of Just Cuts that allowed our franchise owners to rate our performance as the franchisor. 100 per cent of Just Cuts franchise owners rated our system as good/very good. We were also delighted to find that 92 per cent of Just Cuts franchise owners rated their overall relationship with the franchisor as good/very good.

Snap-on was founded in 1920 in the United States. Snap-on has a strong brand heritage, which continues to be relevant in Australia and the rest of the world.

SNAP-ON TOOLS

Snap-on does have to adapt for local markets; for example, the Snap-on mobile store has had to be customised for the Australian and New Zealand market.

Prior knowledge of the industry is not essential, but knowledge of our tools is an advantage. What makes a great Snap-on franchisee is someone with the right attitude and who is self-motivated, ambitious, goal-oriented, determined, and team-spirited.

What are you looking for in a Snap-on Tools franchisee? Do they need to have a prior knowledge of the industry?

T H E

F R A N C H I S E

On education and training…

JUST CUTS

GELATISSIMO

Just Cuts has just turned 25. What are Just Cuts’ plans for growth and expansion before its 30th birthday, and does this include expansion beyond the Australian and New Zealand markets?

What has been the most worthwhile investment into training in the Gelatissimo network? Our recruitment of a highly qualified training manager, as well as the recruitment of a product training and development manager. Having these resources on board means that we are able to provide our franchisees with great support and coaching to help them achieve success. JUST CUTS Just Cuts attended the recent International Franchise Association Convention and USA Study Tour. What major learning did you bring back to Australia? Denis McFadden: Our biggest learning was seeing firsthand that Australia is a small market and that everything is scaled up in the United States. For instance, if we had started Just Cuts in the United States 25 years ago, today, we would likely have 2000 units and a private jet (with our own pilot). The United States has better finance options, which allows people with a passion to be recognised and given the opportunity to follow their goals. If lending options were better resourced in Australia, a lot more people could have their own businesses. SNAP-ON TOOLS How do you use your international network to ensure Australian franchisees are at the forefront of training and development? There are more than 4000 Snap-on franchisees around the world. As we are an internationally proven system, we have a wealth of experience to draw on from both employees and franchisees here and across the world. Snap-on Australia has a dedicated Training Manager, and also uses training facilities in the United States to support our franchisees.

On growth and the future… GELATISSIMO Where do you see Gelatissimo in five years’ time, and what strategies do you have in place to reach these goals? Our aim is to be the market leader in the gelato franchise space. This includes the strong growth of the brand within Australia and internationally. To achieve this, we have a national Franchise Development Manager, and we recently introduced an international Franchise Development Manager.

R E V I E W

Amber Turnbull: Our 2015 strategy is centred on our vision to achieve 200 operating salons and five per cent market share. We have identified an additional 100 sites throughout Australia – these are opportunities for kiosks as stand-alone salons or additional satellite sites for franchisees making the transition into multi-site franchises. We have also identified more regional shopping centres with less foot traffic, which can support kiosk salons, as they have a lower entry point and lower ongoing operational costs than a traditional salon. The kiosk is a more financially viable and sustainable option for a potential franchisee, with less capital buying-in at a lower initial investment. With a fixed franchise fee, this is an opportunity for a change of lifestyle with unlimited earning potential. Most Just Cuts franchisees go on to become multi-site owners, with each currently owning approximately 2.4 salons. In September 2014, we announced the expansion of our focus to the global hairdressing industry, with expansion plans into South-East Asia, the Middle East, India, and the United Kingdom. This is a natural progression for our franchise system that has only been limited by geography to date. SNAP-ON TOOLS What are Snap-on Tools’ plans to grow its presence within the Australian market over the next five years, and how does this fit within the broader international strategy for the business? Over the next five years, our plans are to grow and expand our franchise network by aligning our franchise list of calls with how they are offered internationally. The average tenure of a franchisee in Australia and New Zealand is 15 years, and this means we have to work closely with our existing franchisees to implement any expansion and development plans; for example, Snap-on Australia is currently working with franchisees to highlight our multi-unit franchise opportunity.

Specialist Industry Knowledge Acting for Franchisees and Franchisors Australian and Worldwide Affiliations

WiseWould Mahony is a leading australian FirM that specialises in the area oF Franchise laW

The Firm oFFers Franchisors a broad range oF services including:

We oFFer Franchisees a broad range oF services including:

• Consultancy and advice on establishing new franchised system;

• Fixed fee, quick turnaround franchise assessment for franchisees;

• Assessment, review and upgrade of existing franchised systems and documents;

• Advice regarding rights and obligations under the Franchising Code of conduct;

• Systems, legal and Australian Competition and Consumer Laws (ACCL) compliance;

• Risks of Franchising and solutions to reduce exposure;

• Dispute resolution, solutions and strategies;

• Structuring of the Franchise from legal, taxation and asset protection perspectives;

• Intellectual Property, protecting your copyright/ brand; • Structuring of the Franchisor considering legal, taxation and asset protection; • Master Franchise Agreements; • International Franchising and support worldwide - US/Europe/India/New Zealand; • Access to a network of leading Consultants in the franchise industry;

• Access to specialised Accountants with franchise expertise • Dispute resolution strategies and solutions without litigation; • Acting for franchise advisory councils and representative franchisee groups; • ACCC complaints and investigations.

• ACCL, ACCC investigations and prosecution.

Wisewould Mahony | Lawyers

We work as partners with our clients. Our clients’ success is our success!

419 Collins Street | Melbourne VIC 3000 p +61 3 9612 7297 | f +61 3 9629 4035 enquiries@wisemah.com.au

TT HH E EF F RR AA NN CC HH I SI S E ER R EE VV I EI E WW

Using technology to support growth and recruitment strategies BY JONO BRITTON, MANAGING DIRECTOR, SHIFT8

In the quest for continued network growth, franchisors are looking to technology to both attract new franchise buyers, and to support multi-site ownership. Sales growth and network growth are the lifeblood of franchise systems, generating and improving brand awareness, purchasing power, and returns on advertising spend; however, with the limited pool of ready franchise buyers, franchisors need to get creative with their recruitment strategies in order to stand out from the pack. So, how can technology support these growth and recruitment goals?

1. Tempt the tech savvy According to IPSOS Global Trends 2014 survey results, Australia ranks highly, with a large uptake of, and confidence in, device usage, coupled with an appetite to learn more. Franchisors have an opportunity to tap into the growing

technological aptitude of buyers by showcasing their technology stack, and its ability to meet their needs on a continuing basis. This starts with assurances around the longevity of franchisees’ software investment. Is there an up-front cost with a finite life cycle, or can you opt for ‘Software as a Service’, which allows for growth while paying as you go? Showing buyers that the brand can stay relevant in the face of rapid change and strong competition is a powerful incentive, and a unique point of difference.

T H E

F R A N C H I S E

The ability to use new, mobile and often less-expensive hardware as it becomes available is an added incentive. Building in mobile apps, digital signage, electronic loyalty, group buying and social media will result in a cohesive IT platform that offers all the benefits that franchise buyers seek, while also being easy to manage at a head-office level.

2. Broaden the buying pool Prospective franchisees each have varying levels of competency, so technology tools that help plug essential skills gaps can assist in relaxing franchisee selection criteria. Think franchisees with no prior service experience who are able to recognise a loyal customer, recall their previous purchase, view and recite items’ nutritional information, and suggestive sell – all from the point of sale. Imagine the same franchisee using a mobile tablet to create a staff roster and immediately make adjustments based on the notified labour spend as compared to projected sales. All of this is possible with a cloud-based operational system that links to the point of sale. Monitoring stock usage, labour spend, occupancy cost and franchise fees, all during the normal course of business, adds no extra reporting burden to franchisees, and still provides vital key performance indicators in real time. It’s these same cloud-based tools that allow existing franchisees to manage and monitor performance and staff remotely. It’s this capability that can give franchisees the confidence to invest in new sites without compromising returns. Reporting solutions that offer the ability to review performance of individual or grouped sites are invaluable, and mean that franchisors needn’t rely on a franchisee’s physical presence to know what is occurring in store in real time.

3. Head offshore International expansion is a common goal for franchisors, and success overseas often bodes well for the domestic market.

R E V I E W

International expansion is a common goal for franchisors, and success overseas often bodes well for the domestic market

Selecting an international partner or master franchisee can be fraught, though, with many franchisors losing operational control and transparency over sales results and, therefore, revenues. Establishing a strong IT platform domestically that can be deployed internationally should be at the forefront of new and existing franchise systems goals. Equipping your international partners with access to the same operational tools, including point of sale that satisfies the local currency, language and tax requirements, means that the domestic head office can readily check, support and buoy a network in its infancy. Getting this right means selecting an Australian software solution that can be customised for international markets, but managed from either the local or global head office. Combined with a locally sourced hardware, this will offer the most robust solution for international partners, and will go a long way towards achieving overall network growth. The team at Shift8 has many years’ experience assisting franchisors both domestically and internationally with their point of sale and reporting requirements. Contact us on info@shift8.com to see how we can help your brand, or visit www.shift8.com for more information.

T H E

F R A N C H I S E

R E V I E W

Supporting franchisees on their emotional and business journey BY GREG NATHAN, FOUNDER, FRANCHISE RELATIONSHIPS INSTITUTE

Franchising as an emotional roller-coaster. The franchise relationship can be an emotional roller-coaster, both for franchisees and the franchisor executives that support them. Given all the attention they will have received during the recruitment and initial training process, a franchisee may start off feeling very happy. But they will soon be questioning, not just the value they are getting for their ongoing fees, but also the competence and intentions of their franchisor. At some stage they may even want to shake

After the franchise agreement has been signed, formal training and induction commences. While a franchisee is likely to be enthusiastic during training, they are also likely to forget 80 per cent of what they see and hear

Greg Nathan

T H E

F R A N C H I S E

R E V I E W

free of their franchise system’s procedures, believing they have a better way to do things. The Franchise Relationships Institute team has identified a business journey that has six stages.

Stage 1: Investigation Most franchisees start their business journey investigating several business opportunities. During this Investigation Stage, they are asking, ‘Could this be the right business for me?’ while the franchisor is asking, ‘Is this the right person for us?’ The franchisee induction process actually starts here. The expectations being established in a franchisee’s mind will stay with them for the rest of their journey, which, according to current trends, is likely to be well past seven years. At this stage, franchisors need a checklist of attributes, and a method for assessing prospective franchisees against this checklist. Our research has identified a number of attributes that make a huge difference to a franchisee’s later success, such as family support, optimism, business acumen and sales potential.

Stage 2: Initiation After the franchise agreement has been signed, formal training and induction commences. While a franchisee is likely to be enthusiastic during training, they are also likely to forget 80 per cent of what they see and hear. This stage is called Initiation because it is mainly about initiating the franchisee into your culture and your brand. In particular, you should put them through specific activities to educate them about what you stand for, and about the reputation you want them to build in their local market.

Stage 3: Perspiration The shift from a sheltered training environment to the realities of difficult customers, unreliable staff, long hours and unpredictable cash flow will inevitably be stressful. The franchisee is now moving from a state of unconscious incompetence to a state of conscious incompetence, which can also be disconcerting. Because they are now sweating it out, we call this the Perspiration Stage! The main role of the franchisor at this stage is to provide practical support and encouragement, and to revisit the basics of running the business.

Stage 4: Consolidation My dad used to say that when you get a new car, the cream of motoring is between 10,000 and 30,000 kilometres. In business, we call this the Consolidation Stage, and it normally kicks in after one to three years. There is now a base of regular customers, the business has a steady cash flow and, providing the customer experience is being delivered as it should, sales will continue to grow. The franchisee is now moving from conscious incompetence to conscious competence, which means they can take a breath, step back to review their progress, and reset their goals.

A franchisee in the Maturation Stage will probably have worked with several field consultants, heard numerous franchisor executives proudly roll out a raft of new initiatives (some more successful than others), seen a number of fellow franchisees come and go, and been toughened by the ups and downs of running the business

A franchisor can best support the franchisee by reviewing their business plan and helping them to improve their productivity

T H E

F R A N C H I S E

R E V I E W

The dictionary definition of reformation is: ‘An intended improvement in the existing form or condition of an institution or practices, to make a striking change for the better’. A franchisee in the Reformation Stage has made a decision to make a striking change for the better. This may be to reorganise or restructure their business, or to expand into additional units

and systems. Getting them into good business habits, such as measuring key performance indicators, will also help them to maximise their success.

Stage 5: Maturation We are now likely to be five to seven years down the track. A franchisee in the Maturation Stage will probably have worked with several field consultants, heard numerous franchisor executives proudly roll out a raft of new initiatives (some more successful than others), seen a number of fellow franchisees come and go, and been toughened by the ups and downs of running the business. They may not be cynical, but they are likely to be healthy sceptics, preferring to weigh up the evidence behind new ideas before making any commitment to invest time or money into these. While this can be an opportunity for a franchisee to take time out and enjoy the fruits of their hard work, they can also become complacent. This can be a dangerous time, especially if the business is successful, because maturity is almost always followed by a levelling out of performance, and then decline. The franchisee now needs to start planning for some type of reinvention, before the decline sets in. The franchisor’s role at this stage is to inspire and challenge them to work out a reinvention or succession plan.

Stage 6: Reformation The dictionary definition of reformation is: ‘An intended improvement in the existing form or condition of an institution or practices, to make a striking change for the better’. A franchisee in the Reformation Stage has made a decision to make a striking change for the better. This may be to reorganise or restructure their business, or to expand into additional units.

The energy needed to initiate change should not be underestimated. There are also likely to be many unknowns and risks, and franchisees need to be supported appropriately. This does not necessarily mean financial support; assistance with planning and mentoring can be more valuable. A thorough business diagnostic can also be invaluable, especially if they are moving into multi-unit operations. In many ways, the reformation stage will take the franchisee back through the process of investigation and perspiration as they come to terms with how the restructured business will function. And so the franchisee journey repeats itself, but at a higher level. In this sense, it is like a spiral of continuous improvement. In summary, each franchisee is going to move through different emotional and business stages. As they do, their learning and support needs will change. The nature of the leadership they respond to will also change. If you are a franchisor executive, the question is: Are you flexible enough to meet this challenge? Greg Nathan CFE is a psychologist, author and Founder of the Franchise Relationships Institute (FRI). FRI is a leading global provider of franchisee recruitment tools, franchisee satisfaction surveys and training programs for franchisors. For more information about FRI’s tools, publications and learning programs, go to www.franchiserelationships.com.

The Franchise E-Factor A model that Greg Nathan developed many years ago, called The Franchise E-Factor, breaks the emotional journey of a franchisee into six stages. Details of the Franchise E-Factor and its six stages – Glee, Fee, Me, Free, See and We – can be found at www.franchiserelationships.com.

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

A R T I C L E

Q&A WITH EILEEN WALSH,

DIRECTOR OF OPERATIONS & PROFESSIONAL SERVICES, ELITE HR PARTNERS (PART OF THE IHR AUSTRALIA GROUP)

Eileen Walsh is the Director of Operations & Professional Services at iHR Australia. With more than 20 yearsâ&#x20AC;&#x2122; experience across a broad range of senior HR leadership roles, Eileen is now responsible for driving iHR Australiaâ&#x20AC;&#x2122;s Elite HR Partners, which provides an Employer Advisory Service that is designed to support businesses by providing expert human resources (HR), industrial relations (IR) and workplace relations advice on issues from everyday people management, performance and staff retention, through to high-risk sexual harassment and bullying claims. Here, Eileen shares her views on the specific HR challenges and risks to franchise and multisite operators. A 40

What are the particular HR challenges that are faced by franchise and multi-site operators (MSOs)? As franchise and multi-site operators are trading in various regions and locations, it can be difficult to keep up-to-date with the relevant state and territory legislation for HR issues. We conducted research last year among MSOs, and found that 32 per cent of surveyed organisations did not apply benefits and compensation practices uniformly at all sites and locations, and 22 per cent stated that recruitment policies were not consistent at all sites. So, clearly, consistency is an area that franchisors and MSOs can struggle to achieve in their approach to HR. Those with people management responsibilities within a franchised business, such as a retail store manager, often need immediate advice but do not have easy access to an HR resource, so issues take longer to resolve, or become the responsibility of line or area managers who have little or no human resources training. So, there is often a knowledge and experience gap that exists for staff handling HR issues across franchises.

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

Disputes and misunderstandings can occur in many areas, including termination, award interpretation, performance, disciplinary action, harassment, discrimination, adverse action, redundancies and Fair Work Commission issues

In our research, we found that 38 per cent of surveyed MSOs had staff turnover greater than 20 per cent – we would say that 13 per cent is in keeping with best practice. Over half of the organisations admitted that the retention rate was also markedly different in certain locations, suggesting site-specific HR problems. So, again, maintaining HR consistency is one of the main challenges for franchisors and MSOs.

What are the potential HR risks faced by franchisors? For franchisors, the scale of having businesses in various locations means it can be hard to prioritise and respond promptly to the HR issues that are being faced at each and every individual location, leading to frustration and issues potentially escalating. Disputes and misunderstandings can occur in many areas, including termination, award interpretation, performance, disciplinary action, harassment, discrimination, adverse action, redundancies and Fair Work Commission issues, to name just a few. If franchisors are not properly equipped to handle and manage these kinds of HR issues, it exposes the business to serious organisational, operational and financial risks. They may be liable for severe compensation penalties, not to mention significant damage to their brand and reputation. For franchised businesses, the brand is a staunchly protected area, as it is key to ongoing network and business growth. It’s not just about risk management; brand and performance are also key outcomes of the HR function. For example, we ask our new clients to describe how they wish to be viewed as an employment brand. Many clients wish to be perceived as a fair, professional employer of choice; however, it is often an empty goal without the proper processes in place to achieve it. Creating a strong employment brand means having a clear commitment to key HR processes, such as onboarding, performance management, training and development, and so forth. If these processes are not in place or are inconsistently delivered, employees leave and, unfortunately, it can lead to negative market chatter and a weakened employment brand.

A R T I C L E

For franchisors that are looking for franchisees to invest, this becomes more important than ever.

How should franchisors and MSOs protect themselves from these HR risks? HR issues can quickly become serious and costly, so dealing with complaints and issues promptly is the main priority. Inexperience can lead to inappropriate handling and exposure to risk, so I cannot stress enough the importance of ensuring that you have a team with the experience to understand, analyse, interpret and ultimately know the steps that need to be taken. This is the basis of how Elite HR Partners was born, and we have found that our Employer Advisory service has resonated in particular with franchisors and MSOs. We have a team of expert consultants with an average of 20 years of Human Resources and Industrial Relations experience between them. On-call access to that level of knowledge and professional experience is invaluable for performance quality and risk mitigation. Internal HR departments should ideally be able to focus primarily on strategic organisational issues, and area and line managers with their own business imperatives.

Our consultants assess the issues and provide practical, immediately actionable step-by-step advice

One of our most significant partnerships has been with Specsavers, which has previously been awarded the Franchise Council of Australia’s ‘Established Franchisor of the Year’ and ‘Social Responsibility Award’, along with the Australian Retail Association’s ‘Australian Employer of the Year’ award. We set up an on-demand service for the Specsavers store partners to contact us with their HR or industrial relations issues. Our consultants assess the issues and provide practical, immediately actionable step-by-step advice. This has resulted in a large reduction in issues escalating into formal disputes, and instilling greater confidence and skills in their store partners to deal with staff-related issues, through training and development interventions that are then developed, based on the analysis and findings provided to the Specsavers People and Organisation team.

B 41

T H E

F R A N C H I S E

R E V I E W

Reaping the rewards at Bakers Delight Q&A WITH GERRY GERRARD, GENERAL MANAGER OF BAKERS DELIGHT

Bakers Delight is one of the most successful franchise businesses in Australia, and this year is celebrating its 35th birthday. Franchise Review spoke with General Manager Gerry Gerrard about the Bakers Delight Franchise Model.

Franchise Review (FR): Can you explain what you believe to be the reasons for the success of Bakers Delight? Gerry Gerrard (GG): Weâ&#x20AC;&#x2122;re always looking for ways to make the customer experience delightful. Customer preference for authentic fresh bread, the convenience of more than 700 bakeries across three markets, and our commitment to customer delight continues to fuel business longevity and growth.

T H E

F R A N C H I S E

R E V I E W

FR: Why should potential franchisees apply with Bakers Delight?

Bakers Delight offers an established brand and products that customers recognise, trust and love

FR: You joined Bakers Delight in 2004. What is it about the company that’s kept you there for more than 10 years? GG: Firstly, I personally feel aligned to the culture that [Founders and co-Chief Executive Officers] Roger and Lesley Gillespie have created. The business has a terrific balance of being family-owned, and community- and customer-conscious. It also encourages us to achieve the best we can in the varying economic, retail and currency [fluctuating exchange rates] environments. Secondly, Bakers Delight continues to offer new opportunities and challenges to its employees, and I enjoy taking on more responsibilities if offered. For example, my role started off overseeing property and project departments, which quickly led into supply chain management, procurement, franchisee recruitment and compliance.

GG: Bakers Delight offers an established brand and products that customers recognise, trust and love. Our franchisees have access to proven management and operational systems, which help to establish profitable bakeries. For those starting out, investing in a Bakers Delight franchise removes the work of building a business from scratch, and provides a platform for a long-term career that offers a work/life balance and plenty of rewards. FR: What process do potential franchisees undergo prior to becoming a franchisee with Bakers Delight? GG: We have a program called Manage To Own (MTO), which is a franchise training program developed to take potential franchisees on the journey to own and operate a Bakers Delight store. Franchisees must undertake 12 months of comprehensive training, including six months of franchisee training and six months of bakery management training. Following the completion of training, franchisees work with our recruitment team on the opportunity to lease their own bakery. MTO graduates who successfully lease their own bakery for 12 to 24 months may purchase that bakery, or explore other opportunities in the Bakers Delight network.

My thinking for a successful career is: get involved, love what you do, ride the ups and downs, and always take on more when the opportunity arises.

FR: How does Bakers Delight retain its staff, and ensure that franchisees are getting value from their involvement with the company?

FR: Bakers Delight is involved in charity and environmental work, and fundraising for various causes. Can you give us some insight into these?

GG: We retain staff through ongoing support, training and mentoring. We assist franchisees with financial guidance, marketing support, IT, food safety regulation and management training so they have the confidence to hit the ground running when the time comes.

GG: Through our network, we donate approximately $143 million in bread to charities each year. This year, we are celebrating 15 years of supporting the Breast Cancer Network Australia (BCNA). We also reached the significant milestone of donating $15 million (in total) in funds and services to BCNA to support Australians affected by breast cancer. The relationship between Bakers Delight and BCNA is really important to our business, and has become ingrained in our culture. It’s a big part of who we are. Our annual Bundraiser day also sees us raise funds for charity through the sale of hot cross buns. The money raised goes towards the purchase of essential medical equipment and resources for sick children around the country. FR: Bakers Delight is looking for new franchisees to extend its network within Australia and internationally. Can you tell us a bit about the company’s expansion plans? GG: Bakers Delight plans to open 15 new bakeries across Australia, New Zealand and Canada in 2015. We’re also seeking new franchisees to join the network as part of a national recruitment drive, and we currently have 10 bakery ownership opportunities available across New South Wales, Queensland and South Australia.

We also offer national and local public relations and marketing support to grow brand awareness and help to raise the profile of local franchisees within their communities. FR: How would you describe a day in the life of a Bakers Delight franchisee? GG: The beauty of being a franchisee is that you can set your own work hours, and you can manipulate your time off. A typical day would generally include an early start to run the baking shift, followed by customer service during the ‘rush periods’ (community engagement and dealing with people is a big drawcard for franchisees), managing staff, bookkeeping and running errands. Most Bakers Delight franchisees finish work by 11 am to be with their families and pursue hobbies et cetera. FR: Can you tell us a bit about the Fresh Franchisee program? GG: Fresh Franchisee is an internal training program that allows Bakers Delight employees to rise from the ranks within the network to become business owners. By identifying and fostering internal talent, we’re finding business owners who have a good, strong understanding of the business and culture.

T H E

F R A N C H I S E

R E V I E W

The beauty of being a franchisee is that you can set your own work hours, and you can manipulate your time off. A typical day would generally include an early start to run the baking shift, followed by customer service during the ‘rush periods’ (community engagement and dealing with people is a big drawcard for franchisees), managing staff, bookkeeping and running errands

Of those who complete the Fresh Franchisee program, 76 per cent will either lease or buy a Bakers Delight franchise. The program is available to employees who demonstrate the drive and inspiration to own their own bakeries. FR: According to a recent press release, there’s a trend in franchise recruitment that sees white-collar workers return to more grassroots businesses, such as bakeries. What do you think has led to this trend? GG: It’s clear from those applying to be Bakers Delight franchisees that many middle-aged men feel trapped in desk jobs due to family and financial responsibilities. We’ve noticed an appetite among men from white-collar backgrounds in particular who are keen to pursue a

‘nostalgic’ career where they feel that they have a place in the community. FR: What advice would you give to anyone looking for a career change who is considering becoming a franchisee? GG: If you enjoy working with people and you’re looking for greater work/life balance, you are well suited to a Bakers Delight franchisee role. Initially, you need to be willing to work the long hours and put in the hard yards; however, it won’t be long until you notice the long-term benefits and reap the rewards. For those interested in becoming a Bakers Delight franchisee, or for more information, please visit bakersdelight.com.au/franchise.

Are you a family business?

PROFESSIONAL DEVELOPMENT

Many of Australia’s leading franchises are...

Is the majority of your business owned by a family or multiple families? Do family members work in your business? Are family members involved in the management of your business? If you have answered yes to any of these questions, you are a family business! Family Businesses hold significant advantages over others: • A greater return on investment • Positive culture • The ability to respond quickly to changing business conditions You can harness these advantages by engaging in professional development for families in business.

“

Family Business Australia’s purpose is to contribute to the long term success of family business. Robin Buckham CEO

Learn more about the opportunities available to your family business. Contact FBA at info@fambiz.org.au, call 1800 249 357 or visit us at fambiz.org.au

”

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

A R T I C L E

THE FAMILY FRANCHISE ADVANTAGE Many of Australia’s franchises are sitting on an untapped secret to better business – the family franchise advantage. Many franchise owners, both franchisees and franchisors, are families in business.

Lesley Gillespie and husband Roger of Bakers Delight in their Camberwell bakery

Ella Baché, one of Australia’s most established and recognised skincare brands, began and continues as a family-owned business, in addition to 40 per cent of their franchises that are also family-run. Pippa Hallas, Chief Executive Officer, and her father John, sole owner and chairman, maintain the aspiration to continue as a family business, and to be the most premium skincare franchise in Australia. ‘We were the first Australian skincare brand to franchise, and it is important we keep being innovative, meeting the changing needs of our customers and maintaining leadership across our products, education programs and retail models,’ Pippa explains. Family businesses in Australia are known for their ongoing commitment to improving their industry, their community and Australia’s economy. This sentiment is highlighted by the fact that Ella Baché currently offers undergraduate and postgraduate education for aspiring skincare professionals. It is this genuine commitment to improving not only their family’s

A 46

prosperity, but also the success of families across Australia, that consumers connect with and trust. On Ella Baché’s postgraduate program, Pippa’s genuine care is evident: ‘This [program] allows us to have a long-term relationship with the students,’ Pippa says. ‘In some cases, the students go from graduation, into working in an Ella Baché salon or department store, before eventually owning their own stores – and we encourage this.’ The importance of long-term relationships – developing and investing in Australia’s talent – in Ella Baché’s business model is similar to those values in many families. Another of Australia’s well-known family franchises, Bakers Delight, also has the unique position of being a family business franchisor, working with many franchisees that are also family businesses, often sharing in the complexities of working in an environment where both family and business values are at play.

T H E

F R A N C H TI H S E

R F R E VA INECWH I/ S/ E S P RO EN V ISEOWR E D

Lesley Gillespie, joint Chief Executive Officer of Bakers Delight with her husband Roger, works with her entire immediate family. Their two children work within the company, with Aaron (35) working in Canada for the COBS Bread brand of Bakers Delight, and daughter Elise (33) in a General Management position of Operations and Marketing in Melbourne, as well as Elise’s husband, David Christie (32), who also works for the business in a senior operations role. Lesley commented that one of the greatest advantages of being a franchisor and a family business was that they could be more nimble when making business decisions, compared to a publicly listed company. ‘An integral part of our business model is to buy and sell bakeries. Generally we would own between five and 10 per cent of the bakeries at any one time,’ Lesley explains. An example is the Mango Hill bakery in Queensland, where they financed the opening of the bakery themselves, allowing the franchisee time to source their own funding.

A R T I C L E

sector. Pippa says that FBA assisted her in taking on the role of CEO. ‘FBA provided me with great opportunities to network with other people in similar situations and share experiences. It also assisted me in setting some ground rules in my working relationship with my father,’ Pippa says. Lesley recently spoke at an FBA event in Queensland, presenting her firsthand advice and insights on leadership. For more opportunities to network with successful family businesses, visit www.fambiz.org.au or call 1800 249 357. A good place for families in business to determine the opportunities and risks presented to their business is by using the Family Business Diagnostic Tool. This free resource is available at fambiz.org.au/resource-centre.

In the case of Ella Baché and their family-run stores, there are often unique advantages based on the culture, relationships and longer-term strategic plans in place, as opposed to shortterm financial goals of some corporate companies. ‘As a result of the strong relationships and passion that people feel for their family businesses, there is often a level of ownership and engagement that even our external consultants recognise right away,’ Pippa explains. Despite this, both business leaders agreed that there were certainly challenges in being a family business, saying that navigating the complexities around where work finishes and family starts can be tough, and that the strength of the family business in terms of the relationships and passion involved can mean that having difficult conversations, or delivering ‘tough love’, can be hard. In terms of advice for families that own a franchise or are thinking about it, Lesley explains that ‘no matter what franchise a family owns, there are always opportunities to grow and develop’. Pippa recommends that family businesses use the untapped strength of being a family business. ‘Leverage the strength of being a family business, including your networks, culture and people involved. When family members are engaged and empowered in the business, they are more likely to take ownership and flourish,’ Pippa explains. Organisations such as Family Business Australia (FBA) present families in business with opportunities to harness the advantages that are presented to them as a family business. Research shows that family businesses that undertake consistent professional development can ensure that they maintain profit, grow productively and manage a successful transition of business ownership. Pippa has been a long-term member of FBA, and a recipient of the Next Generation award in 2012 for her contributions to Ella Baché in her role as CEO, as well as to the family business

Pippa and father John Hallas of Ella Baché at their Manufacturing and Distribution Centre, Sydney where products are made and packaged

B 47

T H E

F R A N C H I S E

R E V I E W

An inside look at the International Franchise Convention Each year, the franchise calendar begins with the annual pilgrimage to the International Franchise Convention. This year, the event returned to its spiritual home of Las Vegas. The Franchise Council of Australia (FCA) contingent saw a return to strong numbers in 2015, with more than 40 delegates in attendance, including three of the five Aussie Certified Franchise Executive (CFE) graduates from 2014. Sara Pantaleo (La Porchetta), Peter Baily (Luxottica) and Franchise Hall of Famer John Oâ&#x20AC;&#x2122;Brien (Poolwerx) were all honoured at a ceremony recognising CFE graduates from across the world. Attendee and graduate Sara Pantaleo, from La Porchetta, spoke highly of the accreditation program, and of the ceremony at the event. â&#x20AC;&#x2DC;The CFE study modules are very robust and provide amazing learnings to bring back to your business. The FCA should be commended for linking their education to this system. It enables franchise executives to continue their education at the highest level, and gain international knowhow and best practice.

T H E

F R A N C H I S E

‘The International Franchise Association (IFA) really knows how to make you feel special for having achieved CFE certification, and I thank them for all their efforts in organising a fantastic presentation,’ Ms Pantaleo said. As part of the convention, the FCA delegation was treated to an exclusive half-day seminar designed for Australian brands looking to expand into the United States, as well as the World Franchise Council (WFC) proceedings, which were held at the same venue. FCA General Manager Kym De Britt said that networking with 32 other national franchise associations attending the WFC meeting was invaluable, and he was particularly interested to learn about franchising in Canada. ’The Canadian association seemed to really mirror Australia in terms of growth areas and

R E V I E W

issues, with franchisee recruitment and finance key among their challenges,’ Mr De Britt said. The IFA Convention itself packed a mighty punch, with 3800 delegates from 49 countries in attendance across three days. Keynote speakers included Arby’s Chief Executive Officer Paul Brown, and Walmart Chief Executive Officer Mike Duke. Strategists from Google were also in attendance (hot insider info: there is a department in Silicon Valley called Google X where secret developments happen!). The FCA delegation came away from the event inspired and educated. Director of FC Business Solutions Corina Vucic enjoyed both the operational learning outcomes and the topline view for business growth that conventions like this deliver.

T H E

F R A N C H I S E

‘The IFA reinforced the life learning attitude [that] each and every one of us must possess to lead and grow successful, relevant and sustainable businesses,’ Ms Vucic said. Sara Pantaleo believes that there is something at the IFA Convention for everyone. ‘The IFA conference is great value if you want to upskill yourself, or if you are looking at international expansion. It’s designed for all levels, and includes streams for franchisors, franchisees and operations. Emerging systems were covered, as were established franchises. Throughout the sessions, there was a focus on best practice, excellence in customer service, and the need for innovation,’ Ms Pantaleo said. Following the Convention, a small group of FCA member franchisors embarked on the third annual FCA US Study Tour. Leaving Las Vegas for California, franchisors visited malls, stores and head offices, covering a variety of United States-based franchise brands, including Instant Imprints, Jazzercise, Panda Inn and Johnny Rockets. The group was also treated to a tour of the Oakley at Luxottica Brand Headquarters, which are inspired by the Mad Max film set. The FCA US Study Tour is held immediately following the IFA Convention each year, and is designed to be a behind-the-scenes look at how franchise brands in the United States do business. It is open to franchisors, founders and Chief Executive Officers only, and applications open after the National Franchise Convention each year. See the next issue of Franchise Review for an in-depth look at the tour.

R E V I E W

NATIONAL FRANCHISE CONVENTION 2015 11-13 OCTOBER GOLD COAST

growth expansion

NFC15 promises to build your knowledge on all things franchising to help ensure your business flourishes in any conditions. The must-attend event for all franchise professionals in Australia, NFC15 will once again provide an impressive array of inspirational speaking talent and ample networking opportunities. Join hundreds of Australian franchisors for the franchise networking event of the year. For sponsorship and exhibition opportunities, call Angie Cooksey on 1300 669 030, email angie.cooksey@franchise.org.au or go to franchise.org.au The FCA gratefully acknowledges the contribution of the following sponsors for NFC15

T H E

F R A N C H I S E

R E V I E W

Meet the Young Entrepreneurs in Franchising winner Q&A WITH RHYS RICHARDS, WINNER OF INTERNATIONAL FRANCHISE ASSOCIATION’S NEXTGEN COMPETITION

The Young Entrepreneurs in Franchising Competition targets students and young entrepreneurs around the world, addressing a youthful global population to get them involved in franchising. Winning entrants in this year's competition were flown to Las Vegas for the International Franchise Association's Annual Convention in February, where they attended the NextGen in Franchising Summit – an educational program for the next generation of entrepreneurs. Franchise Review spoke with Australia's winner, Rhys Richards. Franchise Review (FR): Congratulations on your recent win. How does it feel to have been chosen as one of 50 winners from around the globe? Rhys Richards (RR): It is a privilege to be able to represent Australia at the IFA convention in Las Vegas, and being able to have the opportunity to liaise with and learn from the best minds in the franchising industry is very exciting. To be recognised as one of the first Young Entrepreneurs in Franchising global winners will allow me to discuss new franchise concepts and new ways of taking franchising into the future, as well as giving me the opportunity to attend roundtables and learn about the latest trends in the franchise industry, which will benefit me enormously in my current and future roles. FR: You ran a Japanese restaurant for eight years before embarking on your current business venture. What initially drew you to being interested in franchises? RR: [I was interested in a] new business venture – actually, I recently became a Business Consultant and Business Broker for LJ Hooker Business Broking. This position appealed to me because I’ve had my own experience operating a business in the past, and the office has a strong focus on franchises. I had a fantastic opportunity to live in Japan when I was younger, where, not only did I learn the language and culture, but I also learnt that there was a 7-Eleven convenience store on every corner! I enjoyed the vibrant nature of franchised outlets in Japan, and since returning, I’ve taken a closer look at franchised businesses, and I always enjoy attending the franchise exhibition in Sydney.

FR: Your franchise pitch was to ‘Expand an Existing Franchise’. What does this specifically entail? RR: I was fortunate to read a post on social media by the Franchise Council of Australia’s Education Manager, Simon Heggen, which led me to enter the contest. The competition, administered by the Youth Success Network on behalf of the International Franchise Association, asked applicants to submit a pitch. My pitch involved taking a franchise that is at a mature stage in the market, and looking to acquire or cooperate with another franchise that is relatively new to the marketplace – one that is increasing its momentum in its space, and gaining market share rapidly. Having these two companies working together

T H E

F R A N C H I S E

would not only let the newer of the two brands grow even more rapidly, but the infrastructure would already be in place to support new, as well as existing, franchisees, which is critical to a successful franchise. Other possible options would be a hybrid menu for the stores, potentially increasing customer spend. Benefits would include a reduction in operational costs as well as hopefully bringing more traffic through existing outlets, leading to an increase in sales. FR: Globally, youth employment is a big issue. Do you think it is important for young people to be aware of the benefits of entrepreneurship? What are the risks involved in taking the plunge? RR: Young people should definitely be aware, [because] being able to be in control, and being able to pursue something that you’re passionate about while reaping the financial rewards, are just some of the benefits of entrepreneurship. There are, however, associated risks – financial as well as personal risks. The amount of time and effort needed is usually a lot more than if you were to work for someone else, as opposed to working for yourself; therefore, the support networks around young entrepreneurs are essential, as is being provided the right information on business-related issues. It would be great to see franchisors and their franchisees get on board and engage more with the next generation of franchising industry leaders and entrepreneurs. This could be a way of providing training in stores or head offices, as well as having possible co-owned stores whereby a 25, 50, 75 and 100 per cent staged ownership option through vendor finance will reduce the risks of failure, while the young franchisee gains experience in their franchise role.

R E V I E W

FR: This year’s theme for the IFA Convention in Las Vegas was ‘Connect, Innovate, Evolve’. What do these three words mean to you, and why do you think they are important to franchising? RR: Connect – It will be exciting to connect with the best in the industry and build a relationship with them, as well as with the attendees of the convention. By expanding our networks, further opportunities can arise to grow our business. Innovate – Innovation is important to every business. In order to keep ahead of your competition, it’s so important to be at the forefront of any decisions made. Evolve – To develop is key to success for any franchise; however, it’s important to not expand too quickly, and to have the systems in place to manage every facet of the business. FR: You’ve certainly had a successful past year. What’s next for you in 2015? Do you have any other ambitions that you would like to pursue? RR: It would be great to be able to connect with franchisors and franchisees in Australia to develop and assist budding entrepreneurs to gain experience in their stores, and to develop a model to limit the potential risk of failure to those young entrepreneurs who wish to take an equity in a franchise that they are passionate about. In my current role, I hope to further gain valuable knowledge about the industry so I’m more adept when assisting buyers in finding a new franchise suitable to their needs and experience, as well as assisting franchisors in finding new buyers for both new and existing stores. For more information on the NextGen competition, and to keep updated for next year's event, visit www.nextgenfranchising.org

T H E

F R A N C H TI H S E

R E VA INECWH I/ S/ E S P F R RO EN V ISEOWR E D

A R T I C L E

DEAL LOCAL, INSURE GLOBAL Attracting more and more of Australia’s best-known franchise businesses, National Franchise Insurance Brokers (NFIB) is an insurance force to be reckoned with.

Now represented in New Zealand by one of the largest broker networks in that country, and following on from discussions with insurance brokers around the world, NFIB Executive Director Darryl Morris says, ‘NFIB continues to grow internationally, and we’re at contract stage with a number of other countries globally. This will be of great benefit for franchisors here in Australia, particularly those that have international operations. ‘This means that the franchisor can deal locally if they wish, but have international representation, all through the same insurance program and technology platform.’ With insurance solutions designed to complement franchisor activities, NFIB can remove the headache of audit and compliance needs, along with the documentation it entails, all of which means the franchisor does not have to apply the resources in-house.

54 A

INSURANCE PLATFORM For those of you not familiar with NFIB, they offer a web-based insurance platform that has been designed exclusively for all kinds of franchised businesses around Australia. What’s central to NFIB’s success is twofold: inexpensive insurance premiums regardless of the franchised business being insured, and the ease at which a franchise business can insure their business. What makes insuring with NFIB so easy is the fact that there are only four basic pieces of information required in order to arrange cover for a franchised business: 1. the replacement of plant, equipment or stock 2. the gross profit of the franchised business 3. the level of public liability required by the franchised business 4. whether machinery breakdown is required by the franchised business.

T H E

F R A N C H TI H S E

R E VA INECWH I/ S/ E S P F R RO EN V ISEOWR E D

Plus, there isn’t any paperwork, and there are no forms to complete or signatures required. It really is quite a simple and ingenious process. ‘We spend a great deal of time and effort travelling around the country speaking to both franchisees and franchisors, and their feedback is extremely positive,’ says Morris. ‘Our online system allows the franchisor to make sure that all of their individual franchisees’ businesses have adequate insurance cover. From the franchisees’ perspective, our ability to “bulk buy” insurance cover means their costs are significantly reduced when compared to what they may have paid for insurance in the past.’ With a total commitment to understanding franchisor/ franchisee insurance expectations, Mr Morris says that he strongly believes that the future of the business lies

A R T I C L E

in his group’s ability to provide the most competitive and comprehensive insurance costs available. ‘We all hate getting insurance premium renewals. That’s a fact of life. People want the most adequate cover for the lowest possible price – it’s as simple as that. What we’ve focused on from the beginning, and what is still central to everything we do today, is to make sure our customers save money on their business insurance,’ Mr Morris says.

For more information about National Franchise Insurance Brokers, please contact Darryl Morris or Brad Dixon. Phone: 1800 776 747 Email: info@MYNFIB.com.au Web: www.MYNFIB.com.au

445168

55 B

T H E

F R A N C H I S E

R E V I E W

Are you a lender-friendly brand? BY DARRYN MCAULIFFE, CEO, FRANDATA AUSTRALIA

Franchise finance access is a recurring and frustrating theme; however, a number of encouraging signs are emerging that suggest better times ahead. Positive indicators include increased investment in franchise banking, the availability of information through the Australian Franchise Registry™, multiple new franchise-brand bank accreditations, and an improved sector outlook through the revised Franchising Code of Conduct.

lender. Most non-accredited lending is treated as generic small business lending due to the lack of reliable information available on the brand, which gives little credence to the underlying support or improved risk profile that a well-managed franchise brand can bring. Lenders normally only proceed if transactions are supported by significant cash contributions or collateral property security.

Franchise finance is of great importance, as the majority of franchisees need to borrow to complete their transactions. There has been a growing trend for franchisors to directly fund or indirectly support new franchisees, but this is not necessarily a sustainable practice. It can also create a number of risks, including potential conflicts of interest and inadvertent breaches of franchisor lending conditions and loan covenants.

Traits of lender-friendly brands include:

Major banks continue to dominate Australian franchise financing, with transactions typically falling into one of two categories: ‘accredited’ or ‘non-accredited’ lending. ‘Accredited’ status is generally granted to brands that meet certain minimum requirements and have been through a comprehensive review process. Accredited brands are allocated dedicated bank contacts, and their franchisees enjoy more consistent and predictable treatment. Subject to regular review, accreditations do get withdrawn when loan quality falls below an acceptable level, or when an insufficient number of transactions are achieved to cover the cost of maintaining the accreditation status. The majority of franchise brands find accreditation elusive, with most major banks having less than 50 brands accredited. This represents less than five per cent of the reported 1100 active brands operating in Australia. ‘Non-accredited’ lending is considered on a case-by-case basis. This approach can be inconsistent across not only different lenders, but also through outlets within the same

Banks see franchise lending as an important part of their small business strategy, and are keen to deepen relationships with franchise brands that can provide a transparent performance history. The greatest inhibitor to the bank’s lending reluctance is the perceived inability of franchisors to provide timely, detailed and reliable insights into their operations. Lenders provide finance with more favourable terms to brands deemed to be ‘lender-friendly’, and franchisors can position themselves this way if they embody lender-friendly traits.

• the desire to be identified as a genuine and quality franchise brand »» Franchise Council of Australia membership is an excellent indicator that brands are serious about their reputation and that of the franchise sector – it recognises the importance of a unified, representative voice, and the role that improved information plays in supporting that representation • the ability to provide lender information in a timely and transparent manner »» lending applications can be declined due to the lender’s inability to access the most basic level of brand information. Brands need to either provide lenders with independent, reliable and relevant information, or use information gateways like the Australian Franchise Registry™ to optimise lending decisions

Darryn McAuliffe

T H E

F R A N C H I S E

R E V I E W

• a sound financial position (franchisor) »» a willingness to both share financial information to provide insights into the strength of the franchise model and its capacity to endure fluctuations in trading cycles, and to support its franchisees • a disciplined and successful approach to recruiting, training and supporting franchisees »» the ability to demonstrate a structured and proven approach for single-unit or multi-unit franchisee success • the ability to provide insights into unit performance (franchisees)

A common judgement error made by many inexperienced franchisors is the reluctance to disclose or provide details on adverse events or issues

»» these insights help lenders with loan structuring considerations, and provide effective and early warning signs for potential problem loans • the ability to provide insights into the secondary market (unit resale values) »» the provision of real and complete comparative market data significantly enhances a lender’s ability to recognise the value in a franchise business • the ability to work constructively with lenders if expectations are not being met

adverse events or issues. Lenders recognise that brands have ‘learning experiences’. They are very interested in any insights franchisors can provide on how these were discovered and addressed, and resulted in revised strategies. It is actually these events that can significantly enhance a brand’s risk profile, ultimately improving finance access.

»» strong working relationships between banks and franchisors result in superior outcomes and reduced losses on problem loans. The risk that franchisees may underperform is not the key issue – it is the actions the franchisor will undertake if that situation arises.

Improved finance access awaits brands that can effectively communicate the strength of their brand to lenders. It is brands that demonstrate a superior risk profile and a strong business development opportunity that are being rewarded with easier finance access.

A common judgement error made by many inexperienced franchisors is the reluctance to disclose or provide details on

Darryn McAuliffe is the CEO of FRANdata Australia, which administers the Australian Franchise Registry™.

T H E

F R A N C H TI H S E

R E VA INECWH I/ S/ E S P F R RO EN V ISEOWR E D

A R T I C L E

IS FRANCHISING A VALID MODEL IN THE CONSTRUCTION INDUSTRY? Any builder will understand the difficulties and pressures faced when running a small business, particularly in such an aggressively competitive industry as residential construction.

With the current strength of the Australian construction industry, one of the biggest challenges is maintaining profitability in the face of significant growth in turnover and building numbers. Managing an erratic cash flow, home indemnity insurance pressures, and a constantly shifting supplier and subcontractor base all add to a builder’s woes. G.J. Gardner Homes developed its franchise model in 1995, after founder Greg Gardner built more than 800 homes throughout Queensland as a privately owned builder. The basis of the franchise model enables builders to manage significant growth in their turnover and develop a sustainable, saleable business. The G.J. Gardner brand partners with licensed home builders who are looking to expand from building five, 10 or 20 homes a year, and provides them with the systems, software, marketing platform, plan range, training and support to build four to five times that amount. Now, 20 years on, the G.J. Gardner Homes model is the largest and most successful home-building franchise in Australia and internationally. Still very much a family business, with 135 builders across Australia, New Zealand and the United States, G.J.’s has expanded on the back of ensuring the sustainable but ongoing growth of every franchised builder.

58 A

So, how does franchising in a construction business work? ‘I had reached a point in my own building company where I had to either grow my business or revert back to being a subcontractor to the larger building companies. By joining G.J. Gardner Homes, I immediately gained the buying power and marketing support of a volume building company,’ says Kris Gill, Bendigo franchise owner. ‘I am surprised at how much I have changed from a tradesperson who was running a small building company, to a businessperson running a larger company.’ The cliché runs true that to achieve growth, business owners need to spend time working on the business rather than in the business. The G.J. model shifts the home builder’s focus away from day-to-day construction issues to developing a strong and ongoing sales methodology with a two- to five-person sales team. The software and systems allow the franchise owners to manage the construction of a higher volume of houses, and keep their focus on sales and business management. G.J. works with builders to think long-term around their brand in the market and a display home strategy with finance options, and assists with the recruitment and training of salespeople who ultimately drive the success of the business.

T H E

F R A N C H TI H S E

R E VA INECWH I/ S/ E S P F R RO EN V ISEOWR E D

In order to be price competitive, there is a lot of value to be gained from high-volume supplier agreements. G.J. Gardner Homes built more than 1300 homes in Australia last year, and as Australia’s eighth-largest detached-home builder, has access to some of the best pricing available. ‘After a lot of research, we decided to jump in the deep end with G.J. Gardner Homes, and we haven’t looked back since. It enables you to handle volume, and we just couldn’t be where we are now with the number of builds going on at once, and the number of slabs we’re getting down each year without the structure and support that the software gives you. We’ve gone from a company four years ago doing 10 homes, to this year doing 50 homes.’ Sean and Nathan – G.J. Gardner Homes Shoalhaven.

A R T I C L E

on any members of the group for any issues or problems we have; most of the guys have been in the franchises for a long time – and the group itself, as far as systems and backups – it’s all there for you.’ After 20 years of franchising, G.J. Gardner Homes now has a goal to become the largest home builder in Australia by 2019, and is looking for the right builders to join the company on this journey. G.J. Gardner Homes’s aim is to assist you in growing your business by incorporating your building experience and drive for success with its business systems, national branding and marketing expertise. If you would like to find out more, please visit www.gjgardner.com.au/franchise or contact Peter Love, Australian General Manager at peter@gjgardnerhomes.com.au.

Franchising your business is a big step and a calculated risk; however, the G.J. Gardner franchise system is dedicated to the success of our franchise partners. A survey of current builders who have joined the Australian G.J. team has found that, on average, their revenue has increased by 400 per cent three years after joining G.J. Gardner Homes. The G.J. Gardner Homes model gives builders the tools to achieve significant scale and growth in their businesses. They join a community of business owners dedicated to becoming the most highly regarded home builders in their communities, and contributing to the growth of the G.J. Gardner Homes brand. ‘One of the major advantages we’ve found of coming from a small builder doing a few homes a year is the system – to come into using a fully integrated system, from sales, right through estimating linked to accounting, has been a great step forward. We use all parts of the system to its full potential, and the time we now save has been unbelievable,’ says Rob McMaster, franchise owner, Ballarat, Victoria. Chris Dell, a franchise owner in Launceston, Tasmania, says: ‘One of the best business decisions we ever made. We can call

59 B

Case Study

Australia’s leading provider of physiotherapy and related services rises to the challenge of ensuring franchise owners maintain brand integrity. Back In Motion’s sights are set on expanding further across the country and more than doubling their practices in the coming years, therefore maintaining brand integrity is imperative. As with any business objective, brand integrity requires resources that can be delivered in-house or outsourced. To achieve this objective a broad range of factors must be taken into account, such as; accurate reproduction of logo and brand elements, colour consistency, uniformity of paper stock and finishing options, ensuring collateral is produced in the correct format, maintaining a high standard of image resolution and that all information published is current and correct. In of itself this is a lot of work, but multiplied by dozens of locations across Australia, using a multitude of different printers, it becomes impossible to guarantee any sort of consistency for a brand that new practices are buying into. This is where Whirlwind Print comes in. Whirlwind’s Online Print Management system (OPM) enables Back In Motion to easily provide nationwide marketing support to their practice owners. 100% of practices choose to use the OPM, which is a resounding testament to the capabilities of the system.

“Whirlwind provides our business a holistic print solution with their OPM platform and a dedicated Account Manager. The convenience of the platform, customer service and cost effectiveness are all reasons that I would recommend Whirlwind.” Natalie Whittington

Marketing, Communications and Public Relations Manager Back In Motion

This successful print partnership delivers: • Consistently excellent print • Head Office maintains brand integrity whilst providing flexibility to franchise owners • At a glance, franchise owners can see all available collateral

Read the complete Case Study on our blog. blog.whirlwindprint.com

• Templates enable franchise owners to customise their collateral to reflect individual store details • Time and cost savings with pick-and-pack

• Collateral can be ordered and paid for online whenever franchise owners need it • Stores take advantage of marketing campaigns locally

www.whirlwindprint.com

T H E

F R A N C H I S E

R E V I E W

Franchisee recruitment tips for franchisors BY PROFESSOR LORELLE FRAZER, DIRECTOR, ASIA-PACIFIC CENTRE FOR FRANCHISING EXCELLENCE

Franchisee recruitment is an ongoing challenge for the majority of franchisors, so to assist franchisors with the process, I’ve put together five quick tips: Franchisee recruitment tip #1 Provide potential franchisees with a work experience trial Where appropriate, franchisors should consider providing potential franchisees with a work experience trial. Providing a prospective franchisee with an opportunity to actually work in the franchise before signing the franchise agreement allows both parties to assess each other’s capabilities. Franchisors can see what the franchisee is like in action, and can get a better feel for their personality and how they handle the pressure, as well as whether they’re going to be a good fit for the franchise. The franchisee, on the other hand, can get a real taste of what it will be like being part of the franchise. For example, a franchisee might like dogs; however, after three days straight of washing dogs, they may realise they’re not really the right fit for the franchise – or they may be more passionate than ever! Franchisors want to ensure that franchisees are a good fit for the franchise, that they’re likely to be able to follow the systems, and that the franchise is the right fit for the franchisee, too. There’s no point in recruiting someone into your franchise who is going to lose interest after a few weeks, as these potential franchisees are not going to have the drive to make their franchise a success. Your experience with such a franchisee could also adversely affect your franchisee recruitment process in the future when you’re contacted by other prospective franchisees.

Franchisee recruitment tip #2 Recruit franchisees from within existing franchise staff Recruiting franchisees from within the franchise business has worked well for franchisors who have adopted this approach. There are several benefits to this method over recruiting new people into the franchise.

T H E

F R A N C H I S E

R E V I E W

Our research shows that franchisees with small business ownership experience often make superior franchise operators

One benefit is that the franchisors have had time to get to know the skills and abilities of their staff members, so they’ll know who the reliable, high-performers are – these are the ones who will make good franchisees. Existing staff will already know the franchise business operations, so they will require less start-up training. They also have loyalty towards the brand. This approach also provides the staff with an opportunity to grow with the brand, rather than having to look outside of the business for further growth opportunities; franchisors can expand their franchise while also retaining the talent within the business.

Franchisee recruitment tip #3 Reward good franchisees with additional units/territories Rather than looking to recruit new franchisees, it may be appropriate for franchisors to consider offering some of their most successful franchisees additional territories or units, if it’s appropriate for the franchise model. Again, there are several benefits to this approach: •

The franchisor already has an existing relationship with the franchisee.

•

The franchisee has already proven him/herself to be a high performer.

•

The franchisee already knows the systems and operations of the business.

•

It provides the franchisee with opportunities for growth and greater profit potential.

•

The franchisor will have fewer franchisees to manage than they would if new franchisees were recruited for each site or territory.

This can be a very effective method for franchisee recruitment and franchise growth; however, franchisors need to cater for multiple-unit franchisee field support needs. Multi-unit franchisees require different types of field support to single unit operators, with a greater focus on human resources and other areas; a multi-unit franchisee needs to move to a more complex management role and will therefore need to develop greater skills in business management. They will need support to move from constantly working ‘in the business’ to working ‘on the business’, where they will need to build effective teams and learn how to delegate.

Franchisee recruitment tip #4 Recruit people with small business ownership experience Our research shows that franchisees with small business ownership experience often make superior franchise operators. They already have a good understanding of business, so there’s less for them to have to learn. Becoming a franchisee can also make business easier for independent operators, as they can access support from the franchise head office, including marketing, economies of scale for any products used, environmental scanning and opportunities analysis. This may involve conversion franchising, where a franchisor approaches existing independent operators in their industry to become franchisees.

Franchisee recruitment tip #5 Seek out people who have strong personal drive Strong personal drive is one of the top characteristics you can look for in a franchisee. Our research shows that people with strong personal drive make superior franchise operators, so during franchisee recruitment processes, franchisors should select people who can demonstrate this trait. One way to assess strong personal drive may be through psychological testing, such as using the Myers–Briggs Type Indicator assessment, or another personality test system. People with strong personal drive are those who set goals and achieve – or even over-achieve – them. They are also the type of people who don’t get despondent when something goes wrong, rather seeing the situation as a challenge that motivates them to perform better. Franchisors will really benefit from identifying these people during their franchisee recruitment processes. Professor Lorelle Frazer is the Director of the Asia-Pacific Centre for Franchising Excellence at Griffith University. The Centre was created in 2008 with the goal of consolidating and combining the wide variety of information available for franchisees and franchisors. In addition to this wealth of practical franchising knowledge, the Centre also offers a wide range of franchise courses (online and face-to-face), professional development events, online seminars, research reports and more. See more at: www.franchise.edu.au.

T H E

F R A N C H I S E

R E V I E W

FCA Events Calendar Now that the year is in full swing, there are numerous breakfasts, roundtables and education sessions you can attend, along with FCA programs that you can participate in. As a member of the FCA, you are entitled to some of these events exclusively and free of charge, and some at members-only prices. The Awards program is exclusive to FCA members.

National Events National MYOB FCA Excellence in Franchising Awards categories open – 13 April National MYOB FCA Excellence in Franchising Awards categories close – 8 June NFC15 – Sunday 11 October – Tuesday 13 October MYOB FCA Excellence in Franchising Awards Gala Dinner – Tuesday 13 October Certified Franchise Executive Program – ongoing National awards entries close – 8 June

Queensland April Roundtable: Learning and development for time-poor franchise executives – efficient techniques to maintain your professional development – 16 April Education course: Effective Franchisee Recruitment – 28 April

May Education course: Improving Franchise Advisory Councils – 7 May Education course: Introduction to Franchising – 22 May

June National awards entries close – 8 June

July Event: Franchising and Business opportunities Expo

New South Wales April Education courses: Site Selection and Territory Planning – 16 April Roundtable: Preparing your franchise for sale – 29 April

May Roundtable: Increasing Franchisee Turnover – 14 May Education course: Introduction to Franchising – 28 May Education course: How to Organise a Franchise Conference – 29 May

June National awards entries close – 8 June Australian Emerging Franchisor of the Year 2014, Shingle Inn

T H E

F R A N C H I S E

R E V I E W

Victoria

Western Australia

April

May

Education courses: Site Selection and Territory Planning – 21 April

Morning Coffee Catch-Up: How the new Code is impacting on franchise systems

May

June

Forum: FCA Field Forum – is your field team relevant and effective to the current needs of your business? – 19 May Education course: Introduction to Franchising – 26 May Education course: Improving Franchise Advisory Councils – 27 May

Morning Coffee Catch-Up: Spending your marketing dollars wisely – 4 June National awards entries close – 8 June Franchisee Breakfast: On the couch with franchisees – 23 June

June Breakfast: Franchisee Recruitment – 2 June National awards entries close – 8 June Forum: Using Data to Improve Your Decision-Making – 16 June

South Australia April

Education course: Effective Franchise Recruitment – 22 April Education course: Managing Franchisee Underperformance – 23 April

July

Morning Coffee Catch-Up: Marketing funds – the legal Do’s and Don’ts – 2 July

Events held by and in conjunction with the Franchise Council of Australia are designed to be informative and educational, along with providing ample networking opportunities. Meet franchisors, management staff and experts in the sector to discuss issues relevant to your brand and your career. *NB – Breakfasts, forums, roundtables and education courses are being added to the national calendar all the time. To see the most upto-date version of the calendar and register for events, go to www.franchise.org.au/event-calendar.html.

June National awards entries close – 8 June

MYOB FCA Excellence in Franchising Awards Night

FCA events are designed to be educational and provide plenty of opportunities for networking

The hairdressing industry in Australia is worth over

75 Million each week

Get your cut! Introducing the new

kiosk Just Cuts is such a fun, flexible place to work and all my Stylists start and finish on time every day. Personally, I love it because it is just cutting. We have no appointments, Clients just walk in and they love how convenient it is. All the systems and tools are in place and I was able to get finance quickly and easily! ™

Lilydale, VIC Just Cuts Kiosk Owner NS TM

“Just Cuts has changed my life for the better! This is my second Just Cuts salon that I own and operate and I have done it all within 18 months. The Just Cuts community are very welcoming and salon Owners help each other along the way. It’s great to be part of a growing franchise that still remains a close knit group - when we say we are like a family it’s because we are! We have a fantastic network of fully qualified Stylists, and I love coming into work every day. I look forward to what my future holds with Just Cuts !” ™

™

Fixed franchising fee •

Mornington, VIC Just Cuts Kiosk Owner RH TM

Flexible finance options available • Balgowlah, NSW Just Cuts Kiosk Owner BT, 19 years of age TM

Only 49 sites available Australia wide • Business coaching and ongoing support • Create your own lifestyle from $85,000! •

Visit www.justcuts.com.au/franchising or call Brianna 0488 380 222

On average, Just Cuts Franchisees own 2.3 salons each • TM

Exclusive access to our professional retail brand, made in Europe •

Just Cuts is the largest hairdressing network in the southern hemisphere. Australian owned and franchised for 25 years, you can join our network of 80 existing Franchise Owners who collectively own over 186 salons and service over 80,000 Clients per week! TM