YOUR ESSENTIAL GUIDE TO BUYING A FRANCHISE WWW.FRANCHISEBUSINESS.COM.AU
JANUARY/ FEBRUARY 2018
ISSUE 31 VOL 01
COFFEE STATUS
How popular cafe chains keep on top of the game
BRANDS NEW YEAR
Get fired up with these fresh-faced franchises
EMPIRE BUILDERS Ambitious franchisees who just can’t stop growing
Why multi-award winner
PR I N T P O S T A PPR OV E D 10 0 0 0 8121
AUS $6.95|NZ $7.95
GJ GARDNER HOME ADVANTAGE has the
Orangetheory Fitness is a unique and innovative concept that celebrates 100% success rate across 700+ studios worldwide. Backed by science, it’s an energetic, one-of-a-kind training experience that ensures members train at their optimum metabolic rate through the use of heart rate monitors.
A successful global franchise with 3500+ clubs worldwide, Anytime Fitness is the brand that brought the 24/7 concept to life. We’re the biggest fitness community in Australia with 470+ locations. We’re getting Australians moving for a fitter and healthier future.
START YOUR FRANCHISE JOURNEY WITH US TODAY info@collectivewellness.com.au
Australia’s leading health & wellness franchise group www.CollectiveWellness.com.au
CONTENTS
REGULARS
LEADERSHIP
5 6 10 110 112 113 114 115
14 FOUNDERS KEEPERS
EDITORIAL
Check this list of 7 brands with founders still playing a key role.
GLOBAL EYE INSIGHTS
32 BRANDS NEW YEAR
Get inspired with these newbie franchises just starting out.
40 SEEING RED
Red Rooster has been serving up roast chicken meals for 46 years.
GLOSSARY INFLUENCERS
18 COVER STORY
TIMELINE RESOURCES
How this multi-award winning franchise grew and grew.
CHECKLIST
24 UNITING THE GENERATIONS
Pizza Hut has unveiled a new look that harnesses tradition and currency.
26 A SOLID FOOTING
One mobile business has found its feet with the pedicure market.
28 HITTING THE SWEET SPOT
What The Cheesecake Shop has initiated to boost franchisee performance
INDUSTRIES
FRANCHISE BASICS
58 BRIMMING WITH PERSONALITY
82 BUYING INTO THE DREAM
The cafe culture is changing and franchised chains are lining up to meet the challenges.
Turn your ambition into reality armed with all the relevant information.
45 THE NEXT BEST THING
Two franchisors talk about the chance to fast track to a global audience.
50 EMPIRE BUILDERS
Launching our series showcasing franchisee success: five high performing multi-unit operators share their stories.
102 EXPERIENCE VERSUS EXCITEMENT
The pros and cons of an established chain over a fledgling business.
84 AN UNPARALLELED SUCCESS
FCA chairman reveals why the franchising model is a small business success story.
87 AN INDEPENDENT STREAK
Should you buy a franchise or an independent business? Check out these advice tips.
68 CLEANING UP
Franchisors are tapping into the desire for a clean home.
72 LEARNING CURVE
The tutoring segment is growing fast and franchises are in on the action.
77 PULLING ALL THE STOPS
Convenience stores continue to change to cater for our busy lifestyles.
91 ARE YOU RIGHT FOR THIS
BUSINESS?
Shared values and compatibility are key to your success as a franchisee.
94 KEEPING TABS
The Franchising Code of Conduct is regulated by the ACCC.
98 20 HARD HITTING QUESTIONS
It pays to be curious so ask yourself and others the tough questions.
106 TERM TIME
Buy a franchise and you sign up to a franchise agreement with a set term.
108 5 REASONS FRANCHISING COULD
SHAPE YOUR FUTURE
Why franchising could shape your future.
122 FINAL WORD
Professor Andrew Terry on how to spot a franchise winner.
JANUARY/FEBRUARY 2018 | 3 | WWW.FRANCHISEBUSINESS.COM.AU
GLOBAL
BRAND LOCAL OPPORTUNITIES
FOR OVER 70 YEARS, BASKIN-ROBBINS® HAS BEEN MAKING PEOPLE HAPPY BY CREATING UNFORGETTABLE MEMORIES AND EXPERIENCES. WE JUST HAPPEN TO SELL THE WORLD’S FAVOURITE ICE CREAM! Whether you’re looking for your first franchise or ready to expand your restaurant portfolio, Baskin-Robbins® offers what you need and want: • Iconic, internationally renowned, global brand with locations in over 50 countries • Rich brand heritage, celebrating over 70 years of innovation & passion for ice cream • Proven operating systems designed to help build your business • A strong team of passionate field staff to support your business goals • World class training & facilities • Exciting new sites available in QLD, NSW, VIC & WA
fun, l l e s e W “ eam” r c e c i t not jus Irv Robbins Founder
Scoop up your own Baskin-Robbins® today!
Contact our team for more information: Dean 0409 720 063
Email franchise@palmoasisventures.com
www.baskinrobbins.com.au
EDITORIAL
Getting it right Franchising is no guarantee of success but it is a fantastic model of entrepreneurship that can deliver great rewards. Franchising works when everyone involved is profitable. Franchisor, franchisee, supplier all need to be getting a good return on their investment. There are some extraordinary examples of franchisees who are building strong business empires of multiple units, and Inside Franchise Business chats with some of these high-fliers in the first of a brand new series showcasing spectacular franchisees. From endota spa to Subway, success can come in any sector, for franchisees with any background. All it takes is...well, you’ll have to turn to page 50 to discover what has helped them succeed. There is, however, no guarantee of success - stellar or otherwise. Like any business, a franchise is dependent on any number of factors for it to be viable. Some of these are within the control of the owner/operators, others are external influences that can have an impact on the development of a business. At the time of writing, the Retail Food Group was in the spotlight following an investigation by Fairfax Media, which alleges the franchisor runs a business model that isn’t working for franchisees. As Bruce Billson, executive chairman of the Franchise Council of Australia acknowledges, allegations of behaviour that is likely to breach the laws that regulate franchising in Australia, warrant further investigation. RFG, which manages many household name franchises including Donut King, Gloria Jean’s and Crust Gourmet Pizza, has vigorously denied the claims and referred back to its financial disclosures for evidence that the business model is effective. In circumstances such as this, when the media’s attention is drawn to franchisees operating unprofitable businesses, it is common to place the blame for failure with the franchise model or franchising in general. Whatever the particulars of the RFG situation, there are lessons to learn about profitability suggests Greg Nathan, founder of Franchise Relationships Institute (FRI). "Perhaps it’s time all franchisors reflected on the health of their franchise networks — culturally and commercially — and asked themselves this important question: “Would you invest as a franchisee in your own network?” The good news is that extensive research at FRI shows 81 per cent of franchisees across the sector do believe their franchisor acts fairly, Nathan points out. And there is plenty to celebrate in franchising. “Franchising is the best model of entrepreneurship. It offers a three-fold increase in the likelihood of small business success compared to a standalone start-up small enterprise,” says Billson. What is crucial is that franchise buyers do solid research before committing to any business offer. Turn to the Franchise Basics advice section in this edition for further pointers about what to consider about investing in a franchise. And for some inspiration, check out the new brands putting their future in franchising, and read about some of the established brands that have backed the business model: Red Rooster, and this month’s cover story, the award-winning G.J.Gardner Homes.
EDITOR
SENIOR ACCOUNT MANAGER
SUB-EDITOR
CLIENT SUCCESS MANAGER
Sarah Stowe P: 02 8224 8371 sarah.stowe@octomedia.com.au
Louis Allen louis@octomedia.com.au
JOURNALIST
Gali Blacher P: 02 8224 8355 gali@octomedia.com.au
GENERAL MANAGER
David Strong P: 02 8224 8370 david.strong@octomedia.com.au
Charlotte Redfern P: 02 8224 8373 charlotte.redfern@octomedia.com.au
Jarha Avila P: 02 8224 8375 jarha.avila@octomedia.com.au
MARKETING MANAGER
Sar a h Sarah Stowe
OCTOMEDIA
L10, 51-57 Pitt St. Sydney NSW 2000 PO Box R217, Royal Exchange, NSW 1225 Ph: +61 2 9901 1800 Fax: +61 2 9251 5957 www.octomedia.com.au FOR SUBSCRIPTION ENQUIRIES CALL customer service: 02 8224 8383 ISSN: 1321-408X
Cherie Nelson P: 02 8224 8374 cherie.nelson@octomedia.com.au
GRAPHIC DESIGN
Rozelle Carlos rozelle.c@octomedia.com.au
Confirmed distribution of November/December 2017 issue 7,244 - Print Post 100008121
JANUARY/FEBRUARY 2018 | 5 | WWW.FRANCHISEBUSINESS.COM.AU
Editor
P R IN T E D B Y: B L U E S TA R P R IN T 8 3 D E R B Y S T R E E T, S ILV E R WAT E R N S W 212 8 P : 0 2 9 74 8 3 411
ALL INSIDE FRANCHISE BUSINESS MATERIAL IS COPYRIGHT. REPRODUCTION IN WHOLE OR IN PART IS NOT ALLOWED WITHOUT WRITTEN PERMISSION FROM THE EDITOR. OPINIONS EXPRESSED IN INSIDE FRANCHISE BUSINESS ARE NOT NECESSARILY THOSE OF INSIDE FRANCHISE BUSINESS OR OCTOMEDIA. © COPYRIGHT OCTOMEDIA, 2016
GLOBAL EYE
Xtend Barre
DELIVERING A PERSONALISED SERVICE
I
nside Franchise Business looks at the trends for mobile businesses, fitness, and beauty which are delivering what today's Australian customers want.
MOBILE FRANCHISES GAIN MOMENTUM Mobile services are a current trend in the franchise sector. “From a market perspective, mobile franchises are less investment than a traditional food court or fast food business. So, it appeals to a wider demographic,” Jason Daniels, partner, business services, BDO, wrote in a recent blog. “One of the biggest challenges with a bricks and mortar franchise is that trends change, and mobile services can respond to them better.” Food trucks have emerged as a trendy alternative to larger food restaurants. The biggest shift is said to come from millennials. It’s no longer seen as ‘off putting’ to buy food from a truck as the food is usually of a high quality. Having a mobile business means franchisees can take their business to the consumer. Convenience is at the heart of the delivery/mobile trend, which is a global phenomenon. It’s a trend that spy store chain OzSpy
has picked up on – the retailer with the coolest gadgets has shifted its business model to open up a mobile option. Now franchisees can focus on providing an expert on-site service for what accounts for the bulk of the business, CCTV installation. Service franchises on the go have come into their own. With constantly connected consumers, many of whom work flexible hours, the traditional mobile businesses such as dog grooming services, car detailing and lawn mowing, are now right on trend. Blue Wheelers, for example, is a mobile wash, clip, and groom service that travels to client’s homes. Franchisees have the flexibility to choose their own time and clients don’t have to worry about the logistics of getting their dogs to the groomers. For retail operations, going mobile means franchisees can also avoid the high rental costs common in today’s retail arena and can invest in a low-cost franchise option
FITNESS BOOM Two brands, Anytime Fitness and Jetts, were instrumental in developing this sector in Australia. The convenient, 24-hour fitness club franchise with access to a wide variety of high quality cardio, strength and free weight equipment is now a standard. The gyms especially fit the lifestyle of fast-paced millennials who thrive on flexibility and convenience.
According to IBISWorld the fitness market as a whole will grow at 1.5 per cent till 2022. US publication Entrepreneur reports “The US market currently brings in about $31 billion annually and around one in 10 of those dollars comes through a franchise, but in recent years, franchise growth has outpaced the overall industry.” Instagram has also played a part in the success of 24 hour gyms as people enjoy being ‘insta-fit’ and showing off their 5 am muscles before starting their day.
SPECIALITY FITNESS TRAINING Today there is a trend for niche, personalised options that deliver both convenience and results. New fitness models are providing personal trainers, Pilates and yoga instructors, with new business opportunities. The fitness industry is seeing trends such as custom built gyms and speciality fitness training, which is starting to build momentum in the franchise sector. Speciality fitness is all the rage right now and boxing and kickboxing franchises are gaining a ‘cult following’. Specialty fitness programs focus on a particular style of exercise, piece of equipment and sometimes even a philosophical approach. This is starting to explode in the US and it probably won’t be long till Australia starts following suit. Currently in the US there is even a gym
JANUARY/FEBRUARY 2018 | 6 | WWW.FRANCHISEBUSINESS.COM.AU
Grow your network with Cashflow It Franchise Accreditation
Help your franchise partners get the finance they need by becoming a Cashflow It accredited franchise system. Not only does accreditation reduce the challenges of accessing finance, it is also a powerful tool to assist in the growth of your franchise network. While Cashflow It operates with the flexibility of a small business, we have the resources and backing of one of Australia’s largest non-bank finance companies - Thorn Group Ltd, an ASX 200 company with over 80 years’ experience in the finance industry.
Cashflow It has been a key partner for the growth of the Rolld system. Where traditional lenders have rigid requirements, the team at Cashflow It have understood the challenges of a growing franchise system and have been prepared to partner for growth. Ray Esquieres, Co-Founder & CFO, Rolld Australia
Benefits of Accreditation
What can be funded?
1. Guaranteed access to finance
Just about any serialised piece of equipment can be funded with Cashflow It as well as some customised assets.
2. Preferred rates of funding 3. Access our full range of finance products 4. Accredited franchise priority service 5. Other exclusive benefits
•
New equipment
•
Fitouts and refurbishments
•
National equipment roll-outs
•
Serialised and custom assets
•
Used equipment
•
Vehicles
•
Re-financing
•
Franchise re-sales
Get accredited You’ll be happy to know that Cashflow It Franchise Accreditation is nothing like bank accreditation. It’s a very simple, pain free process. Call us today on 1300 659 676 or visit cashflowit.com.au for further information.
GLOBAL EYE
Wholehealth that is focused on rodeo training! In Australia the Collective Wellness Group, which runs Anytime Fitness, has opened Orangetheory Fitness and just acquired Xtend Barre, a Pilates-based franchise offering a multi-studio ballet barre workout program. Xtend Barre expects to grow to 80 studios or more in the next five years. Turn to page 32 to read about some new and upcoming fitness brands.
BEAUTY IS FLOURISHING
Wellbeing, results-driven beauty treatments and cosmetics are focal points in the beauty sector. In the US 7‑Eleven is broadening its product offer with the launch of an affordable range of cosmetics, Simply Me Beauty. The convenience franchise plans to gain market share in this multi-billion dollar industry competing with drug stores and supermarkets which have 30 percent of the market. In Australia pharmacy chains are keeping ahead of the trends. A new big box pharmacy brand that focuses on delivering a holistic approach to healthcare and healthy living is the result of an initiative linking the pharmacy group Discount Drug Stores and two Cairns pharmacists. Wholehealth Discount Drug Store and Healthfoods was founded by brothers and pharmacists Frank and Vince Pappalardo. Frank Pappalardo says the aim is to deliver a sought after retail experience to
Our focus is to empower our clients.
the community as consumers shift toward living healthier lifestyles. The new model focuses on delivering a holistic approach to healthcare in order to improve patient outcomes, lifestyle and wellbeing, by offering expert health advice and professional services alongside the country’s widest and most affordable range of organic and natural products across nutrition, health foods, skincare and beauty. The bigger format model, which ensures all new stores occupy a minimum of 500 sqm, will allow the Discount Drug Stores brand to expand into standalone and destination retail sites. At a niche level, franchised beauty chain endota spa has taken its branding to the next level, announcing beauty and wellbeing ambassador partnerships with stylists Sheree Commerford and Sibella Court and makeup artist Teneille Sorgiovanni, and revealing its latest results-based product range. In January the chain of 100 spas will introduce a new anti-ageing range of 24 products designed to meet customer demands for results-based treatments. The products are designed to work in
conjunction with endota spa’s current anti-ageing treatments in spa which offer a supercharged facial experience, with take home products to maintain results. Founded in 2000, the endota spa chain today employs more than 1000 people; 90 per cent of them women, and it has had more than 120 successful franchisees. Read about one phenomenally successful franchisee who has nine endota spa outlets in our feature about multi-unit franchisees on page 50. And for Australian Skin Clinics, the move into Western Australia with the opening of its Mandurah outlet is the first step outside the east coast. Australian Skin Clinics’ CEO, Kevin Waite, said the company’s expansion into Western Australia is the result of a growing demand for medi-aesthetics in the state. “Our focus is to empower our clients to look and feel fantastic by offering affordable, accessible and results driven cosmetic treatments in high quality facilities, delivered by experienced, qualified and highly trained team members.” n
JANUARY/FEBRUARY 2018 | 8 | WWW.FRANCHISEBUSINESS.COM.AU
Small Business Dream? J O I N A U S T R A L I A’S # 1 F O O D F R A N C H I S E
10 REASONS TO JOIN
AUSTRALIA’S #1
FOOD FRANCHISE: 1. Ranked as Australia’s #1 Food Franchise for 2017
2. Zero Royalties & Marketing fees to pay 3. 116 years of retail baking history 4. No baking required as we make everything for you
5. 5th generation family owners 6. Multiple revenue streams of income 7. Daily deliveries into your store 8. Fresh ingredients used 9. Multiple award winning product lines 10. 70 stores across Victoria and growing
TO FIND OUT MORE VISIT WWW.fergusonplarre.com.au/franchise
INSIGHTS
JANUARY/FEBRUARY 2018 | 10 | WWW.FRANCHISEBUSINESS.COM.AU
AUSSIES
ONLINE A
mazon officially launched its full retail and Marketplace offering in Australia early December 2017 after much anticipation. Millions of products in more than 20 categories ranging from clothing, shoes, beauty and homewares, to electronics, tools, toys and sports, are now available for purchase on Amazon.com.au. The biggest question mark surrounding Amazon had been its delivery offering in Australia, with some sceptics wondering whether the retail giant could support free same-day or even two-day delivery nationwide. Franchised logistics businesses CouriersPlease and Fastway Couriers are both delivering Amazon-ordered goods. Peter Lipinski, CEO of Fastway Couriers Australia, said while he couldn’t comment on Amazon, Fastway was geared up for the demand. "This is an exciting time for Australian consumers and we’re proud to working closely with all our customers to facilitate the best delivery experience for their online shoppers. "Given Australians’ appetite for shopping online, we anticipate an immediate increase in volume." The initial rollout of the online marketplace did not include Fulfilment by Amazon (FBA), a warehousing and fulfillment solution for Marketplace sellers, or Amazon Prime, a loyalty program that offers members
JANUARY/FEBRUARY 2018 | 11 | WWW.FRANCHISEBUSINESS.COM.AU
INSIGHTS
unlimited free shipping on eligible products, video and music streaming services, access to exclusive products, among other benefits. Amazon Prime is set to launch in mid-2018, while FBA is said to be coming soon.
CONSUMER ONLINE APPETITE According to a recent UBS report, the e-commerce giant could steal 2 per cent of retail sales within five years of entering Australia, growing revenues from more than $400 million to about $3.5 billion by 2023. Australians already show a willingness to shop online. Nielsen research shows that Amazon’s US site converts almost one-in-two (49 per cent) Australian visitors into sales - the fourth highest behind eBay (78 per cent), The Book Depository (74 per cent) and The Iconic (53 per cent). Expectation around Amazon’s arrival on Australian shores ramped up with 75 per cent of Australians aged 18+ confirming their interest in Amazon Australia; 56 per cent predicting they will purchase from its Australian site; and 45 per cent willing to pay to become an Amazon Prime member to receive special deals, discounts and delivery perks. So what categories are they likely to purchase? Nielsen’s 2016 Global Connected Commerce Report showed the consumers online purchasing habits are focused on durable categories, such as fashion, travel and books, music and stationery online. According to Inside Retail, Amazon revealed its best-selling products in its first week of sales on the Australian site showed Aussies love technology. Eight of the top 10 products purchased were in the tech category. The two non-tech items to make it to the initial top 10 were books. While in general Australians are fairly brand loyal, a more competitive marketplace may see that loyalty put to the test, according to retail consultant Paul Downs. The managing director of e-commerce company Hitworks believes some Australian retailers may have become complacent about providing outstanding
customer experiences. “In other countries where the marketplace is far more competitive the customer experience is paramount. That hasn’t always been the case in Australia,” Downs said. “What’s going to be interesting to see is how the consumers respond to having more choice. Amazon provides such good quality of service, choice and price we will see if consumers stick with Aussie brands or go for value and customer service. “I believe faced with a choice, Australians will go for the best offer, quality of product and service.” While Amazon provides a marketplace for Australian companies to sell, the downside for some retailers, for example those in electronics or books, is that they will struggle to compete with the enormous buying power, technology resources and artificial intelligence of Amazon if the global giant takes any aggressive approach to acquiring customers. “And it’s a totally awesome experience for the consumer. For example, a consumer can go into a branded electronic shop, look at a product and then go and buy it on Amazon for a price most local retailers won’t be able to match. In addition, the retailer also must carry the cost of running the store. Really, from the consumer’s point of view there is more choice, lower price and better delivery," Downs said. “So, if you want to hold on to your customers, it comes down to the consumer experience. Customers are loyal to brands that work for them. My advice is to focus on your own business and give the best experience to the customer – that’s your only defence.” He believes providing an omni channel framework, which gives the customer the ability to browse and shop from their mobile, laptop, PC then go into the store and look at the product, is essential for retailers. Downs said while the technology was already available, its implementation was happening slowly. “Click and Collect has been a big crossover. A lot of retailers have been implementing it but it has been a real challenge for them,” he said. “Previously all you needed to know was how much stock you’ve got in
your stores, but now you need to know exactly the size and colour is available for sure it’s in that store and has not been purchased. Customers don’t like it when they turn up to collect their purchase only to find it’s not there … it’s a terrible shopping experience.”
WHAT’S HAPPENING TO HIGH STREET STORES? In Australia, the types of stores that are most markedly vanishing from local shopping areas are: bookstores (reportedly seen less often by 48 per cent of Australians compared to 39 per cent globally), newsstands (41 per cent) and any type of independently-owned and operated (non-chain) stores (35 per cent). It’s a different story for other retailers as Aussie consumers reported seeing no decrease in the number of drugstores and pharmacies, eat-in restaurants, cafes, and stores or restaurants selling readily-prepared or takeaway food. Although the reported level of takeaway food restaurants is on the rise, only 11 per cent of Australians are eating takeaway food more often, compared to 18 per cent of the global population. Instead more than one third of Australians (35 per cent) are purchasing takeaway food less often than three years ago. These are the findings of a Global Advisor survey on shopping behaviours, conducted by independent market research firm Ipsos. While consumers are shopping more in general than three years ago (both instore and online), a higher percentage of Australians are more frequently shopping online (on average, 16 per cent are shopping more online across different products and services, and 12 per cent are shopping more instore). The self-reported personal care and social activities the most on the rise are food-related: 17 per cent of Australians are both eating at restaurants and going to cafes more often than three years ago. Fewer Aussies are movie-goers today (40 per cent) while more than one third (36 per cent) are vising bars/pubs less often. n
JANUARY/FEBRUARY 2018 | 12 | WWW.FRANCHISEBUSINESS.COM.AU
Be the
LEADER OF YOUR OWN SUCCESS Welcome to a world of opportunity, brought to you by 7-Eleven, the brand that’s world famous. A 7-Eleven franchise is a partnership in success. When you buy a 7-Eleven franchise, you buy two things. Firstly, a brand name that’s recognised around the world, and secondly a business system that works, one that provides more support than most other franchise networks.
BENEFITS OF BEING A 7-ELEVEN FRANCHISEE Our stores are open 24/7, so we’re with you 24 hours a day, supporting you in every part of your operation. From setup, to training, to marketing, and even to book-keeping, we’ll help you turn your new business into a solid investment. We set up shop for you and give you
full training
We take payroll admin off your hands
and help with the book-keeping
We deal with suppliers to get you the
best products
We manage the fuel
Financials
Contact Details
An initial investment of between $400,000 and $1,000,000 + is what is required to become a 7-Eleven Franchisee, so it’s certainly a big decision to make.
Franchise Development Managers
The 7-Eleven franchised business model is one with a difference, because we tie our financial success to the success of our Franchisees. 7-Eleven shares in the profits, so it’s in our interest to ensure that we continually work with you to meet the needs of your customers to grow sales, and to grow profits. Our gross profit split is determined progressively, and there are other shared income stream profits, such as commissions.
We have brands you won’t find anywhere
Brett Reading Queensland
E-Mail: bzr@7eleven.com.au Mobile: 0407 877 674 Peter O’Hara Victoria / Western Australia
E-Mail: pwo@7eleven.com.au Mobile: 0408 175 534 Shayne Boogaard New South Wales
E-Mail: szh@7eleven.com.au Mobile: 0418 136 156
else
We provide advertising and promotional
support
START YOUR SUCCESS STORY TODAY www.7elevenfranchise.com.au
FRANCHISING
THE LIST
FOUNDERS KEEPERS
Passionate franchise founders don’t take the money and run. They stick around to keep developing their business so others can continue to benefit.
H
ere are seven brands where the founders are still playing an integral role in the business.
APPLIANCE TAGGING SERVICES
FOUNDERS: SARAH AND AINSLIE ALLEN BUSINESS ESTABLISHED: 2002 FIRST FRANCHISE OUTLET: 2006 Why did husband and wife Ainslie and Sarah Allen start their tagging services business? “To make money out of something we are really good at,” says Sarah. “Workplace health-and-safety obligations are common across all businesses – we knew there was a huge opportunity for providing professional, national electrical safety services as a franchise network, with ongoing repeat business. “Establishing a franchise business is a bit like having a baby: you watch it take its first steps, guide it through challenges, and celebrate successes. We are in the exciting teenage years at the moment. and it’s important as founders we continue to be involved with our strong vision for the future. “We understand the challenges our franchisees face as we have lived through these ourselves. We are continually challenging ourselves and our franchisees to embrace technology and deliver clients an outstanding experience at every touchpoint.” What are the challenges of being a founder/director as the business develops? “When we were a small network, I had a personal relationship with each of our franchisees,” says Sarah. “It’s really challenging to develop and maintain those personal relationships with a growing number of franchisees and the increasing responsibilities of a larger network, but it’s something we are really trying to get back to.”
LE WRAP
FOUNDERS: HAKAN (KAAN) CELIK BUSINESS ESTABLISHED: 2005 FIRST FRANCHISE OUTLET: 2010 MILESTONE: JOINED FORCES WITH KEBAB FRANCHISE ALI BABA IN 2017. Kaan Celik wanted to create fresh, healthy, made-to-order, take-away food that would not just appeal to everyone, but in particular the health conscious. LeWrap was created with a goal to provide exceptional customer service and satisfaction, and this aim still stands – along with its commitment to provide a vehicle for any potential franchise who has the right attitude to customer service and the ambition to run their own small business backed by a trusted brand. And Celik is still passionate about the concept, with a vision of growing the brand nationally, perhaps even internationally one day. “I am by nature a hard task master who leads by example and expects the same from others. I know everything there is to know about my brand and have worked in every aspect of the business. I know the issues at ground level and can support the franchise network with my knowledge and experience in the industry. “By merging with Ali Baba, I have found an organisation that will give us greater numbers, stronger skills and synergies.”
NIRVANA BEAUTY LASER CLINICS
FOUNDERS: MARC AND SUZAN AKIL BUSINESS ESTABLISHED: 2002 FIRST FRANCHISE OUTLET: 2015 “We had a vision to empower women to look and feel their best inside and out, and adopted the motto ‘Live Well, Look Good, Love Life’,” says Suzan Akil. “We started off as a day spa, but a year later found there was a big demand for results-driven treatments in minimal time. We transitioned into a medi-spa focusing on delivering the latest beauty trends and treatments, and have grown to multiple locations.” The goal now is to become a national brand. Meanwhile, the founders are still actively involved, providing ongoing support and training for franchisees and coming up with innovative ways to help them generate more revenue. They also keep on top of beauty trends and source salon technology internationally. Do they find there are challenges in being a founder/director as the business develops? “The biggest challenge is that there is a lot of competition, so staying relevant and current is the key to success in this industry,” says Akil. “We have been able to do this by treating each client as an individual and customising treatments to address their specific concerns.”
JANUARY/FEBRUARY 2018 | 14 | WWW.FRANCHISEBUSINESS.COM.AU
THE LIST
OZ FUNLAND
FOUNDERS: BRIAN AND CHRISTERINE LAUL BUSINESS ESTABLISHED: 2008 FIRST FRANCHISE OUTLET: JULY 2017 Oz Funland is a culmination of the Laul’s 35 years of award winning work and a childhood obsession with all things Oz. The children’s party, education and entertainment business answers a need for more than passive play in today’s interactive world: “to create magical experiences for children filled with hope and happiness in a venue where minds can develop, imaginations run riot and a family could have fun together”. Today the goal is to expand as a franchise, to offer a business model with five strong income streams to “people who share our passion for community involvement, love working with children and nurturing their creativity”. As the business develops the challenges are ensuring the team stays true to the vision, is motivated to maximise customer potential, and creatively contributes to growth strategies. Brian and Christerine love the business because it allows them to contribute to the local community and pursue their passion. “The ability and joy in fostering human potential, embracing new trends and technologies to advance financial growth and empowering associates to creatively contribute to the business’ organic growth all help to build a healthy franchise network. We have mentored at various levels and there is nothing more satisfying than seeing another person flourish using our business and marketing systems,” says Brian.
POOLWERX
FOUNDERS: JOHN O’BRIEN BUSINESS ESTABLISHED: 1992 FIRST FRANCHISE OUTLET: 1992 John O’Brien went on a global sabbatical looking for a business niche in a high-growth, under-baked and disorganised industry that might be energised by franchising. He found what he was looking for minutes after arriving back in Australia. In a cab from the airport, he found himself behind a mobile pool-servicing van with a telephone number on the rear window. In short order, he became a partner in the company, then fully acquired the business that became Poolwerx. Its original aim was to put pool-servicing men in vans; the goal today is to provide own-business entry points for people at various stages of their lives and careers, ultimately manifesting in the model of a multi-store retail empire with a fleet of homeservice units. “I suppose my strength is having learned from countless idiotic mistakes. You learn to listen. One of the things is encouraging your people to ask about the way it works, and to pick up the gems,” says O’Brien. “It’s tempting to think you have done all this stuff by yourself and that if you take ‘you’ out of any element of the equation it’s going to be a mess. I still also get involved in the bits, but that’s because it’s the bits that are fun. You can delegate lots of stuff but stay involved in the fun.”
PACK & SEND
FOUNDERS: MICHAEL PAUL BUSINESS ESTABLISHED: 1993 FIRST FRANCHISE OUTLET: 1994 Michael Paul needed to send an unpacked computer from Sydney to Melbourne, but could not find a business in Australia prepared to provide a combined packaging and courier service … so he established a retail model designed to make it convenient for businesses and consumers to have anything sent anywhere. This mission has been constant since the company’s inception, but the business systems have changed and adapted significantly to meet changes in the market. Paul is still involved in the company, with its board believing that founder-led enterprises generally have an advantage in terms of leadership around connections to the brand, customers and franchisees. It believes that a good CEO/founder and a watchful board will have a thoughtful succession plan in place to help the company thrive in both the short and long term. For CEO founders, the challenge is to ensure the business has the necessary skills built in to match where it may be in its lifecycle. That means the CEO founder needs to be continuously learning and developing their own skills while ensuring the directors are technically aware and that the company has the right level of management talent.
XPRESSO DELIGHT
FOUNDERS: STEPHEN SPITZ, PAUL CRABTREE BUSINESS ESTABLISHED: 2003 FIRST FRANCHISE OUTLET: 2004 Originally the goal of Xpresso Delight was to set up a business model that would allow franchisees to achieve an income equal to a full-time paying job without having to work 40 hours a week at the coalface. “We saw an opportunity to provide a cafe-quality coffee experience in the corporate market space; even if we could get only a tiny market share, it would be a substantial business,” says cofounder Stephen Spitz. “We soon learned that most corporate coffee consumption was happening throughout the day, usually in offices with instant coffee or at best a dripolator. We simply took it to the next level both in taste and experience.” Why are the founders still involved? “Quite simply, our passion for providing a coffee concierge service directly into the marketplace is still there, plus we have still only just scratched the surface in terms of the business potential. My business partner is also spending more time in the US now leading our expansion plans over there.” What are the challenges of being a founder/director as the business develops? “Now our footprint has expanded outside Australia, we need to ensure our principal model remains intact and true to form, no matter where our clients are,” says Spitz.
JANUARY/FEBRUARY 2018 | 16 | WWW.FRANCHISEBUSINESS.COM.AU
COVER STORY
HOME
ADVANTAGE
JANUARY/FEBRUARY 2018 | 18 | WWW.FRANCHISEBUSINESS.COM.AU
When it comes to building up a franchise, GJ Gardner has the awards to prove it knows what it is doing. And after straddling the Tasman, it is now hammering away at the US market.
W
inning a national franchise award is a great achievement, but scooping up three in one year really is something. Bragging rights go to GJ Gardner Homes for its hat trick of wins at the MYOB FCA Excellence in Franchising Awards 2017 – Established Franchisor of the Year, Excellence in International Franchising, and Franchisor Social Responsibility. The awards take pride of place in the office at the franchise network’s headquarters in Queensland, a daily reminder the brand has been recognised for its business approach and achievements. It is a long way from the early days of the business founded by Greg Gardner, who is still involved in a strategic role. In the 1990s, current CEO Darren Wallis was the company accountant. The decision to take the home-building business and expand through franchising brought the two men together. Says Wallis, “It’s been a great ride.” He says the company is still essentially a small Sunshine Coast business that now has a presence across three countries, including the US.
Darren Wallis JANUARY/FEBRUARY 2018 | 19 | WWW.FRANCHISEBUSINESS.COM.AU
COVER STORY
Darren Wallis with Greg Gardner
So why franchising? This was, of course, because of the need to expand. Franchising was a way to access finance to achieve growth, but there was more to it than that, says Wallis. “We wanted to grow the business and give something back to the industry, to help small builders build their business, and it was a way of having extra stakeholders in the business and expanding a lot quicker.”
THE RIGHT PEOPLE The key has been finding the right people to work with and to bring on as franchisees. “It’s really important to have the right people running a franchise – people with passion and the right attitude to success and business. A lot of skills can be taught, but it’s finding those people with the passion for growing the business. It’s finding those people who want to partner with you and take the business forward. “The better the people you have involved in the business, certainly the easier it is to expand, and much more enjoyable too. If they’re a square peg in a round hole, it doesn’t help them, or us or the network as a whole.” When the business converted into a franchise model there were six offices under management. “We found that franchisees watched their profitability a lot more,” says Wallis. “When we franchised we noticed that overheads significantly reduced. “What I learned fairly quickly was that it is easy to find the 20 per cent who are not going to work. I’ve had franchisees I thought might be okay, but they turned out to be superstars. And there are others who seem to have the perfect
background, be the perfect franchisee, and they make it work; but if there’s a ladder, they end up near the bottom.” Franchisees must be good-quality builders. Typically they will run an office, a couple of display homes, employ three to six salespeople and up to five admin staff. On a daily basis franchisees are managing staff, working on the business, and working with clients and contractors to bring to life someone’s dream home.
PASSION AND ATTITUDE Apart from the requirement for a builder’s licence, franchisees need no other specific qualifications or skills before investing in the business. What GJ Gardner demands from its franchisees is passion and a great attitude. Relevant technical and business skills will be learned through training and education. “We give the builders the skills, resources and systems. We have a fully computerised system that runs every part of the business, we train them how to have sales people, how to set up model homes and finance those display homes, how to run sales meetings, at what point they need staffing... all the marketing behind an international company, and how to do marketing at a local level. “It’s really about turning that builder into a business person, and giving them those extra skills to be able to do that and focus on the business rather than just on the construction of a home.” A master franchise in each state runs business-plan reviews each year with franchisees, working out how they can do better, helping them set targets for the ensuing year.
JANUARY/FEBRUARY 2018 | 20 | WWW.FRANCHISEBUSINESS.COM.AU
BE PART OF SOMETHING BIGGER QUEST FRANCHISING - A PROVEN & SUCCESSFUL BUSINESS FORMULA As Australasia’s largest apartment hotel operator, Quest is a brand business travellers have come to rely on for more than 30 years. We’ve created a business format franchise model that takes away some of the challenges to achieving success in small business, with the support of one of Australia’s most recognisable brands.
Visit questfranchise.com.au or call 1800 809 913
COVER STORY
“We have guys who have done more than 150 homes in a year, and that’s a massive turnover, so we want to take those who do 20 homes a year and show them how they can do 50, and then 100, and maybe 150.” That, he says, is the benefit of buying into an established, award-winning franchise business. Concentrating on helping franchisees become the best in their area then in the state, and replicating a strong network of systems further afield has served GJ Gardner Homes well. Today the brand is not just national but international, with a presence in New Zealand and the US, and plans for further expansion. It was 1997 when the brand dipped its toe across the Tasman, and now the network numbers 29 franchises. There are 77 in Australia.
ANOTHER CHALLENGE Stepping into the massive US market is another process entirely. “I moved over there to get that established,” says Wallis. “One of the keys is having someone on the ground who has a fairly significant stake in the business, so I was on the ground to make it happen. I moved the family over there for a couple of years. I was prepared to do whatever it takes to make it happen, and set some franchises up in California and Colorado. “Our plans are to be the largest builder in America. It’s a pretty ambitious goal. Over the next 10 to 15 years we will be working at having some solid growth, setting up representation in every state.” Already the business has 22 US offices. Successful growth depends on planning, says Wallis. It took five years of investigation before the first office opened in the US. Is overseas expansion important for Australian franchisees? “It’s part of the whole success behind the brand that gives franchisees more good news stories, to be proud to be part of the brand,” says Wallis. “That positivity affects your mental ability and your attitude to what you’re doing every day. If you’re happy, you’re successful, and you’re proud of the brand you’re a part of. That’s infectious to your staff, to your salespeople, and it rolls down to your customers. “It’s a domino effect. It becomes part of the psyche of the franchisees and the company as a whole.”
It’s really important to have the right people running a franchise – people with passion and the right attitude to success and business.
SOLE FOCUS Franchising is the sole focus of GJ Gardner head office with no home-building at company level. That gives the management and support team a clear focus on the need to deliver for franchisees. “We make good money when the franchisees make money, but we put the money straight back into marketing, support, systems and training, because we tell franchisees, ‘We’ll be successful when you’re successful’.” While the home-building landscape is competitive, it is still a good option for a business, says Wallis. “Some places are doing better than others. Really, the economy for construction is pretty good. It’s not overly
booming, but it’s on a solid growth path.” GJ Gardner has introduced tools to help customers get closer to building their dream home, which also helps franchisees drive their businesses. Another initiative is GJ Finance Brokers, which helps clients gain finance and helps franchisees sell more houses. Franchisees can also share a new virtual-reality program with customers, enabling them to virtually step through the floorplan of their home design. For the next five years, GJ Gardner will focus on establishing another 30 offices in Australia and New Zealand, but the spotlight will be on building up the US market and looking at Canada before considering further options under its 10-year plan. n
JANUARY/FEBRUARY 2018 | 22 | WWW.FRANCHISEBUSINESS.COM.AU
LEADERSHIP
UNITING
the generations Many Australians have fond childhood memories of Pizza Hut, and in its latest store design the fastfood chain has kept some familiar elements while presenting a fresh image that keeps it relevant.
JANUARY/FEBRUARY 2018 | 24 | WWW.FRANCHISEBUSINESS.COM.AU
A
pizza brand that has been part of the Australian fast-food landscape for generations has taken on a fresh look to take it into the future. While the interiors of its restaurant have retro touches to reflect Pizza Hut’s American heritage, overall the feel is Australian contemporary. Features include an open kitchen, indoor, outdoor and bar dining spaces, and a digital jukebox. As well as the chain’s new-look interior design, the Waterloo location in Sydney will be the brand’s Centre of Restaurant Excellence, an innovation lab to test and prove concepts before they are rolled out in select stores around Australia. Pizza Hut Australia innovation director Matthew Sawyer says the new business model has a “glocal” philosophy: globally relevant with adaptations to suit the local community. “Our new store’s food will be created specially to please the residents in the area. In other locations, we will tailor certain menu items in the same way. This reflects our approach of fusing global and local for our brand. “We are fundamentally a people business with strong long-term relationships with our suppliers as well as internal and external customers. It is
these relationships that have secured our success,” Sawyer says.
FAMILIAR FACE The launch of the Waterloo store also reveals a familiar face re-imagined: original Pizza Hut icon “Pizza Pete” has been re-introduced into the signage and internal designs. “We didn’t want to forget our heritage in this rebrand,” says Sawyer. “So many Australian adults have fond memories of the Pizza Hut restaurants where, as a child, the experience was magical. We need to maintain our links to that time – but with an update to be relevant to a new audience.” Some crowd-pleasers from the old Pizza Hut days feature in the concept store, albeit with a modern twist. These include free-flowing ice cream, unlimited pizza on certain days, dine-in, take-away and delivery (via electric bike) options, an express lunch menu and a licensed bar area. “This restaurant combines the things Australians have always loved about Pizza Hut with our vibrant, modern casual-dining culture. It will also allow us to respond quickly to our customers’ changing demands. This is the future of Pizza Hut,” says Sawyer. n
LEADERSHIP
A SOLID
FOOTING
Since forming a pedicure business catering for people in their homes, Melissa Harrison has expanded along the east coast, taken on a new business partner and rebranded - and has hopes of stepping up franchise numbers.
T
oenail cutting may be regarded as a little left of centre, but it can really be an invaluable service, according to The Pedi People cofounder Melissa Harrison. “It helps people stay mobile longer, relieves discomfort, and helps them maintain independence in their own homes.
“Clients also enjoy and benefit from the social side of visits. Our 30-minute visit every six weeks can positively change an isolated, housebound person for the better.” Together with her former husband, Harrison launched The Pedi People in 2000 as The Toenail People, building the model to nearly 20 units along the Australian eastern seaboard. Today she runs the business in partnership with Karen Farquhar, who is also one of seven franchisees in the rebranded, re-modelled system, with four territories in Sydney and one each in Canberra and Queanbeyan over the past 15 months. “We already had existing
franchises in Brisbane and Gold Coast, and next year we have our sights set on an extra 15 franchises across Australia,” says Harrison.
TECHNICAL TRAINING The business has partnered with training organisations to provide technical training so a franchisee’s business can be up and running within six to eight weeks. The program comprises a nationally recognised qualification, intensive on-the-job training, one-on-one education, training in dealing with older and disabled clients, and a Small Business Success course by the Business School for Mums. After the rebrand last year, The Pedi People introduced new services such as medi pedicures and manicures. This move expanded its client base by 50 per cent. “Now we offer more relaxing and luxurious treatments for anyone who loves to keep their feet and hands looking beautiful. We are finding that pre- and post-partum mums who are housebound are loving our service, along with time-poor ladies who run their businesses
from home,” says Harrison. Each Pedi People franchise costs $49,950, plus training and equipment. Franchisees can expect a return on their investment within 12 to 18 months, and the business offers the potential to achieve turnover of more than $100,000. “We keep the cost of buying into a franchises low so as to be accessible to those on a budget or those with families,” says Farquhar. “When our franchisees are motivated and confident running their own business, it’s a win win for all of us.” n
JANUARY/FEBRUARY 2018 | 26 | WWW.FRANCHISEBUSINESS.COM.AU
Want to join the world’s fastest growing franchise? Be part of the Freshii revolution! Freshii’s dynamic range of delicious and affordable salads, wraps, healthy bowls, burritos and juices are winning hearts, minds and tastes wherever we go. Since 2005, we’ve expanded from one Toronto eatery to hundreds of locations across five continents, 10 countries and 60 cities, with new stores continuing to open every week. Now Freshii has a strong foothold in Australia - and we’d love you to join us! We’re looking for self-motivated, vibrant individuals to grow our unique, fun brand of healthy fast food in urban/CBD areas. • • • • •
Become a Freshii partner from just $160,000* (ex GST) incl. franchise fee and fitout Opportunities in CBD and urban locations across Australia Financing options available from 0% deposit (STA) Uncapped earning potential No experience necessary - training, marketing & site development support available
To apply, or find out more, get in touch at franchising@freshiiau.com or visit www.freshiiaufranchising.com.au
WH71871
*
T&C’s apply. All applicants will be reviewed on an individual basis.
LEADERSHIP
HITTING
THE SWEET SPOT While it may all look attractive at first sight, a franchise needs to offer a solid foundation for its practitioners. And when it comes to the crunch, The Cheesecake Shop is a franchise that really knows the importance of a decent crust.
T
here is something about baking that appeals to the home-body in all of us, and creating a delicious treat for a special occasion can be a true joy. The good news is that you do not need to be a culinary genius to turn your hand to a baking business that can lighten up lives.
Many of us have grown up with The Cheesecake Shop. About six years ago, the brand took on a slick, more modern look, and in 2014 it launched a revamp to keep the product range relevant. Yet at heart it is
still the same family-oriented business. “Not everyone knows that franchisees bake their own cakes in store,” says CEO Ken Rosebery. “It’s not a central bakery – we ship out raw ingredients and they do the rest. So we need to know of any enhancements or changes so that everything is in place to be replicated across 220 stores.” The franchise profile reflects the diversity of modern Australia, he says. “We have a lot of migrants because it provides a safe way to enter a business. We’re helping them with all the regulatory details.
“What sums it up? Families. It’s an ideal family franchise because husband and wife, older children, sisters and brothers can all do something. There’s baking, customer service, admin tasks, so everyone can make a meaningful contribution. “We set quite rigorous product, service and administration standards. We don’t leave it up to the franchisee what cakes will look like, what service will look like. We do mystery shopping to check on customer service, and we train on customer expectation.” There is further compliance too as
JANUARY/FEBRUARY 2018 | 28 | WWW.FRANCHISEBUSINESS.COM.AU
Shift to Combining Loyalty and Online Ordering
It’s no secret that loyalty programs are effective marketing tools. They increase sales, help retain customers, and improve your brand’s reputation. Combine a loyalty system with online ordering and you really maximise your sales potential. Most people in Australia have placed a restaurant takeaway or delivery order online. Consumers are inclined to order online because, more than ever before, they value convenience. That’s why some of Australia’s leading cafés, restaurants, and QSR’s use Redcat Polygon for their POS Management needs including sophisticated online ordering and loyalty solutions.
Redcat Polygon Online Ordering and Loyalty Features • no double keying • orders go straight to the kitchen • manage in-venue orders and online orders in the same place - integrated reporting - integrated to the Redcat Loyalty and gift card solution • customised websites and smartphone Apps
1300 4 REDCAT hello@redcat.com.au www.redcat.com.au
PB10424
Contact us to discuss how Redcat Polygon will benefit your business.
LEADERSHIP
stores need to be maintained. The fitout needs to look modern and up to date. Help is available if standards slip. “We undertake regular audits from food safety and store cleaning to other elements. These are scored, and poor scores will highlight the need for extra training. We see it as our job to provide that structure and support. Even with admin we centralise it to make it easy and trouble free for franchisees who are, by and large, not administrators. We provide systems and structure and technology to make everything easier for franchisees.”
ANSWER IN THE CLOUD While franchisees may have a passion for baking and customer service that makes them an ideal fit for the brand, they are not likely to have an equal passion for their financial and admin tasks. “Like many franchises there was once little visibility of financials. Mostly franchisees sent in incorrect information because they didn’t know how to do it, and things were not on time. As a franchisor, one of our responsibilities is to ensure our franchisees are making a fair return on their investment,” says Rosebery. “We saw this as an opportunity to improve the way we monitored the financial performance.” The answer was to turn to cloud-based technology to give franchisees the right tools to deliver accurate financial reports, which then allows the franchisor to offer support where needed. “We are now at the point where 95 per cent of our franchisees deliver an accurate, reconciled up-to-date financial report within 10 days of the end of the month. This is then benchmarked against
other stores in the network. Stores are grouped by size for comparisons, and franchisees can see how they rank for cost of goods and their employment costs and profitability. “We can see that, they can see that – it’s completely transparent. “This ended up being a benefit with the changes to the Fair Work Act. The final piece of the puzzle was to ensure timesheets automatically flow through to software so we have a high degree of confidence the wages being paid are compliant with the Fair Work Act. “Franchisees did not come into this business because they were accountants or middle managers. They manage what they see, they manage with their hands. We want that. “We had to understand this is not the world franchisees live in. We have to translate into language they understand.”
GREEN OR RED… The result is an online dashboard visible when they log in on that gives them sales and customer statistics. “They don’t want to labour through data, they just want to see it: green is good, red is bad. The digital age helps us provide incredible levels of support for our franchisees.” It hasn’t as yet had a massive impact on other aspects of the business because while customers can order online, they still prefer to pick up the cake rather than have it delivered. This means locations need to be car-friendly. Customers drive in, pick up, go home. “We’re not in big centres but our business is mature, so we have rises and falls within the economy,” says Rosebery. But he says that however bad times
may be, people rarely put off a birthday celebration. “Our business is incredibly stable. We go up a little bit and we’re horrified if things go down 2 per cent.” What is having an impact on the business is changing demographics: families are shrinking, urban density is increasing so entertainment habits are changing as well. That might mean adopting a different approach to reach a more urbanised population. “We need to be relevant to the changing demographics. It’s not easy to find a 100sqm bakery site in Sydney’s inner west and make it work economically. There may be satellite kiosks for neighbouring stores that let them reach areas they couldn’t otherwise.” The Cheesecake Shop is taking its brand of sweet treats overseas ‒ in New Zealand there are 22 stores and a growing market, while the UK has seven outlets and is viewed as a rapid growth opportunity. Add in the Middle East and South Asia for development, and there’s plenty going on at this business.
KEEPING RELEVANT Moreover, the diverse base of franchisees in the network is proving useful for other markets. “Our ethnic base will be an asset in our overseas expansion,” says Rosebery. “We have a strong system and are proven and profitable. And the franchisees also appreciate the energy the management team is putting toward growing and keeping the brand relevant. “There’s a certain element of fashion within food, and with family sizes smaller, entertaining habits change over time. As a mature brand we’re always looking for that extra share of wallet, or purse. We have to make sure we have products that just don’t meet the needs for birthdays but for a variety of occasions. “We have a young and energetic team, pushing on product and marketing.” With satisfaction-level surveys, he knows the franchisees are happy with the brand. “Overwhelmingly they value the strong, stable brand and there is increased high brand awareness. It is well regarded by customers. To some degree it’s easy: we make cakes for happy, loving occasions so in some ways those emotions are related to the brand. “We have franchisees who have been with us more than 20 years. We’ve done surveys and their tenure is generally longer than other franchise systems. That speaks something for the sustainability and profitably of The Cheesecake Shop model. “For a husband, wife, kids and grandma, it really works very well.” Listen to the podcast interview at soundcloud/insidefranchisebusiness. n
JANUARY/FEBRUARY 2018 | 30 | WWW.FRANCHISEBUSINESS.COM.AU
OWN OWN YOUR OWN OWN YOUR FRANCHISE FRANCHISE Established in 1996, Australian Skin Clinics provides Established in 1996, Australian Skin Clinics provides injectables, acne programs and skin care products. injectables, acne programs and skin care products. FRANCHISE BENEFITS FRANCHISE BENEFITS
• Custom IT systems with online sales and support. • Custom IT systems with online sales and support. • Nationally recognised courses and training programs for • Nationally recognised and training programs for therapists, managerscourses and franchisees. therapists, managers and franchisees. • Advanced medical support 7 days a week with a Medical Director. • Advanced medical support 7 days a week with a Medical Director. • Multi-channeled centralised marketing + MORE. • Multi-channeled centralised marketing + MORE.
1300 303 014 1300 303 014 www.australianskinclinics.com.au/franchise w w w.australianskinclinics.com.au/franchise
BEPART PARTOF OF BE THEFASTEST FASTEST THE GROWING GROWING SECTOR IN SECTOR RETAILIN RETAIL
KICK SOME SOME KICK GOALS FOR FOR GOALS YOURSELF YOURSELF THIS SEASON SEASON THIS
Contact our development team about Contact our development team about
FRANCHISING OPPORTUNITIES FRANCHISING OPPORTUNITIES available in your area. available in your area. Ongoing support & training provided. Ongoing support & training provided.
ENQUIRE TODAY ENQUIRE TODAY (03) 9234 2200 (03) 9234 2200 franchising@hairhousewarehouse.com.au franchising@hairhousewarehouse.com.au www.hairhousefranchising.com.au www.hairhousefranchising.com.au
LEADERSHIP
BRANDS
NEW YEAR Ready, steady, go...these newbie franchises are pumped up for 2018. Are you?
W
hy not start the year off with a fresh franchise...a brand that has just started its expansion as a franchise, a brand that has a special niche, a brand that you can grow with? Here are seven options that fit the bill.
FIRST INDEX Are you keen to invest in the financial
markets to secure your future? Then you will join the 11.2m Australians who hold investments outside their institutional superannuation fund, according to the ASX Australian Investor Study 2017. The study also reveals 60 per cent of investors take some professional advice to help them make investment decisions. And that’s where the newest business opportunity is targeting its growth. First Index is a bricks and mortar trading franchise network that launched
in 2017 and is now set for 10 Melbourne locations over the next three months. This is expected to ramp up to a new franchise opening every three weeks. The business is part of AGM Markets, a fully regulated global financial company with related offices in Europe and Israel, and it offers trading across indices, commodities, shares and foreign exchange. What’s different about this trading opportunity is the branch-based model
JANUARY/FEBRUARY 2018 | 32 | WWW.FRANCHISEBUSINESS.COM.AU
Are you passionate about leading others? Do you want control of your future?
Join a winning team! Our coaches worldwide recommend this opportunity as a personally-fulfilling and financially-rewarding business, offering a balanced lifestyle.
Earn more, Work less briantracyglobal.com/franchise Contact Andrew Phillips on 0418 500 721
LEADERSHIP that allows franchisees to deliver education, expertise and service to clients. Kevin Lacey, national franchise development manager at First Index, says “We will invest in you and your future potential, by providing extensive training, ongoing support and mentoring and equity financing. The franchisor provides 24/6 customer support to your clients. “Our model operates in spaces from 55sqm premises up to 110sqm and offers your customers access all year round. “We also offer a great range of class options unlike banking institutions as well as our popular ‘First Index Training Programs’, for which you obtain additional income from selling to your clients.” Investment in the franchise starts at $100,000 for an exclusive territory with fit-out costs, depending on site size, another $100,000. The model works with low staffing costs, Lacey says, and provides access to an AFSL licence, business management, sales and retention systems, and franchise team support and training.
Speedfit
SPEEDFIT Imagine if you could squeeze all your tough gym training into just one session. That’s the central point of Speedfit, an Aussie business set up by Matej Varhalik using a technology familiar to Europeans for decades. The technology is electro magnetic stimulation, and is similar to the nerve activation in a Tens machine which is commonly used for pain relief in physio sessions and childbirth. Clients wear specially provided fitness suits while undergoing the fitness session. The beauty of the fitness model for clients is that they bring nothing to the studio - everything including special clothing, grooming products, a shower towel - is provided. It targets professionals who want an intense 20 minute session with an instructor with a maximum of two clients per class. In a day franchisees can accommodate between 25 and 35 clients. Varhalik says “Many clients can exercise because there is no impact. It works with eight muscle groups, each group undergoes 120 contractions in 20 minutes. You can use this once a week, you need time to recover.” In addition to the specially designed routines, clients can purchase supplements and participate in nutrition workshops. There is a personal touch required to run a franchise, but Varhalik insists it is an easy business to manage. He decided in early 2017 to franchise, and has sold five licenses to one client.
Walkers Doughnuts There are also seven company owned outlets. In 2018 he plans to open 20 studios.
WALKERS DOUGHNUTS A brand that’s new to franchising, but Melbourne doughnut aficionados will know the store that started the sweet treat sensation in 2006, opposite Flinders Street station. It’s distinctive branding emphasises the old-school American feel of its menu - jam doughnuts, US style hot dogs, milkshakes and old fashioned sodas. But it’s the doughnuts that everyone loves: sales generally account for between 70 and 80 per cent of total store sales with coffee, sodas and hot dogs the remainder
of the turnover. And there’s more to this popular ball of dough than a dusting of sugar...Jim and Rose Stoupas started the business and Jim has a food science background; he insists on yeast-raised doughnuts made without perservatives. Making these items daily, and allowing the fresh dough to slowly ferment, is integral to the flavour of these old-fashioned doughnuts. So how does the brand stay competitive in a cost-conscious treat market? “Our doughnuts are priced competitively. We offer deals like six hot jam doughnuts made fresh for you for only $6 and value packs of any doughnuts including Nutella or Custard in dozen and half dozen boxes from $18,” says Rose Stoupas. Now there’s the opportunity to invest
JANUARY/FEBRUARY 2018 | 34 | WWW.FRANCHISEBUSINESS.COM.AU
Love your work! Make it a reality with The Cheesecake Shop.
Many people just dream about doing a job they love. Why not make those dreams come true by owning a franchise in The Cheesecake Shop. You can be your own boss! Bake tasty masterpieces all for the world to enjoy! And most of all you can enjoy your days working with those you love.
franchise.cheesecake.com.au
Create your own future
Create your own future
Yarra Valley Farms are wholesale suppliers of quality farm fresh fruit and vegetables to the hospitality industry. We source fresh produce from our growers and deliver directly to customers via Franchisees.
Enjoy benefits including:
Yarra Valley Farms are wholesale suppliers We’re looking for positive, passionate, of quality farm fresh fruit and vegetables to motivated and fun loving people to become the hospitality industry. We source fresh Yarra Valley Farms Franchisees. produce from our growers and deliver directly to customers via Franchisees. Create your own future by contacting usWe’re today. looking for positive, passionate,
Great work/life balance - finish your day around midday and get to do Exclusive territory - with existing the things you enjoy! customers and plenty of opportunity to grow. Guaranteed minimum income A minimum $2,000 gross income Great work/life balance per around week for the first sixget months. day midday and to do
motivated and fun loving people to become Yarra Valley Farms Franchisees. Create your own future by contacting us today.
Exclusive territory - with existing customers and plenty of opportunity to grow.
the things you enjoy!
Guaranteed minimum income A minimum $2,000 gross income
Franchises Now Franchises Now Available Available
www.yarravalleyfarms.com.au/franchise www.yarravalleyfarms.com.au/franchise
LEADERSHIP
in the success and buy a franchise. The fourth store in the network, and the first franchised outlet, is at Werribee Plaza, with franchisees Gavin and Jackie Wheeler at the helm. This is just the beginning; the Stoupas’ expansion plan for 2018 is to open 10 new stores, starting with further growth in the Melbourne market. The Walker’s Doughnuts franchise has been designed to suit hospitality-experienced franchisees or first-time operators with a passion for food and retail, and investment is between $200,000 and $250,000.
Physio Inq
CORE+ Spotting a trend for shorter, sharper fitness sessions, Michael King saw an opportunity to develop a new model. Already attuned to the sector running yoga studios with his wife, King decided to crease fusion classes, a contemporary spin on traditional yoga poses. “We’ll mix it up with kettlebell weights,” he says. The classes also provide fans of yogastyle exercise - 70 per cent are women - with a 45-50 minute option rather than the 90 minute traditional sessions typically on offer. Mixing up the exercise styles means Pilates moves are taught incorporating hand weights and on a reformer bed. “It’s traditional apparatus but almost a choreographed class,” explains King. Instructors are responsible for creating an upbeat mood, including a curated music playlist. The model has been trading for nearly three years with two corporate studios, the franchise offer a relatively recent option, introduced in August 2017. So far two franchisees have been signed up for February and March studio openings (Hawthorn East and Preston), with one more expected to open in early 2018 in Port Melbourne. By the end of the year the plan is to have up to a dozen franchised outlets operating. King wants to maintain a collaborative approach with franchisees and is looking for individuals who can help shape the business and share their skills across the network. “We’re attracted to franchising because we’re working with other people who can bring their own experiences.” A boutique studio costs between $200,000 and $350,000 depending on site size. This includes fitouts, franchise fee, set up costs and training. Equipment leasing is a separate cost. The model works for investors but the
Melt Shop
Core+
JANUARY/FEBRUARY 2018 | 37 | WWW.FRANCHISEBUSINESS.COM.AU
LEADERSHIP best economic option is to be an owner/ operator, King says.
IBROW THREADS Established in 2014 in South Australia by Jeevitha Sivapalan and Roha Joshna, this eyebrow threading kiosk model is just launching its franchise offer. Seven outlets are company run in the home state, and in the ACT. While the focus is on shaping the brows, the treatment menu also includes brow tinting, eyelash lifting and facial threading. Head beautician and managing director of iBrow Threads, Sivapalan will oversee franchisee training, staff selection and store openings as she has done with all the company owned stores. Joshna takes on the role of site selection and lease negotiations. He will also oversee all aspects of the shop fitout and have regular contact with franchisees for the on-going operation of the business. Opening up the model to franchisees, it’s important to find individuals with a passion for beauty and a willingness to learn, says senior marketing coordinator Emma Voigt.
• • •
The goal is to have iBrow Threads kiosks in every major city and regional areas of Australia and buyers can expect to invest upwards of $100,000.
MELT SHOP OK, not strictly a new franchise but brand new here. Is Australia ready for the melted sandwich? The directors of US franchise chain Melt Shop certainly believe so. Australia is one of the brand’s targeted overseas markets. “Australia is exciting and filled with potential. With the right partners, we could see Australia becoming a strong market for Melt Shop,” says Spencer Rubin, Melt Shop’s founder and managing partner. Rubin believes the company is perfectly positioned to begin franchising internationally and in addition to Australia is looking to expand across the globe with the Middle East, Southeast Asia, Japan, China, India, Mexico, South America, Canada and Western Europe on the destinations list. “We recently expanded into the
Middle East and will open seven locations in the region, with four opening in Kuwait by March 2018.” So what exactly is the Melt Shop and why is it a viable business opportunity? It was established in 2011 and now has eight corporate locations in New York, Philadelphia, and Minneapolis. Parent company Aurify Brands is a hospitality-focused business founded by multi-unit franchisees. The Melt Shop has an ambitious global target of more than 100 locations over the next five years. “Melt Shop has spent the last six years tirelessly perfecting our brand and business model. The timing is right to bring our New York-born fast casual concept to the world,” says Rubin. High-quality ingredients and freshly baked bread are crucial elements to success. “Melted sandwiches possess the unique ability to be instantly recognisable and familiar in any market and we see immense potential to grow through franchising. It’s a strong investment opportunity for entrepreneurs excited about being part of a franchise concept’s early growth story. This is just the beginning.”
The business is targeting experienced operators who have existing scale in their business. “We're looking for multi-unit franchisees with strong restaurant and hospitality experience and a shared dedication to operational excellence who have a strong knowledge of their market. The ideal partner is a proven leader in the restaurant industry,” says Rubin. “Keeping the integrity of the Melt Shop brand is very important to us. We will have dedicated operators overseeing the day-to-day of our international locations. An intense and all-encompassing training program will also ensure that no steps are overlooked or missed. “We strongly believe in compliance and it's important that we find partners that are dedicated and passionate about the Melt Shop brand. All locations will follow the same processes and quality standards and we'll do everything to make sure it's consistent across every location.”
PHYSIO INQ Wellbeing is a strong trend in business, and one firm adopting a franchise focus taps
We’re attracted to franchising because we’re working with other people who can bring their own experiences.
right into the goodfeel ethos. As the name suggests Physio Inq delivers physiotherapy treatments, in clinics and as a mobile service, but there’s much more to the business...Pilates, acupuncture, massages, exercise physiology, occupational therapy and podiatry. The business is an accredited Workers Compensation, NDIS and aged care physio provider. Physiotherapists can offer a variety of therapeutic services for conditions including cerebral palsy, motor neurone disease and spinal disorders. The Sydney-based network of allied health practitioners and admin staff, deliver these services to more than 5000 people
‘We approached Nirvana since we wanted to join an innovative and reputable beauty salon brand. More than just joining a franchise, we became part of a family....Their support and ‘We approached Nirvana since we knowledge has been invaluable in wanted to join an innovative and our initial start-up and subsequent reputable beauty salon brand. More growth... I feel lucky to be part of such than just joining a franchise, we became a professional organisation.” part of a family....Their support and knowledge has been invaluable in - Stewart, East Sydney Franchisee our initial start-up and subsequent growth... I feel lucky to be part of such a professional organisation.” - Stewart, East Sydney Franchisee
each month. It began as a family business set up by Jonathan and Irene Moody. In five years one clinic had turned into five, and now there are 10 locations cross the city. Professional and memorable high quality health care is the driving force of the business which is structured and based around a set of principles, with physiotherapist and employee mentoring, and student training programs. Now there’s the opportunity for qualified practitioners to buy into this business, investing upwards of $200,000. n
LEADERSHIP
Peter Kailis and Chris Green
SEEING
RED
Serving up delicious roast chicken has been the mission of Red Rooster since it began 46 years ago.
JANUARY/FEBRUARY 2018 | 40 | WWW.FRANCHISEBUSINESS.COM.AU
4RULES
ROASTING
1. Red Rooster chicken is 100
per cent Australian grown and produced 2. Fresh, daily deliveries 3. Chicken is hand seasoned 4. Chooks are roasted for 55
minutes and kept hot for no longer than three hours
I
magine where a $27,000 investment can lead to? For Red Rooster founder Peter Kailis, putting his hard-earned cash into the chicken business 46 years ago has more than paid off.
Hospitality was in Peter Kailis’ blood – his Greek-born parents bought and operated for decades a fish and chip shop in Perth – and he had owned and operated several large companies including a packaging company and a timber factory, building companies from scratch and establishing enduring processes and management systems. It was in 1972 that Kailis and nine partners invested in an existing chicken rotisserie shop and so the Red Rooster business was born, in Kelmscott, Perth. But the road to success wasn’t always an easy journey – within the first 12 months the company, which Kailis chaired, had lost $100,000 and one of the partners.
INNOVATION ACROSS THE DECADES The losses panicked other shareholders but Kailis kept his cool and eventually bought out all the partners. Then one store turned into four, an expansion that was built on happy customers sharing the news about the brand. No money was spent on advertising. In those days the cost of a whole roast chook, stuffed, was $1.95. Peter Kailis developed the Hawaiian Pack (originally with a banana fritter), and he also invented the Rooster Roll as a way of using up leftover chicken- these are both popular items still on the Red Rooster menu today. The Hawaiian is still his chicken of choice. Today the business is led by CEO Chris Green, who has worked in fast food for three decades, starting out as a 15 year old in Hornsby’s McDonald’s. Green has had key roles in the global giant including vice president of operations
and franchising in Malaysia, director of operations in Australia, and director of operations in South Africa. Sharing his 46th birthday with Red Rooster, Green says “Being at the helm of Red Rooster is a dream job for me. The job is challenging but very fun and rewarding. Watching the transformation of stores, seeing the brand grow - every day I get to work with the best food, the best people and the best brand.” It was Green who initiated the delivery option with a dedicated digital platform and website. These have enabled franchisees to get their roast chicken on the move and home-delivered to hungry customers.
FRANCHISEE FAVOURITES The passion for Red Rooster is shared by franchisee legend Sue Lomax who has been on the journey with the chicken business
JANUARY/FEBRUARY 2018 | 41 | WWW.FRANCHISEBUSINESS.COM.AU
LEADERSHIP
TIMELINE 1972 Red Rooster opens in Kelmscott, WA
Peter Kailis in the early days
1985 Launch of successful jingle Red Red Ready
1995 Combi ovens replace rotisserie ovens
1973 A quarter chicken and chips costs 79 cents
1992 Red Rooster expands into the Eastern Seaboard and has 230 restaurants
1997 Old cash registers are replaced with digital versions
2000 International flavours such as Bombay Bites on the menu
since 1977. For nearly 40 years Lomax worked in the corporate business, only recently leaping into the challenging role of a franchisee. But she hasn’t looked back and now employs about 50 local staff in her two busy outlets in Orange and Dubbo in New South Wales. Fellow franchisee Dimi Cumner has also notched up a few decades with Red Rooster, starting as a teenager behind the counter. Cumner was inducted in to the company’s Hall of Fame in 2016 for her contribution to the brand. “Over the years I have watched the Red Rooster brand grow and evolve. There have been changes and challenges but what I’ve
learned from my life with Reds is that it’s all about the food and the customer.” For hospitality professional Kylie Johnson, franchisee of two Townsville outlets, juggling staff, family, and the business still leaves her with time to join in with community initiatives. Like her fellow franchisees, Johnson is committed to serving the local community and she is the key figure behind the drought appeal Buy a Bale, helping Aussie farmers. “We are proud of what we bring to our customers and communities,” she says, “and passionate about seeing the brand get bigger and better. Delivery has totally exploded, taking our food to more customers than ever before.” n
2016 Online delivery platform and national delivery rolled out nationally. Smaller format Reggie stores introduced.
JANUARY/FEBRUARY 2018 | 42 | WWW.FRANCHISEBUSINESS.COM.AU
2014 Brand relaunch and introduction of Tender Loving Chicken. First roast chicken home delivery.
2018 Today there are 400 delivery cars, 360 stores, 180 franchisees and 10,000 staff.
Want to make a clean break? Build your future with Chem-Dry Chem-Dry is the world’s largest carpet cleaning franchise, and has been helping Australian’s realise their dream of business ownership since 1986.
Franchises available in all capital cities & regional centres
Our unique, hot-carbonated water extraction method, combined with best in-class products and services, and unparalleled training and support, make it impossible to find a better cleaning franchise opportunity. No experience is necessary, as Chem-Dry provide comprehensive training on all aspects of the business. Our on-going marketing and operational support will ensure that you are able to enjoy the flexibility and lifestyle benefits that owning your own successful business can provide.
1800 243 637 chemdry.com.au
If you’re ready to make a clean break with your own Chem-Dry franchise, simply fill out the information form on our website, or call our franchise business info line on 1800 243 637.
LEADERSHIP
THE NEXT
BEST THING Thanks to a US franchising contest, two Australian franchisors have found a fast track to a global audience. But they have also learned there needs to be a steady approach to overseas expansion.
F
ranchising is driven by innovation and passion, and these two franchisors have buckets of both. As well as that, their brands have been fasttracked to a global audience. Both brands have a health connection – Salts of the Earth is a natural therapy that helps relieve respiratory and skin conditions, while KX Pilates is a highperformance version of the workout system. There is also a connection through the US-based International Franchise Association with its annual worldwide
contest that aims to put the spotlight on the next big thing in franchising. Salts of the Earth founder David Lindsay was last year’s NextGen global runner-up, while the winner of the competition’s latest Australian heat is KX Pilates founder Aaron Smith, who heads to Phoenix in February to pit his brand against international competition. “It’s really great to stop and get recognition for our team and franchisees, and it’s an awesome opportunity to get our brand out there in the sector,” says Smith. “We’re right on the border of international expansion, so this couldn’t have come at a better time.”
Lindsay saw the NextGen contest as a massive opportunity to boost awareness within Australia. Reaching the finals in Las Vegas last year shot him into a whole new business stratosphere. “In the US, the media, the interviews ... it’s enormous. You are showcased as the next up-and-coming business in the market.” Apart from the branding opportunity, he appreciated the access to big names in the franchising sector including Anytime Fitness founders Dave Mortenson and Chuck Runyon, and Susan Greco from Subway. “It was just amazing to have the time
JANUARY/FEBRUARY 2018 | 45 | WWW.FRANCHISEBUSINESS.COM.AU
LEADERSHIP
Salts of the Earth to talk to these guys and realise they are just normal people with an incredible team around them, and they face the same problems.”
NOT YET What Lindsay learned about overseas expansion, however, is that while his brand could move into the US tomorrow, thanks to the contacts he made through NextGen, it might not be the right move as yet. “The biggest thing I took away from the event is that Salts of the Earth still has so much more development to happen. We’ve just launched our own product range, and we’re about to introduce testing so people can monitor the health of their lungs.” Lindsay founded the company after his father gained a new lease of life from the treatment in Ireland, which involves sitting in a room and inhaling dry salt air. It was not easy to gain recognition for the therapy in Australia. “It was a huge challenge,” says Lindsay. “I was bringing in a therapy no-one had heard of. It was a whole education process to get people thinking logically about the therapy. “We’ve been in business seven and a half years and still have to do a lot of education about what we do, what the therapy is, and that feeds into our marketing with client testimonials.” He admits he did not know what franchising was at first. “But it kept coming
at me as our popularity grew. The more I educated myself about it, the more I fell in love with it. I got into this business to help people become healthier, and what I love about franchising is that you are giving someone – someone who loves your brand and what you’re trying to do – the opportunity to better themselves.”
RECURRING REVENUE He has developed a model that brings in recurring revenue, like a gym membership, and is based on management plans. He says the model will really kick into gear with the brand’s multi-unit concept. “We’re recruiting really well. We opened five or six within three months and the capacity is about 200 members, on management plans, and each of these is already up to 120 to 150. “The next conversation is, ‘Well done, you have all this marketing and great word of mouth, are you interested in opening another?’. It comes down to the people you recruit. I’m happy with a person who wants to open just one unit, so long as they are passionate and driven and want to be part of the brand. But I’m also motivated to drive people to further success with multi-units. “Meanwhile, we know we will have a stronger offering when we have the system where it needs to be in the next 12 months. This gives me time to reflect on the business, where I want it go to. You
David Lindsay
JANUARY/FEBRUARY 2018 | 46 | WWW.FRANCHISEBUSINESS.COM.AU
Build your successful business career Australian Franchisor of the Year - Twice!! As a Poolwerx Franchise Partner, you can start small or jump right in. Create your unique business career path with infinite potential - all backed by 25 years experience and outstanding support, marketing and business development systems. Join us as a man and van, progress to multi-vans, a retail store and vans and then into multi-stores. Whatever your journey, we will help you realise your vision. Our one focus is to create a profitable partnership. All you need to do is match your energy and enthusiasm with Australia’s award-winning franchise system. Together, we’ll build a business for you and your family.
1800 245 447 or poolwerx.com.au/franchising
LEADERSHIP
KX Pilates
Aaron Smith only really have one chance to do it, and I’d love to do it when I know I have a really solid, completed system with the added-on products and services we are introducing.”
It is a different focus for Smith, whose typical customers are between 22 and 55 years, predominantly fit, health-conscious women. That translates to mums during the day and young professionals after work. “We are slowly getting more men through the doors,” he says.
MORE INTENSE
ANOTHER STEP The challenge of the US, its state regulations and the size of the population have helped persuade Lindsay to consider setting up joint ventures with established US businesses. But there might be another step first. “The industry is only starting to establish, and we have a well-developed system so time is really on our side,” he says. “We’ll probably enter Canada before the US, put the training wheels on and then go hard.” So what makes the business compelling for franchisees? “Lack of competitors. We’re the only people doing salt therapy so we really own the market. We’ve bought up a lot of intellectual property and domain names. We have the opportunity to move ahead, and there are only a handful of independents out there.” There is no age barrier to the service: anyone from a newborn upward (the current oldest client is 103 years) can benefit from the treatment.
He founded KX Pilates eight years ago. While Pilates purists stick to classical movements, and physiotherapists recommend it as a rehabilitation tool, for Smith it is a fitness-based business and an ever-changing brand. “There are 12 people in a class. We ramp up the intensity. It’s like a pump class in a gym on a reformer machine where we train the whole body at once,” he says. A big eater in his teens, Smith changed his life when he was 18 with self-studies in nutrition and exercise that gave him confidence and revolutionised his life. A love of both travel and exercise enabled him to indulge both activities, and he worked in gyms in the UK and the US. He came across this type of Pilates in London, and headed up the first studio of its kind. When he returned to Australia with the vision to open his own brand, franchising seemed like the perfect vehicle. So far the numbers speak volumes: 85 per cent of franchisees are already clients or trainers “and they love waking up and changing people’s lives every day”, he says
CHANGING GOALPOSTS Meanwhile, the goalposts keep changing for Smith. “When I opened the first studio in 2010, the goal was 50 franchised studios and 10 company studios. A year ago we had the whole of Australia mapped out, so we set a minimum target of 120. Now, a new COO with international experience has just changed the goal to 500. Now that’s my target. I’m pretty set when someone puts up the challenge to go and hit it.” Smith is banking on the NextGen exposure to give his business a real boost. “I’d love a win, but I’m really going in with eyes open, and want to network with amazing people and open up the doors for where we could go.” He says that with an amazing team in head office, it is just a matter of finding the right partner. While an exit plan is also about stepping back, changing his lifestyle and devoting more time to family, Smith has a broader focus right now. “I’m really passionate about education, apparel is a huge market, then there is manufacturing. A lot of our equipment comes from good but expensive manufacturers, so potentially we could bring out our own line. “I was a classic gen Y, but now I really look at this for the long term and I still wake up every day and love it.” n
JANUARY/FEBRUARY 2018 | 48 | WWW.FRANCHISEBUSINESS.COM.AU
NATIONAL FRANCHISE OPPORTUNITIES AVAILABLE. ENJOY THE FOLLOWING BENEFITS:
LEADERSHIP
EMPIRE
BUILDERS Inside Franchising presents a new series showcasing franchisees, and we start with those ambitious business owners who like to extend their skills to running not just one franchise, but two, seven, nine or even more.
I
nvesting in one franchise is simply not enough for some high fliers...their ability to grow their businesses, their staff and their own skills through multiple outlets or territories marks out
these success stories. From fast food to handyman services, as well as beauty and hair salons, there is opportunity all around, as evident from these five franchisees...
JANUARY/FEBRUARY 2018 | 50 | WWW.FRANCHISEBUSINESS.COM.AU
LEROY DAY: DOMINO’S PIZZA Stores: • Coffs Harbour • Kempsey • Lighthouse Beach • Port Macquarie • Toormina (Coffs Harbour) • Wauchope • Wodonga “I eat sleep and breath pizzas, I always have my uniform on,” says Leroy Day, who has been a passionate Domino’s Pizza store owner for more than 13 years. Growing up in Tamworth, New South Wales, he had big ambitions by the time he was 20: he had already decided that owning a Domino’s outlet was the future. And he had a $10 million turnover target. “The first time I saw a profit-and-loss statement as a store manager, I thought, ‘How do I buy one of these stores?’.” He had started with Domino’s in 1997 as a part-time delivery driver, then managed a store before moving into a training role in Sydney. It was when he started chatting with Andrew Rennie (now head of Domino’s Pizza Australia’s European business) that the business dream became a reality. “That conversation changed my world,” he says. The two invested jointly in a Port Macquarie store, Day working to save to buy out Rennie, which he achieved within two years. There has been no holding him back since. First there was the second store he owned himself in Forster, then he bought and sold outlets in Newcastle. The high point of his portfolio of acquisitions was owning nine Domino’s stores. Now he is in a position to help younger wannabe franchisees fulfil their dreams, 12 months ago replicating the original deal he did with Rennie to enable a staff member to set up the Wodonga franchise as a joint investment. “I’ve been making pizzas for 20 years, it gets a bit ho hum, like any job. Watching staff get married, have kids and buy their own outlets, that’s deeply satisfying.” Domino’s provided the perfect landscape for Day to grow his business, he says. “I figured it out really fast, and Domino’s always fostered development and promoted from within. “At 20 years old I wrote a business plan to achieve $10 million and take 10 per cent of the turnover. We cracked $10 million four years ago. We’re almost at $15 million now. I’m super-focused on the numbers. I run daily sales reports, and get each store’s weekly P&L.” But while the financial goal has driven him, he has reached a point where bringing on the next generation is more important
than a disposable income spent on new toys. “I can’t flog myself for ever. The more that you have, the more there is to break. I’m not scared of hard work.” Mentoring has provided him with a succession plan, he says. He sees the role of multi-unit franchisee as threefold – manager, motivator and firefighter. “It’s a complex business, what you have to do in a tight-margin business for it to run smoothly. I never reinvent the wheel. Follow the system and keep the wheels turning,” he says. “There will always be audits and breakdowns, you just have to navigate through.” To do the role well, Day believes he needs to keep up his own network of support, a group of five people he speaks to regularly throughout the week, sharing tips and problem solving. Managing a large team of 230 people means dealing with personal issues, and he is keen to point out that an unhappy manager cannot do a good job. Keeping managers happy is just part of the job. “The guys work for me. They like the way I operate. I have fantastic tenure because we’re fair,” says the 38-year-old father of three. “I like going to work. I go to work to make money, that’s my motivation. Domino’s measures everything, and my goal is to always be in the top 10 of every measure.” He was pleased to be rated an A-grade operator recently. “We won three international awards three years in a row. I’m always trying to do the best I can.” His advice for franchise buyers? “Buy the most expensive store you can afford, as you will have more margin for error. You get only one chance to buy your first store - don’t be fragile. But the first one is really hard.” He says franchisees have to earn and burn, as there is no such thing as residual income. “I have been discussing what next with my mentors. Maybe I’ll be another 10 years in Domino’s, maybe buy another two stores if I can partner with managers. I’ll likely end up with 10 stores,” he says. Then it will be time to put more money into property development, travel and race cars, he says. “If you want to have what no-one else has, then you need to do what no-one else does.” n
JANUARY/FEBRUARY 2018 | 51 | WWW.FRANCHISEBUSINESS.COM.AU
LEADERSHIP
GREG LAMERTON: SUBWAY Stores: • Beeliar • Perth Airport • Haynes Plaza • Tuart Hill • Fiona Stanley Hospital • Flinders University • Gepps Cross Home HQ
H
ow did former pizza delivery guy Greg Lamerton fund his first franchise? “I sold my car (my only real asset), borrowed from family and friends, obtained a small loan from the bank, backed by the seller, and was able to buy my first Subway store in 1996,” says Lamerton, who had started as a Pizza Hut delivery driver at 16 years old. He worked his way up to store manager, and eventually area manager. At that stage he nearly made a career detour – signing up to join the police force. But he deferred his entry for a year as he was intrigued by the franchise sector. “I wanted to become a business owner, then the opportunity arose to become the manager of the first Subway shop in Adelaide,” he says. With his law-enforcement dreams fading, he spent two years as manager, opening three Subway shops for the owner. “He helped me become a franchisee in my own right.” Lamerton found he enjoyed the structure of a franchise and the support provided by the franchisor, as well as the opportunity to grow his business. So two years later he took the next big step in his franchise career, opening a second Subway outlet. “Through training and growing my management team, I was able to buy three more Subway shops over the following three years. At one stage I had interests with partners in 13 Subway shops, and I am presently a partner in seven of them.” Lamerton is achieving annual sales exceeding $5 million, and has about 100 staff members across his fast-food outlets. Some of his team members have gone on to become franchisees themselves, some within the Subway network and others in different businesses. The ability to help staff grow within the business as it grew was an unexpected and pleasurable element of being a multi-unit franchisee, he says. Managing staff can be a challenge for many fast-food outlet owners; for a multiunit franchisee, the obstacles are multiplied. “Retaining great staff members is always the biggest challenge,” says Lamerton. “It seems to come in waves. I have had wonderful teams over the years. At one stage I had assistant managers ready to become managers, but no shops for them
to take on. At other times, I have had more shops than great managers. “I don’t know that it will ever be overcome. Retaining great team members, and giving them an ability to grow within the business, is the biggest juggling act ever.” Cash flow can be a huge benefit when a business is flying and growing, he says. Access to cash funded his expansion. “The key learning is to not over commit. It can be easy to grow quickly when you have an abundance of great team members and high sales, but when things become tight, banks can be very quick to come knocking. Fortunately, I have not had this issue, but I have seen some friends experience this. “While financing in the past few years has become tighter with more regulation, it makes me look more closely at my own numbers, which can only be a good thing for my business.” Lamerton says he has had many highlights over the past 20 years. “Subway has become a whole new family for myself, my wife and our two children; they have grown up knowing nothing different, and many of our closest friends are Subway franchisees, support staff at head office, and businesses and suppliers to Subway. “On a personal level, a highlight was being named Subway Franchisee of the Year in 2002 for Australia/New Zealand. This was the same year I became a development agent for Subway in Western Australia.” This role focuses on developing and growing a region for the franchise. Along with three partners, Lamerton took on a
territory of 51 Subway stores and they have grown it to more than 150 outlets. “We became Subway Development Agents of the Year for International (all territories outside of North America) in 2005. Last year, I took on the development rights to east Victoria and Tasmania, and have relocated to Melbourne to oversee 190 shops. “My current focus is on helping franchisees in east Victoria and Tasmania become better business people, while I continue to have a hand in guiding and developing the business in Western Australia.” But, as they say, that’s not all. There is simply no holding Gary Lamerton back. “As Melbourne has become my new home, I am looking to buy existing Subway shops and become a multi-unit operator in the territory. While Subway franchisees have seen many challenges and competitors in the past few years, Subway corporate is facing these head on, and I believe we are again heading in the right direction.” What does it take to be a truly successful multi-unit franchisee? Lamerton is quite clear: “Structure and accountability. Being accessible to your team is of vital importance. Each team member should know and understand their own responsibilities. “Having a strong structure in place allows not only growth for your team in the organisation, it also allows you to enjoy a healthy work/family balance. Holding everyone accountable for their own responsibilities can be the difference between success and the opposite.” n
JANUARY/FEBRUARY 2018 | 52 | WWW.FRANCHISEBUSINESS.COM.AU
r o F f n od? o i s a P START YOUR BRILLIANT FUTURE NOW AND BUY A BUSINESS WITH HEART
“MY DAUGHTER & I BOUGHT INTO A HEALTHY RELATED FRANCHISE LIKE SUMO BECAUSE WE LOVE THE IDEA OF BEING ABLE TO OFFER PEOPLE HEALTHY DELICIOUS FOOD AND WE SAY ‘YOU CAN MAKE FRIENDS WITH SALAD’ ” ~ Mother & Daughter, Sandy & Sarah
VISIT www . ALL THE IN sumosaladfranch FORMATION i s e.c Y O U NEED TO om FOR HEALTHY B MAKE A USINESS CH OICE
LEADERSHIP
DAMIAN AND CASSANDRA COLEFAX: JUST CUTS Salons: • Devonport • Eastlands (Hobart) • Glenorchy • Cat and Fiddle Arcade, Hobart • Kingston • Meadow Mews Plaza, Kings Meadow • Quadrant Mall, Launceston
T
he Colefax story is a true testament to the strength of franchising in Australia and the Just Cuts system. Cassandra Colefax started her career as a stylist with Just Cuts in the Illawarra region of New South Wales during the ’90s while raising two children. Husband Damian also launched his career as a stylist in a Sydney salon, working his way up to team leader. He saw potential in a life-changing move to Tasmania where a franchise was available. They opened Just Cuts Eastlands in Hobart in June 1999, and now the couple owns all seven Just Cuts salons in Tasmania. Just Cuts founder/CEO Denis McFadden says their overall commitment and adherence to the brand has never wavered. “They excel in all areas of the business, and their willingness to participate in pilot programs has helped Just Cuts achieve significant growth as a franchise system. They are true ambassadors of the brand and great mentors to other franchisees and potential franchisees.” In 2014, the couple were named Australian Franchisees of the Year at the Just Cuts Annual Franchise Awards for their continual contribution to building the brand. Since joining the Just Cuts community, the Colefaxes have been continually praised for their exceptional customer experience, outstanding business performance and positive representation of the brand. Working closely with the Just Cuts Academy head-office team, Cassandra and Damian also regularly organise and implement local marketing initiatives to actively engage communities, and have established a large and loyal client database across Tasmania. “Finding each other’s strengths and focusing on following the system are key to our success,” says Cassandra. “Damian and I are not alone with our commitment to the brand. We have a great team of brand ambassadors that helps us achieve our goals day-in, day-out and who share the Just Cuts vision.” Damian says they have put a focus on
following the system, putting their faith into the finely tuned Just Cuts procedures that have been developed over the past 27 years. However, the most challenging obstacle to expansion is still the process of streamlining practices. “There are recurring tasks we hoped to streamline when expanding, but in many instances we are still seeking the best path,” says Damian. There is also an ongoing recruitment challenge. “Finding quality team members and leaders has always been a significant obstacle as well,” he says. “Despite our efforts to provide a positive, ethical and rewarding working environment, our industry has always struggled to provide the volume of quality applicants to adequately service and grow our clientele.” One way forward has been to offer positions only to applicants who meet quality and experience expectations. “With our team being predominantly female, we have found they often fill the role of primary carer in their families, so career longevity and roster reliability can be affected,” says Cassandra. “We’ve had many children born to our team, and often have mums return to work after maternity leave. We believe this is because of our flexible return-to-work arrangements.” The couple runs a leadership group comprising regional managers, team leaders and second-in-charge from its seven salons. “We focus heavily on communication and streaming information, so established this group to help support this,” says Cassandra. “Delegating is key to running a multiunit franchise, and having a leadership group ensures that any procedural changes, system updates or important promo information is noted and acted on, and in turn trickles down to all team members. “We believe that implementing a leadership group was the perfect way
to harness the salons and become a conglomerate as opposed to being a collection of standalone entities.” Expansion and funding go hand in hand, and the Colefaxes have taken a positive attitude toward their relationship with their financial institutions. “With clear short-, medium- and longterm goals shared with them regularly through our business life spans, our lenders have a clear understanding of where we came from, where we are as well as where we are going,” Cassandra says. It has also paid off for them to err on the conservative side of financial and expansion plans, keeping one eye on a pessimistic view. “This way we have found that any negative variation from expectations can be accommodated without too much impact, and we can also easily meet budgeted versus actual variance tolerances to satisfy the lender’s requirements,” says Damian.
JANUARY/FEBRUARY 2018 | 54 | WWW.FRANCHISEBUSINESS.COM.AU
GLENN KIDDLE: HIRE A HUBBY Territories • Ashgrove • Kedron
W
hen you have been in the military for 20 years and the Queensland police for 18, the prospect of following the structure, rules and regulations of a franchise is appealing. That was the case for Glenn Kiddle, who this year was named Most Valuable Franchisee at the Hire a Hubby Franchisee of the Year Awards. “I’ve gone from green to blue to magenta,” he says of his uniform transitions over the past three decades. “I loved my old job, but I’m 56 and in the Queensland police we can work only until 60. “I made the decision three years ago: I wasn’t going to wait around until I was 59 then have to find something. I started looking for an alternative. “For the past 20 years I’ve been renovating and selling houses, tinkering around while I’ve had my other jobs.” He grew up doing just that – tinkering around the garage with his dad. But today those skills are much harder to come by, which appealed to him about the Hire a Hubby business. That and the structure and procedures of a franchise. And the branding. “For me this is a business, not a job,
and the benefits are that I can grow my business, have staff who do what I need, and the business will provide me with an income for as long as I need it.” Within 12 months of buying the first territory, Kiddle had another opportunity. The neighbouring territory was up for sale, and this, he says, was a chance to “future proof” the business. “I didn’t have to travel. It was the perfect opportunity, and I knew I had to take it while I had the skills and the people.” The four staff members work across both territories with the business systems being kept separate and independent P&Ls being produced each month for each territory. This means Kiddle will not need to split up the systems if he decides to sell off one or other. His role is purely running the overall business, spending two-thirds of his week with suppliers, at client meetings, visiting potential clients and working on projects. The other two days are office-based on admin and producing quotes. “I’ve taken on an office manager. I found I was working all day then spending five hours in the office after-hours. Then you get tired, and the things you pride yourself on doing properly start to fall through the
cracks. Now when I finish at 7pm, I stop. “I’m happy where we’re at. There is the potential to expand. It’s a growing industry because people don’t have the skills or the knowledge any more, and we’ll only get busier.” His goal is to cut back on the work and spend more time with his family, allowing his “leading hands” to take a more prominent role. “We often review what we’re doing. I’m driven and passionate. What’s good about franchising is that everyone has something specific they want to achieve. Everyone has the opportunity to work toward that.” Business is going so well Kibble expects to have another two staff members by the start of next year, and in time to develop two staffers into management roles, one for each territory. “The longevity of this brand and system has put me in a place where my age is no longer a concern,” says Kibble. “Monetarily it’s not been an issue from day one. I’ve done very well out of it. It’s hard work, but you’re putting in the work and reaping the rewards of your own work.”
JANUARY/FEBRUARY 2018 | 55 | WWW.FRANCHISEBUSINESS.COM.AU
LEADERSHIP
Chris Barbour; Amanda Connors, head of brand and marketing at endota spa; Sally Cantwell; and entoda spa founder Melanie Gleeson
SALLY CANTWELL: ENDOTA SPA Spas: • Chatswood • Crows Nest • Four Seasons • Martin Place • Paddington • Rozelle • Foster • Diamond Beach • Surfers Paradise
"I had a boutique in Crows Nest for 10 years and loved every single minute of it,” says Sally Cantwell. “My husband Chris and I also had a small resort on the north coast of New South Wales and were looking to add amenities – a spa was an obvious choice.” As an avid spa user, she felt that the pick of the crop was endota, a hunch backed up by research. “We wanted to work with a business that had expertise in the area, because we didn’t. We felt that would be a really great add-on. It’s a fantastic location on the beach front in a renovated cabin, just four rooms. It’s a little reminder of how far we’ve come in eight years.” That little beach cabin became the catalyst for a portfolio of salons that now numbers nine across New South Wales and Queensland. “Once we saw how it really resonated with the client base we were interested in, and we became aware of the fantastic footprint the brand has in Victoria and in South Australia, we saw an opportunity in New South Wales, and particularly Sydney.” While the couple continued to invest in endota spas, Sally kept on working in her boutique until 2012. “The irony is that Chris started work in the business before I did. It’s usually the reverse in this industry.” With five spas in Sydney and increasing business pressures, it became obvious they had spread themselves too thinly, she says. “We’ve always been very hands on. I’m very operational, and to some extent so is Chris. He has taken a commercial and financial
perspective, we’ve had managers from the start, but we want to be involved. We enjoy interacting with clients. “I really enjoy working with my management team, and they enjoy working with their staff as the business grows. It’s really satisfying. One of our managers is the part-owner of one of the Surfers Paradise spas.” Communication is key to her management of the business, with all the tools at her fingertips playing a part in regular daily contact with her managers: face-to-face meetings, phone, email and Skype communications. And relying on technology allows her to walk out of her spa at night with her business at her fingertips. “I’m quite stunned how much I can do on my phone, and I always have my laptop. One thing that really helps me is using Dropbox – if someone needs a document, it’s there, it’s nice and consistent.” Chris brings his skills to the all-important data analysis. “We find that this gives us good insights and helps us drive what we’ll do for next year.” So what does success look like? “A good commercial outcome, and the professional development of the people who work for us. About 99.9 per cent are female, and giving the young girls help with understanding they are part of something really big, that’s at the forefront of our industry, and that their experience will stand them in good stead. Many of them join us straight from beauty college and it’s important to give them career opportunities.” The Sydney group of six spas is the focus for Sally, who puts clients front and centre of the business. The spa chain has taken a more clinical approach to skincare results, and this has gone down well with Sally, who can see her clients appreciating the strategy. But the spa is still a place of relaxation, she says. “We have a heritage of relaxation. People come to switch off and relax, even if it’s just for an hour.” When they invested in the endota spa
chain, the couple faced the strictures and compliance central to success in a franchise network, not always easy for experienced, independent business owners. “I think working within a system is good, it makes us stronger if you do it really well. We can still be creative. We just have to follow the rules of the road. A national brand has to mean something. To me, the standards are just commonsense.” Paying attention to details such as a missing order, or a malfunctioning bed in a treatment room, ensures the business does not slip, she says. “It has to look right, it has to be right. This is your business. If you want a nine-tofive job, go work in an office.” She says there is no clocking off for the owner of a sevenday-a-week business. “I’m always available, but I like it.” Sally and her husband spend time together away from work every day walking their two dogs, and admits that some of their best conversations about the business have taken place on the local oval. They do manage to escape further afield...to the coastal resort they still own. “We have a place up there we’ve been going for 20 years, and for me it’s a real opportunity to switch off. I still work but I love it. Appointment books are on my phone, I can see what’s happening. “I’m so focused on running excellent spas. That’s what I want to achieve, to know that we’ve done endota spa proud, particularly in the Sydney market. It’s a big footprint. I want to look back and say I had a real part to play in that.”
JANUARY/FEBRUARY 2018 | 56 | WWW.FRANCHISEBUSINESS.COM.AU
Fifo Capital – the sophisticated Business model for Entrepreneurs and Business leaders It’s still not too late to get a slice of this outstanding $64 billion invoice finance industry. While some markets are now closed out we have opportunities in several major metropolitan and region centres.
In the recently published Australian Top Franchise awards, Fifo Capital was rated in the Top 5 Franchises for the Lifestyle category, as voted by our Franchisees. The network’s performance has been amazing in 2017. Turnover for the year was over $260 million, bringing our total lend to well over $1 billion! We have only scratched the surface of this huge industry and we are now ready to take the business to the next level.
“The decision to join the Fifo franchise has delivered beyond my wildest dreams, I hit the $1 million mark in finance written for my first year!” Mark Edwards – Fifo Franchisee
With potential returns in-excess of 50% annualised per annum, highly secured assets and very low overheads, there is simply no business model that can compare.
“The Fifo Capital business model is fantastic, with minimal effort you can generate high returns, its a great lifestyle business with few overheads.” Jane Lombard – Fifo Franchisee
The key driver behind our success is undoubtedly the people. Our Business Partners provide a highly valued service to the SME community and received a Net Promoter Score (NPS) of +63% from their clients for 2017.
Find out more about this opportunity
To make your journey easier, we now have an Investor program running providing capital. You can use your own capital or our Investor capital and lend funds using our proven systems and processes. Would you prefer just to be an investor? We want to talk to you also!
Andrew Roberts 1300 852 556 I 0438 801 575 www.fifocapital.com.au
INDUSTRY SPOTLIGHT
BRIMMING WITH
PERSONALITY
A great coffee is about more than a cupfull of brilliant beans, roasted to excellence, and served with a smile. The cafe culture is changing and franchised chains are lining up to meet the challenges, writes Sarah Stowe.
F
ranchise brands lead the way in the cafe and coffee shop arena. A report on the coffee shop sector has shown a highly fragmented industry, with most cafes employing fewer than 20 people,
but the number of franchised outlets has grown over the last five years. And it’s headed up by Retail Food Group, a publicly listed Queensland-based
franchisor with a coffee division which operates bb’s cafe, Esquires Coffee, Gloria Jean’s and Michel’s Patisserie, as well as mobile businesses Cafe2U and The Coffee Guy, and roasting businesses Caffe Coffee and Di Bella Coffee. Shingle Inn
JANUARY/FEBRUARY 2018 | 58 | WWW.FRANCHISEBUSINESS.COM.AU
INDUSTRY SPOTLIGHT
XPRESSO
MOBILE
The same rules of customer demand that influence a bricks and mortar cafe apply equally to a coffee service on the move, says Jonathan Payne, who heads up Xpresso Mobile. “Like any business, if we don't give our customers what they want, they will go elsewhere. It's as simple as that. It's critical we keep our finger on the 'pulse' to ensure we remain at the forefront of the mobile cafe industry.” Typically a mobile business' turnover is 70 per cent coffee and related beverage products. But staying relevant is not just about the coffee. Payne pinpoints environmentally sound cups and 'keep cups' as an emerging trend and coffee community narrative. “We continue to work with our suppliers to ensure our carbon neutral cups are exactly that while still managing cost of goods for our amazing franchisees.” And what of the customisation trend across the cafe scene? “Personalisation is certainly a key part of our franchised offering,” says Payne. "While it may sound counter intuitive, by offering our franchisees the opportunity to put their 'own spin' on the food offerings in the business, they are able to support their local community by accessing foods at wholesale level with local family owned businesses rather than receiving sub standard, potentially higher priced food items through the franchisor. “By forfeiting our ability to be middle man, franchisees are able to personalise their mobile cafe and adapt their food range to their specific customer base.” Managing costs is a constant for every franchise chain but Payne identifies another challenge to brand expansion - finding the right franchisees. As a responsible franchisor, Xpresso Mobile Cafe actively tries to recruit new franchisees with the ideal minimum debt/ equity ratio of 70/30, he says. “To that end, we meet and talk with folks on a daily basis who would love to join the system but don't quite meet the minimum deposit benchmarks we expect. Many folks are asset rich but don't always have the access to cash and liquidity that allows them to chase their self employment dreams.”
But even with these brands, market share in coffee is in single figures: RFG has an estimated 4.8 per cent market share. The Minor DKL Food Group, a local subsidiary of Thailand-based Minor International PCI, is the franchisor for The Coffee Club and Coffee Hit chains. Combined the brands account for an estimated market share of 1.6 per cent, according to IBISWorld. The third largest business in terms of market share is Emirates Leisure Retail which operates the Hudsons Coffee chain. The hospitality division of the Emirates Group acquired the Australian coffee business in 2009. Despite the prominence of the franchise brands in the marketplace, the report found there’s a perception that independent coffee shops and cafes deliver not just a more personal experience but better quality coffee. The fragmentation of the industry also serves to reinforce the low barriers to entry and the highly competitive nature of the business. Food retail continues to face trading pressures and the report Cafes and Coffee Shops in Australia, October 2017, indicates the industry is lining up for a much lower growth trajectory over the next five years, after 4.8 per cent annual growth expected in the five years to 2018. Report author Bao Vuong writes “High industry fragmentation will fuel intense competition, which is expected to cause profitability to decline further over the next five years. Industry revenue is forecast to increase at an annualised 1.0% over the five years through 2022-23, to reach $8.6 billion.” To achieve profits, business owners will need to focus on premium ingredients and gourmet cafe-style meals, Vuong says. “Strengthening economic conditions and ongoing interest in health and ethical consumerism should also provide some support for profit margins.” While the blending of coffee operations into artisan bakeries and
patisseries, for instance, has added to the competition there are some clear steps to fighting off the competition, suggests Vuong. “An establishment’s success is largely determined by its customer service, the price and quality of its products, and the overall cafe experience. Coffee quality is crucial, with the coffee brand, texture, temperature, milk, and even crema in an espresso becoming increasingly important to customers.” One notable element of the coffee market is the broad split between consumer age groups - under 34s make up 36.8 percent, 35-54 year olds account for 36.5 percent market share, and those aged over 55 are 26.7 per cent of the market. Australians remain coffee fans, right across the age groups. IBISWorld has highlighted the following as influential trends in the coffee and cafe market: • Time-constrained consumers • Organic and Fairtrade focused consumers • Health-consciousness • Declining profits • Increased competition with restaurants and other outlets introducing coffee • Preference for premium product • Rising costs So what do franchisors in the coffee sector make of the trends, and how are they ensuring their brands steam ahead?
Shingle inn Louise Bellchambers, national brand manager Shingle Inn, says even in a full service cafe environment coffee is still a major driver for business but customers can be fickle. “People are generally habitual about their coffee experience. If they like what they get, they come back but there’s no room for error. “We spend a lot of time training on customer service and coffee – each
An establishment’s success is largely determined by its customer service, the price and quality of its products, and the overall cafe experience.
JANUARY/FEBRUARY 2018 | 60 | WWW.FRANCHISEBUSINESS.COM.AU
Stellarossa Cafe
ee and ca Coff IN fes
AUSTRALIA Revenue
$8.2bn Profit
$359.1m Wages
$1.9bn
Businesses
14,071
Annual Growth
18-23 1.0%
Source: www.ibisworld.com.au Mrs. Fields
store has to have four fully trained baristas at all times.” Customers place more value on the bespoke, says Bellchambers. However the desire for better quality merchandise is not necessarily matched to consumer willingness to pay the price for a handmade item. “It’s not just the food industry, some homeware brands produce offshore and people have got used to paying small amounts for very nice looking items. “People don’t appreciate what it takes to make good quality products and we still make a lot of our products by hand,” says Bellchambers. Chatting about the brand at the start of the festive season, she points out, “It’s
a wonderful thing to offer a handmade piece. Christmas is the only time we have a large takeaway and gift offer, and this is the first year (2017) that Shingle Inn has introduced Christmas packaging for its gift offers.” But with a small marketing budget, there’s a challenge to convey to the consumer that Shingle Inn’s Christmas cake fruit ingredients, for instance, are soaked in brandy, then hand mixed, or that the reindeer tarts are hand-filled and piped. A short behind-the-scenes video uploaded on Facebook is one step in communicating the handmade approach to the Shingle Inn menu, and showcasing the value the brand places on premium
product. “We have to work out what quality means to people,” she says. Rent is the other big challenge. Shingle Inn is heavily represented in shopping centres with just nine of its outlets high street stores. In 2017 the café chain trialled a new burger concept; the small footprint store sits alongside a Shingle Inn café and lends itself to a high street setting. Bellchambers says the branding needs some more work, but the trials have led to successful operations in Caloundra and Toowoomba, and across all the Victorian stores. Down the track the Saint Burger operations may be standalone stores in
JANUARY/FEBRUARY 2018 | 61 | WWW.FRANCHISEBUSINESS.COM.AU
INDUSTRY SPOTLIGHT
high street settings. Introducing the band has also allowed Shingle Inn to muscle in on the Uber Eats and Deliveroo services. The burger menu has been available and the café chain will now be introducing select products for delivery. The move is as much about creating brand awareness among a new cache of potential customers as it is about delivering food.
Mrs Fields Peter Elligett, CEO at Mrs Fields, doesn’t agree that consumers view independents as offering a better coffee and more personalised experience, he says. “I realise that the press has pushed this thought process but I think that the reverse is actually true. We are not only a franchisor but are vertically integrated and roast our own coffee. Therefore, we are intimately involved in the quality process, the up front and ongoing training of baristas in our stores, the purchasing and maintenance of equipment and even ensuring that our cups and packaging are the best available.
Coffee is definitely becoming a cluttered market but the advantage that franchised brands have over individual stores is that they are constantly evolving to meet new challenges. “The key is to ensure a high quality, consistently great coffee in every store, every time. “Our coffee sales are still increasing year on year and our focus is on quality from the farm to the consumer. We will continue to enhance our barista training and evolve our business to meet the expectations of the consumer - so I am confident of our future in the coffee space.” There are of course challenges, and Elligett believes the approach taken by landlords in terms of competition and rent represents the biggest obstacle to café growth. “I think that for shopping centre
based cafes such as ourselves, the biggest threat is the landlords replacing almost any vacancy with a food or coffee operator. We have seen this trend increasing over the past five years and the result is more coffee operators competing for the same number of consumers. “The problem is compounded by the unrealistic rents being charged, the continual increase in labour rates and the cost of power.” The blending of café models is already happening with supermarkets, Bunnings, men’s hairdressing and women’s fashion chains such as Lorna Jane including a coffee offer in their stores, says Elligett.
Since
1920 A global leader in tools & franchising
Mobile showroom
Extensive training & support
Be In Business With the Best
A proven & established business model
A market leader for mechanics
Give customers personal service & premium products
Take Our Online Discovery Tour
sota.franchise@snapon.com www.snapontools.com.au/franchise
AUS: 1800 810 581 NZ: 0800 441 762
JANUARY/FEBRUARY 2018 | 62 | WWW.FRANCHISEBUSINESS.COM.AU 175x125mm Mag Ad - 250117.indd 1
25/01/2017 1:43:54 PM
Franchised brands lead the coffee market, but how much potential is there across Australia? “Coffee is definitely becoming a cluttered market but the advantage that franchised brands have over individual stores is that they are constantly evolving to meet new challenges. In most cases, franchisors have sophisticated POS systems, rewards/loyalty programs, orderings apps, ongoing R&D and active promotional programs so I do see further potential to expand in the future. “What I do know is that the number of sites you have is not as important as the quality of the sites you have, and we are constantly striving to ensure that the franchisees are as profitable as they can be.” There are 46 franchised outlets around Australia, and Mrs Fields has budgeted for eight new stores in 2018.
Stellarossa Cafes Franchisor Darren Schultz recognises the decline of demand for branded coffee – but only in certain areas. “The city is not interested in brands, in the corporate look, so we are concentrating
on regional areas and outlying suburbs, including the Northern Territory and northern New South Wales.” There is plenty of growth to pursue in the brand’s home state of Queensland in the raft of new suburbs developing around population growth. “There is brand awareness for us being a city based brand - it got us established in the market when we were really cool,” Schultz says. Stellarossa has spread its network north to Townsville, Mackay and Rockhampton with Bundaberg set to open soon, and expansion across the Sunshine Coast. “Consumers in the new suburbs have a high discretionary spend, an aspirational spend, but they want the safety of a brand.” Schultz is observing cafes opening and closing with equal measure in Brisbane – “you have to make a lot of money in five days in the city to make it work,’ he points out. In 2017 he opened, and shut, five stores. It’s been part of a process to redefine the brand, and ensure the franchisees investing in the brand are best-placed to take advantage of the opportunities.
The business has employed a marketing agency to review the brand and its place in the market. “We are rediscovering who we are,” says Schultz. “It’s the quality of the product that counts. Coffee is extremely important to us. It’s such a simple thing and how we can differentiate ourselves. “Our focus is not looking like a brand. We’re going through a brand review. We launched a new menu in spring, we’re warming up the look of the stores A lot of our shops are quite clinical. We’re totally revamping, even going through a logo review.” The goal is to create a branded environment where the brand is less obvious – still identifiable but in a subtle way. Each store will have a common theme. When the business began every café outlet had its own look, with the backlit big red star the commonality. But Schultz admits it’s harder to deliver a unique profile as the network grows and multiple openings in a short period of time are a logistical challenge. “When you open them quickly, you do need more of a cookie cutter approach. The new stores will have a similar feel but we’ll mix up the mediums and materials used.”
· The Inventors of Windscreen Repair · International Brand with Strong Local Presence · Locally Owned and Operated Franchises Australia-wide · Industry Leading Marketing & Technical Systems
Ph: (07) 3625 2400 | www.novusautoglass.com.au franchising@novusautoglass.com.au JANUARY/FEBRUARY 2018 | 63 | WWW.FRANCHISEBUSINESS.COM.AU
INDUSTRY SPOTLIGHT
The Coffee Emporium
XPRESSO DELIGHT
The suggested decline of the coffee sector is not a concern for Xpresso Delight’s co-founder Stephen Spitz. “To a certain extent Xpresso Delight is protected from this. Our focus is in the corporate space. We transplant the café experience directly into the workplace and employees and visitors don’t need to leave their place of work when they want a cappuccino. Our mission is to change the way they experience their coffee at work. “We are arguably one of the largest franchise networks providing this type of service across the country.” Xpresso Delight has estimated it has less than one per cent market share so its potential for new clients and franchisees is, says Spitz “almost endless.” He points out there are significant losses of productivity every year due to coffee breaks. “Our solution keeps the staff from having to take a ‘coffee walk’ to find their favourite brew. It is right there in front of them and they can use a break out room, their office or outside area to enjoy it.
“Increasingly businesses see their employees as assets not an expense so looking after those assets is their number one priority.” The opportunity to provide top quality products Spitz believes sits nicely with the consumer perception that independent coffee shops and cafes deliver not just a more personal experience but better quality coffee. “This is our USP. We provide our clients with a very real coffee experience. The bond and understanding our franchisees have with their clients cements this relationship. We take a lot of care to ensure our coffee blend is as good if not better than road side cafes which keeps our clients for years,” says Spitz. Selecting the beans is an extensive and detailed process which is why the brand has dedicated coffee roasting facilities in both Australia, NZ and the US, tailored to each country’s specific palette. “We only use 100 per cent gourmet arabica coffee blends for our clients which is not available anywhere else outside of our franchise network,” says Spitz.
The goal is to get franchisees who can welcome customers as if they were in their home, and teach their staff to do the same.
Look out for the new look this year, drawing on a traditional European café feel with modern twists. “It will be a bit earthier, there will be greenery to make it more inviting,” he says. The goal is to get franchisees who can welcome customers as if they were in their home, and teach their staff to do the same, he says. Stellarossa will help with staff training. “Good staff trained well if serving at tables, can triple the turnover by upselling,” he reveals. There will be more of a table-service element to the new stores too. “My goal is 50 stores by the end of 2018. And we’re going into drive-throughs. We’ll have one outlet at Beenleigh, set to open in April, that will include a full café onsite, and a second outlet opening in May/ June at Sydney Downs that will be purely drive-through.” Heading into a market dominated in Queensland by fellow-Queensland brand Zarraffas, Schultz believes the timing is now right for entry into the drivethrough arena.
JANUARY/FEBRUARY 2018 | 64 | WWW.FRANCHISEBUSINESS.COM.AU
SQUARE COFFEE REPORT AUSTRALIA
Drew Eide, left, with Jeremy Regan
JEREMY REGAN, HEAD OF COFFEE, JAMAICA BLUE WHAT GLOBAL COFFEE TRENDS HAVE YOU SPOTTED? A focus on flavours; you will start to see single origin coffees in more cafes with tasting notes designed for the customer to enhance their coffee experience and look for flavours they might not usually associate with coffee. The other trend emerging is the quality of café food is dramatically improving: it’s not enough now to serve great coffee and the standard café menu – menus are becoming more adventurous and the plating of food in some cafes is nearly to hat restaurant standard. WHAT DO YOU THINK I S THE NEXT BIG MARKET CHANGE IN THE WAY WE LIKE OUR COFFEE?
JANUARY/FEBRUARY 2018 | 65 | WWW.FRANCHISEBUSINESS.COM.AU
Piccolos will continue to grow in popularity as consumers review their milk intake and demand for alternative milks will increase – soy, almond, lactose free, cashew, coconut and there will be others. Coffee culture in the UK, especially London, is starting to take shape with an influx of new independent cafes opening. The US continues to be filter coffee focused in most states, quite often in huge cups by Aussie standards apart from a few cities where espresso culture is really taking off: Seattle, Portland and parts of New York and Los Angeles. Some major cities in Asia (Shanghai, Seoul and Singapore) are starting to see huge growth in espresso based coffees.
INDUSTRY SPOTLIGHT
The Coffee Emporium Delivering outstanding guest experiences in the coffee houses comes down to providing premium quality coffee and food offerings, says Tania Minchella, head of marketing. Over the next five years the business plans to continue its rapid growth. “In 2017 we opened 11 new coffee houses. This was a new record for the brand and one we hope to break again in 2018. Last year also saw us enter the Queensland market. Over the next five years we hope to expand further across the country into the South Australian and Western Australian markets.” Further expansion is also in the company’s sights with a focus on the Asia Pacific region. At the heart of the brand is an award winning coffee blend, a secret family recipe that has been developed and perfected in Australia by one of the founders and owners, John Ayoub. He’s a coffee aficionado and continues to oversee the quality control of the coffee at the roasting facility in Liverpool, New South Wales. “This stringent quality control of our award-winning coffee, which includes eight variety of beans blended to produce the premium coffee, is integral our success,” says Minchella, who is confident the high standard cannot be matched by any other
Café customers today are becoming more and more sophisticated and discerning with very high expectations; they know what they want and they have plenty of choice.
coffee retailer within the Australian market. There’s a continual strong focus on quality control backed up by training to ensure franchisees can meet the brand’s high standards. The Coffee Emporium has been operating for more than 25 years. This gives the business a long term perspective, Minchella points out. “We are no stranger to the impact of trends and competition on our business; we have had to adapt, to evolve, to ensure we continue to meet the needs of our consumer base.” Minchella points out that brand personality also counts. “There will always be replicas. It is critical to show not just the personality of the brand in the look and feel as well as ambience of the coffee
house, but just as importantly the quality in all aspects of the business model and functionality.” There are plenty of opportunities for the brand to evolve, she adds - whether that is to improve customer convenience or adapt the menu to meet the needs of health conscious consumers and those demanding organic or Fairtrade products. “Some of The Coffee Emporium’s responses to change include the release of new innovative products on a quarterly basis. We use in depth trend analysis to understand the change in the market including changes in flavour preferences. With the implementation of these quarterly campaigns the sales of the hot and cold
JANUARY/FEBRUARY 2018 | 66 | WWW.FRANCHISEBUSINESS.COM.AU
beverages category in excess of 37 per cent as well as the drive around the food category, have led to a 22 per cent increase in sales.”
Jamaica Blue General manager, Drew Eide, agrees the café industry is extremely fragmented and is witnessing an explosion of strong new independent cafés. “Café customers today are becoming more and more sophisticated and discerning with very high expectations; they know what they want and they have plenty of choice. If we are not the best in our niche in every area we operate in, potential customers will simply choose to go elsewhere.” The changes are not just independent operations versus chains; the cafe mood is developing, he says. “Independent funky cafés are opening up in non-traditional spaces, cafés are becoming social meeting hubs more than ever before; under 25s are meeting at cafés far more now instead of alternative meeting places. Baristas are upskilling, turning their passion for coffee into flourishing careers. Cafés are also conducting more workshops, new blend tasting sessions, roasting on-site
and using different brewing methods. The game has changed, as have customer expectations.” The challenge is to tap into the trends without losing sight of the brand’s ethos. “For Jamaica Blue, I have to say that we remain wholeheartedly committed to our original guiding principles while evolving when necessary to remain relevant. This guiding philosophy has allowed us to be flexible and creative with different café formats, from fully licensed caférestaurants and in-line cafés, to kiosks and hole-in-the-wall espresso bars. “And while great coffee is critical, ultimately we’re finding that our guests are buying a little bit of ‘time-out’. They want authenticity, fresh produce, the best coffee, freshly prepared food in-store, and a fabulous ambience in a comfortable space.” Jamaica Blue has been recently awarded for the quality of its coffee and Eide agrees that coffee is critical to the overall Jamaica Blue experience. “Coffee drives loyalty, and the experience our guests receive in-store brings them back as returning customers. We work very closely with our franchise partners to reinforce the importance of this.” With so much choice available to customers an average cup of coffee is
just not good enough, he adds. “Perfectly prepared, premium espresso coffee is critical; it can make or break somebody’s experience in our cafés.” Jamaica Bluie invests in a barista development program to achieve this. The chain has three daily coffee options on the menu and an exclusive seasonal single origin coffee with each menu rotation, for which the brand has recently been recognised in the prestigious Golden Bean Awards. The challenge of rising costs affects Jamaica Blue, as it does any other coffee chain and there’s a dedicated team which focuses on managing costs and the overall brand supply chain. However, the capacity to deliver exceptional value and customer experience to some degree takes price out of the equation, says Eide. “We recognise very clearly that we compete with the best cafés in the world and as such, we have set the bar very high in order to deliver an exceptional customer experience and differentiate Jamaica Blue. “While we sell great coffee and fresh food, what we’re really selling is an escape and a little bit of time out from the rush of daily life.” n
JANUARY/FEBRUARY 2018 | 67 | WWW.FRANCHISEBUSINESS.COM.AU
INDUSTRY SPOTLIGHT
CLEANING UP
There is no dirty little secret: Australians love to run a clean house even if they are too busy to do it themselves. This is where franchisers come into play. By Domini Stuart
O
lder people needing help, parents working long hours, busy business owners – there is every sign the demand for domestic cleaning services in Australia will continue to rise. That is good news for anyone considering a cleaning franchise, and there are more benefits as well.
free, you could opt for the evenings and weekends of commercial cleaning. You can also decide how much you want to grow your business, whether to stay independent or build a team of workers or contractors. These examples give a taste of the variety and scope...
A cleaning franchise offers flexibility in terms of when and how you work. For example, if you have young children you can schedule your jobs within school hours. Or, if you prefer to keep your weekdays
OVENU Most people rate cleaning the oven as one of their least favourite chores. It is also one of the hardest tasks to do well.
“The Ovenu system returns ovens to as near showroom condition as possible depending on their age and any damage,” says GM Janet Bannon. “Our franchise owners work with our own non-caustic solutions, which are much safer and more pleasant to use than supermarket alternatives.” Most established franchise owners have more than 1000 clients on their data base. Territories are large enough for them to grow into a multi-van business, and demand is growing year on year. “People value their leisure time and are happy to pay someone else to do the
JANUARY/FEBRUARY 2018 | 68 | WWW.FRANCHISEBUSINESS.COM.AU
INDUSTRY SPOTLIGHT
chores they hate,” says Bannon. “They’re also excited by the results an Ovenu professional can achieve on their hotplates, range hoods and barbecues as well as the oven itself.” The franchise attracts people of all ages. “In their mid-20s they can see the potential to make plenty of money by working hard,” says Bannon. “In their 30s and 40s they’re looking for that elusive work/life balance. And then we have the over-50s who are happy to do a couple of jobs a day so they can enjoy a secure retirement.” CONCEPT: Oven-cleaning and detailing service. LAUNCH YEAR: 2005 FIRST FRANCHISE: 2006 INVESTMENT: $42,000 + GST, plus Volkswagen Caddy or similar TERMS: five years plus five NUMBER OF UNITS: 30 in Australia, 100+ in the UK
JAN-PRO COMMERCIAL CLEANERS While most people tend to associate commercial cleaning with office buildings, Jan-Pro franchise owners have a much wider choice. Specialised training covers a range of commercial environments from automotive spaces through to medical centres and schools. “That means every business is a potential client,” says sales manager Suketu Vyas at Jan-Pro Enterprises. “And while all businesses change over time, one constant is that they all need commercial cleaning. The demand is continuing to grow every year, and the industry is undersupplied.” The company’s Jan-Pro Signature Clean includes a 50-point checklist for onsite inspections. “All our franchisees are taught this method, and it’s up to them to ensure these high standards are maintained,” says Vyas.
“That means doing regular checks, listening to client feedback and acting quickly to rectify any problems. “When you’re providing a high-quality job along with great customer service, there is huge potential to grow your business.” New franchisees undergo a five-week training course. “We provide the resources, training, support and systems you need to succeed,” says Vyas. “Our ideal franchise owner is keen to learn every aspect of the business then apply that knowledge to every job.” CONCEPT: Commercial cleaning LAUNCH YEAR: 1991 FIRST FRANCHISE: 1991 INVESTMENT: $50,000 to $100,000 TERMS: five years plus two further five-year options NUMBER OF UNITS: 110 in Australia, 12,000 outside Australia
JIM’S POOL CARE - MOBILE POOL SHOPS Research suggests there are more than one million swimming pools in Australia. “Many pools are in full display from both inside the house and outside,” says Jim’s Pool Care Australian divisional franchisor Brett Blair. “Their owners want them to be sparkling all year round and, ideally,
JANUARY/FEBRUARY 2018 | 70 | WWW.FRANCHISEBUSINESS.COM.AU
ready to swim in whenever they want. That means there is a huge market for pool-cleaning services.” All Jim’s Pool Care franchisees start out “on the tools”. “They provide their customers with all levels of cleaning and onsite electronic water-balancing right through to the latest equipment, sales and repairs,” says Blair. “As a result, they have multiple sources of income – they can charge for their time, the chemicals they provide and the lucrative equipment options every pool owner needs.” A typical franchise owner will have between 80 and 120 regular clients with a number of one-off or casual customers. “They target residents and body corporates and, when they’re experienced, they can also include commercial pools,” says Blair. “As they grow they have the option of putting on staff and moving into more of a team-management role.” The ideal franchise owner is a selfstarter with a “can do” attitude. “Customers like this, and so do we,” says Blair. “Sales, management and trade qualifications are a bonus but not mandatory as we provide all the necessary training. Getting into business is hard work but the rewards are there for people who approach it carefully, follow the systems and put in 100 per cent effort.”
CONCEPT: Mobile pool-cleaning service LAUNCH YEAR: 2003 FIRST FRANCHISE: 2003 INVESTMENT: $50,000 to $100,000; plus capital investment of $69,000 (including GST/vehicle/working capital) TERMS: 10 years with zero cost to renew NUMBER OF UNITS: 94
VIP HOME CLEANING For a domestic cleaner, efficiency is critical. “Our VIP Systematic Cleaning System ensures franchise owners can do a thorough job in the shortest possible time,” says VIP Home Services founder/chairman Bill Vis. “That way their customers are happy with the service and our franchise owners can make the most of their investment.” VIP also keeps unproductive driving time to a minimum. “A franchise territory is generally a suburb so clients are all close,” says Vis. “If clients move out of the area the franchise owner can sell them back to us.” A single call centre in South Australia fields all inquiries, and the biggest challenge is finding enough franchise owners to handle the work that flows in. “We’ve been established for almost 40 years and have spent millions of dollars on advertising, so we have a well-established brand name and
reputation,” says Vis. Some franchisees work part time while others take on staff to build a sizeable business. “Franchise owners also have the option of taking on end-of-lease jobs along with regular house cleaning,” Vis says. “This requires extra equipment, but it can be a very profitable stream of income.” A four-week training program covers business practices and how to quote for new jobs, as well as the cleaning method itself. “We look for people who are well presented, friendly and enthusiastic and who take pride in their work,” says Vis. “If they’re ambitious, we can give them as much work as they want.” CONCEPT: Domestic cleaning and home services LAUNCH YEAR: 1972 FIRST FRANCHISE: 1979 INVESTMENT: $20,000 to $100,000 TERMS: five years with no extra fee for renewal NUMBER OF UNITS: 1100
If you are looking for a change, are passionate about water safety and enjoy working with children, this could be the opportunity you have been looking for! Swimming is a life skill that nearly every parent recognises they need to teach their children from a very early age. In fact, many parents begin swimming lessons when their children are still babies. We offer a boutique custom-made swim school with state of the art turnkey fit outs, including full training and support for every Franchise.
If you are keen to find out more and see if you qualify to own your very own Splash Swim School please contact us today for a confidential chat. For Franchising opportunities contact: P: 1800 SPLASH (775274) I E: admin@splashswim.com.au splashswim.com.au
JANUARY/FEBRUARY 2018 | 71 | WWW.FRANCHISEBUSINESS.COM.AU
PROFILE: Splash Swim the art turnke follow Royal L Full training a Operation sys
Splash have t contractor tha
INDUSTRY SPOTLIGHT
THE LEARNING
CURVE Kumon
The tutoring segment is growing fast, and franchises are in there offering alternatives that can lead to a brighter future for Australia’s children. By Domini Stuart
P
arents across all demographics want the best for their children, and that includes education. For many, that may mean employing tutors to help with everything from a preschool head start to university admission exams.
Begin Bright
The segment is growing fast. According to IbisWorld, annual revenue generated by tutoring has increased over the past five years to $1.15 billion. The research company also predicts that an increasingly competitive school environment will continue to drive growth. “More parents are choosing to invest in what’s known as the ‘shadow education system’ to complement their school learning,” says SAM, or Seriously Addictive Mathematics, director Sonja Oosthuizen of Western Australia. For franchisees seeking opportunities in tutoring, SAM offers a range of skills areas and age groups. For example, SAM caters for students from four to 13 years old, while the Kumon tutoring programs for English and maths attract everyone from preschoolers to high-school students, and another franchise business, Begin Bright, has centres that provide school-readiness programs and primary tutoring. “We find that parents and caregivers are valuing and recognising the importance of supporting early learning,” says Begin Bright MD Paula Bedford. Franchisees do not necessarily need a background in education to join this vibrant sector. “It’s true that former teachers and educators may be particularly suited to running a SAM franchise, but such experience is not essential,” says Oosthuizen. “All our franchisees, and the trainers they employ, undergo extensive training to ensure the program is delivered at the same high quality to all our students. They all need
SAM JANUARY/FEBRUARY 2018 | 72 | WWW.FRANCHISEBUSINESS.COM.AU
Become Your Own
HEAD HONCHO Already operating in over 70 restaurants in Australia and New Zealand and growing globally, Mad Mex is an award winning franchise concept recognised for its fast growing potential and effective ROI business model. JOIN THE FAMILIA
madmex.com.au/franchise
FRANCHISE INDUSTRY SPOTLIGHT BASICS
to be passionate about education and enriching the lives of children, and must have excellent communication skills. Our franchisees should also have business acumen and a drive to succeed.” Begin Bright draws franchisees from business and investing backgrounds as well as education. “Our franchisees are talented, driven and dedicated professionals with a passion for contributing to the growth of our youngest learners,” says Bedford. “We have all the systems in place that will enable them to hire a team of qualified teachers while they focus on building their business.” Kumon franchisees are all trained in the Japanese learning methodology. Once they qualify, they work directly with their students. As the program encourages students to SAM
become self-learners, no extra tutors are needed. “Our product and franchise structure is unique so our recruitment process is highly selective,” says Kumon Australia and New Zealand PR manager Esther Head. “Our franchisees must have a bachelor’s degree in any discipline, be highly proficient in maths and English, and be able to communicate effectively with a wide range of stakeholders. They must be business savvy and highly organised and, of course, enjoy working with children. “We also look for passionate and positive leaders who are committed to fostering strong relationships in their community.” Franchisees who do not work as tutors can set their own business hours. Those who do tutor usually hold classes after school and at weekends, so the hours will not suit everyone, says Head. But there is room for flexibility in terms of how the working day is structured, and as with any franchise, the amount of time
Kumon
spent in the business will influence its profitability. Kumon has established it takes a minimum of 30 hours a week to run one of its franchises successfully. SAM and Kumon franchisees have the option of working from commercially leased premises or hired venues, such as a community centre or library. “About a third of Kumon franchisees work from commercially leased premises, and these support more than half of our enrolment numbers,” says Head. All Begin Bright franchisees work from a commercially leased base. “We understand this can be daunting, so our team is available to help new franchisees find suitable premises in their preferred location if necessary,” says Bedford. Wherever their location however,
Make a difference to people’s lives. Open The Good Feet Store today. BENEFITS OF A GOOD FEET STORE FRANCHISE: Serves the needs of a large and broad market: people searching for relief of foot, knee, hip, and back pain. A category leader with few direct competitors. Comprehensive branding and marketing: campaign materials and support – broadcast, in-store, online and collateral.
We’re driven by an unwavering commitment to improving the quality of people’s lives – two feet at a time.
For more information on becoming a Good Feet Store franchise owner contact Jarrod on (02) 4957 4230 or email jarrod@goodfeet.com.au goodfeet.com.au JANUARY/FEBRUARY 2018 | 74 | WWW.FRANCHISEBUSINESS.COM.AU
Begin Bright
tutoring franchises seem set to thrive. As long as parents want to engage a talented child or have their eye on a selective school or sought-after university course, they will continue to invest in programs designed give their children a competitive edge.
KUMON HISTORY Kumon is the world’s largest after-school education program with more than 4 million students enrolled in 50 countries and regions. The first Kumon office opened in Sydney in 1984 following a trial with a New South Wales primary school. Within 10 years there were offices in Melbourne, Brisbane, Adelaide and Perth, and in 1995 Kumon expanded into New Zealand. As of September this year the program had 53,000 students enrolled across Australia and New Zealand. NUMBER OF UNITS 317 in Australia, 30 in New Zealand. INVESTMENT LEVELS Up to $20,000. CAPITAL INVESTMENT Up to $5000.
EXTRA SET-UP COSTS Similar to the initial costs involved in starting any business, plus the relevant checks needed for working with children.
BEGIN BRIGHT HISTORY Begin Bright launched as a school-readiness and primary-tutoring centre in 2008 and has been franchising since 2011. It has grown to more than 30 centres throughout Australia, now delivering 63,000 sessions a year. Cognition Education Group acquired the franchise last year and provides access to experienced educators and learning designers. It also has corporate infrastructure to support and enhance the programs. NUMBER OF UNITS 30 in Australia. CAPITAL INVESTMENT Up to $70,000, including franchise fee which may vary depending on location. EXTRA SET-UP COSTS All costs are included in the capital investment.
SERIOUSLY ADDICTIVE MATHEMATICS HISTORY The SAM mathematics learning and enrichment program was established in Singapore in 2010 and launched in Australia last year. NUMBER OF UNITS Seven centres across Australia and more than 100 in 16 other countries. CAPITAL INVESTMENT $20,000 to $150,000, depending on site and location. Initial fees are minimal so most of the capital goes toward fit-out, marketing, further training and working capital. EXTRA SET-UP COSTS Non-commercial location from $10,000; commercial location from $50,000.
Want to join the world’s fastest growing franchise? Be part of the Freshii revolution! Freshii’s dynamic range of delicious, affordable, healthy food and beverages are winning hearts, minds and tastes wherever we go. Since 2005, we’ve expanded to hundreds of locations across five continents, 10 countries and 60 cities, with new stores continuing to open every week. Now Freshii has a strong foothold in Australia - and we’d love to you come and join us! We’re looking for self-motivated, vibrant individuals to grow our unique, fun brand of healthy fast food in urban/CBD areas from just $160,000* (ex GST) incl. franchise fee and fitout. If this sounds like you, get in touch today! No experience necessary - we’ll provide all training.
WH71871
To apply, or find out more, get in touch at franchising@freshiiau.com or visit www.freshiiaufranchising.com.au * T&C’s apply. All applicants will be reviewed on an individual basis.
JANUARY/FEBRUARY 2018 | 75 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISING, LICENSING AND DISTRIBUTION SPECIALISTS Australia is open for business and the 2018 forecast is for further growth. The ACCC is actively monitoring compliance in the industry! Minimize your risk and ensure your compliance to avoid fines and penalties.
Robert Toth and his team provide advice to companies and individuals in:
• Assisting overseas companies to establish business and franchises in Australia. • Master franchise rights. • Dispute resolution – solution and strategies. • Franchise advice – fixed fee reports. • Sale or purchase of franchise systems. • Trademark and intellectual property (IP) advice. • Company structures. • Business modeling – franchising, branchising, licensing, distribution and agency. • Employment law. • Consumer law and ACCC advice. We have a network of franchise consultants to assist our clients establish their brand and systems. We offer fixed fees based on the scope of work so our clients can budget for their legal costs with certainty.
Marsh & Maher Richmond Bennison Franchising, Licensing and Distribution Group act for local and overseas companies entering the Australian market and have a network of experienced consultants to assist clients with demographic, feasibility, market research and preparation of business entry plans to ensure the best success for our clients www.marshmaher.com
Member of International Franchise Lawyers Association (IFLA), US Commercial Service and Franchise Council of Australia (FCA).
CONTACT: robert@mmrb.com.au Robert Toth
esther@mmrb.com.au Esther Zhang
stacey@mmrb.com.au Stacey Ryan
sean@mmrb.com.au Sean Sim
Partner
Lawyer
(03) 9604 9400
Senior Associate
Lawyer
INDUSTRYSPOTLIGHT
Night Owl
PULLING OUT ALL THE
STOPS
Convenience stores have moved on from being a source of emergency groceries. They are now destinations in their own right, with a broad offering that caters for busy lifestyles. By Domini Stuart
W
hen Australia’s first 7-Eleven store opened its doors 40 years ago, convenience meant having a few shelves of basic groceries for customers to fall back on when the supermarkets were closed. It was a new version of the corner dairy, which faded into history as supermarkets took hold.
“Today, convenience means food-onthe-go choices across more occasions
including ready meals, bakery items, snacks and healthy options such as sushi,” says 7-Eleven Stores FM for corporate affairs Clayton Ford. “We are also trialling convenient initiatives such as parcel services, deliveries and the use of digital technology.” NightOwl’s “Store of the Future” concept adds healthier alternatives and hot barbecued chickens and chips to its traditional range. The stores also have a comprehensive health-and-beauty section,
a mobile-phone accessory unit and a “Fun Wall” for frozen beverages and ice creams. “We understand that today’s customers want a one-stop shop for everything from a snack or a quick family dinner to overthe-counter medicines and party items,” says the company’s director of franchising, David Morriss. “Easy-to-navigate in-store digital technology with LED screens streamline the shopping experience. “People in double-income households, where both partners work long hours,
JANUARY/FEBRUARY 2018 | 77 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE INDUSTRY SPOTLIGHT BASICS have little time to buy groceries, run errands and prepare meals,” adds Karen Bozic, general manager retail operations at Caltex Australia. “The convenience model must also be constantly changing to keep pace with evolving customer needs. For example, by 2020, millennials will be the largest-spending group in our economy. They expect speed and efficiency, so digital enablement will be fundamental to our future store design and offering.” Convenience retailing is both fast-paced and highly competitive. “Internally, operators compete with other players on the basis of price, product range and proximity to key markets,” says IbisWorld senior industry analyst Lauren Magner. “For fuel retailers, sales of non-fuel products such as confectionery, food, drinks and tobacco account for a significantly larger portion of profit than sales of fuel and related goods, which means they also face intense external competition from supermarkets.”
AREAS OF GROWTH Some prospective franchisees see this as a barrier to success. Others thrive on the challenge, embracing opportunities for growth. “Key areas of potential growth include collaborations between retailers and suppliers, innovation through store and consumer offers, and differentiation across brands,” says Magner. “Convenience stores can also enhance profitability by being innovative with their product range which, for some companies, includes private-label products.” Ford agrees that differentiation is critical to the success of each franchisee’s business and the company overall. “7-Eleven is continuously expanding its range of exclusive products, brands and services,” he says. “We need to ensure our offer sets us apart and gives our customers what they need when they need it.” Other industry-related benefits can include a minimal barrier to entry without prohibitive start-up costs. “Store merchandise is readily available from a range of suppliers, and retailers can generally decide on the exact product mix to offer their customers,” says Magner. “New franchisees benefit from the marketing support and group buying power that comes with a franchise agreement, and large industry players have established strong relationships with suppliers to secure competitive prices.” The industry itself is thriving. Latest figures from the AACS (Australasian Association of Convenience Stores) State of the Industry Report show growth of 4.5 per cent last year. “We have seen increases in both the number of transactions and the average
spend of our customers, and we expect this to continue,” says Morriss. In a good location, a well-run convenience store offers a good return on investment. “Location is critical,” says Morriss. “Convenience is the number-one factor that drives visits to a service station.” The number of competitors in any catchment area will have an impact on customer traffic but, again, differentiation is a key factor. “Franchisees can to build their customer base by tailoring their offer through the quality of their customer service, what they provide and how they sell it,” says Bozic.
MATTER OF CHOICE Decisions about location can also include the choice of a new or existing store. “Some franchisees seek out new opportunities in great locations where they can build store sales from day one, and really control the growth of the store in the local community,” says Morriss. “Others are keen to buy a well-established NightOwl with a long trading history, loyal and regular customers and a strong presence in the local market. “With new 7-Eleven franchisees it comes down to personal choice, and we are here to help them make the right business decision based on their requirements.” This includes research to ensure any new store does not impact on an existing
franchisee’s business. “We also use specialist demographic and site analysis to assess the appropriateness of a site for any new NightOwl store,” says
JANUARY/FEBRUARY 2018 | 78 | WWW.FRANCHISEBUSINESS.COM.AU
Meanwhile, NightOwl is expanding from the east coast into Western Australia. “We have always been keen to enter the Western Australian market, and forming a partnership with Viva Energy Australia has accelerated the plan,” says Morriss. The customer lies at the heart of 7-Eleven’s business strategy, including how the franchise manages its property portfolio. “We have a well-defined network plan, updated annually,” says Ford. “This plan saw us open about 30 stores in the past financial year, with similar rates of growth projected for the year ahead. “Early next year we will pass the milestone of 700 stores. Our growth is predominantly in new suburban fuel sites, as well as some key regional areas.”
TRUE POTENTIAL
Morriss. “Many are near other nationally recognised brands, which all complement each other. This creates a strong destination and impulse-based customer offer.”
7-Eleven hatential Most new sites are opened as corporate stores. “This enables us and any future franchisee to ascertain the true value and potential of the site,” says Ford. “Once established, we may then look to sell it. Therefore our franchisees are generally buying into existing sites – either a resale or a corporate store – rather than a brand new store.” There has been widespread publicity lately about wage fraud uncovered at 7-Eleven, Caltex and some other convenience franchises. No NightOwl franchisees were implicated. However, for anyone considering investing in this sector, this is bound to be a matter of concern. Both 7-Eleven and Caltex have set up
programs to compensate underpaid workers, and taken steps to ensure the problem will not arise again. “These issues have had an impact on franchisees, drawing their attention to the importance of keeping a close watch on their processes, record-keeping and controls, and identifying any opportunities for improvement,” says Bozic. “Potential franchisees needs to understand the avenues available to them to clarify their obligations around workplace legislation, including Fair Work tools, resources and both in-house and external support services. They must also understand the obligations lie with the director or owner of the business to use these resources and ensure their own compliance.”
REFORM PROGRAM 7-Eleven has been working in partnership with franchisees to implement a reform program. “We are committed to ensuring that every 7-Eleven workplace meets the standards we and our community expect,” says Ford. “Our franchisees recognise that doing the right thing, and protecting 7-Eleven’s brand and reputation, is an important part of growing the value of their individual business. That means they welcome measures that help them comply with workplace laws as well as ensure the rest of the network is doing the same. “We’ve now have market systems in place including a centralised payroll system supported by multi-layered biometric time-and-attendance records. Potential franchisees can feel confident that 7-Eleven’s support systems will make it easier for them to ensure they are compliant with workplace laws.” At NightOwl, the matter has not had any impact on interest from new franchisees, says Morriss. “Our franchisees have the full support of our team at head office. We are continually investing in franchisee training and advanced technology and systems to ensure our franchisees understand their obligations and remain compliant with all relevant legislation so they are in the best position to grow a successful and sustainable business.”
7-ELEVEN WHAT SETS YOUR FRANCHISE APART? 7-Eleven is confident our full-service offer is strongly competitive, delivering brand strength, exclusive products, a turnkey solution and full training. This is supported by a globally recognised brand and our full-service support model. By taking care of things that are a hassle for a small-business owner, and providing our franchisees with support every step of
JANUARY/FEBRUARY 2018 | 79 | WWW.FRANCHISEBUSINESS.COM.AU
INDUSTRY SPOTLIGHT
Night Owl
the way, we leave them free to build their business by focusing on their service. As part of our profit-share model we pay some of the large costs involved in running a store including rent, utilities, equipment, maintenance and IT systems. We also provide a minimum-income guarantee for stores. WHAT DO YOU LOOK FOR IN A FRANCHISEE? As 7-Eleven is a 24-hour, seven-day-aweek retailer, our franchisees need to commit themselves full time to running their business. We are looking for franchisees who have a real focus on customers, are born communicators and are natural people leaders, and are wired for success with a real drive to succeed. They must also have an eye for detail, be able to adapt and learn and follow the 7-Eleven system to the highest standards. We also are looking for franchisees who are committed to having a relationship with us for 10 years or longer. INITIAL COST An initial investment of between $400,000 and $1+ million is based on the type of store, its location and the returns from that business. TERMS The typical term of the 7-Eleven store agreement is 10 years, unless this is limited by an earlier expiry of the property lease.
CALTEX
NIGHTOWL
WHAT SETS YOUR FRANCHISE APART? We are one of Australia’s largest convenience retail networks, predominantly using household brand names such as Caltex Star Mart. We offer comprehensive training, head-office support, vendor alliances and standardised systems, tools and processes. Our franchisees also benefit from the strength of the Caltex brand and being part of a company that, as a longtime member of the Franchise Council of Australia, really understands the franchising world. WHAT DO YOU LOOK FOR IN A FRANCHISEE? Customer focus and engagement is key and, if this approach is the focus, franchisees can establish and build their businesses on a sustainable basis. It is vital that franchisees understand the community they work in and their customers’ needs and expectations. Our franchisees bring a head for business, a passion for customer relationships, a keen sense of community and a driving desire for success. And, as our Caltex Star franchise generally works under a single-site model, our franchisees are expected to be very much hands-on leaders on a full-time basis. INITIAL COST Caltex has a mature franchise network. Most sites have been trading for over 10 years. The initial investment could be from $150,000 to $800,000. TERMS Initial five year term plus one option to renew.
WHAT SETS YOUR FRANCHISE APART? NightOwl was established in 1975 as Australia’s first 24-hour convenience retail business. We started franchising in 1987 and now have more than 70 stores throughout Queensland and New South Wales, with five stores in Western Australia due to open next year. In Queensland, NightOwl’s market share has grown to more than 35 per cent, which makes us one of the largest convenience franchise store chains in Australia. NightOwl franchisees can run a single franchise or multiple franchises within the group. WHAT DO YOU LOOK FOR IN A FRANCHISEE? Our franchisees are passionate about the business and the brand, and also prepared to work hard. While a good brand will provide the security and confidence of a proven system, the amount of work put into a franchise will determine its degree of success. Franchisees must also be good with people, both customers and their own staff. We want to ensure our customers will have the best possible experience every time they walk through our doors, so staff engagement and training are paramount. This is why our comprehensive training program includes staff members as well as franchisees. INITIAL COST From $300,000 + GST, plus start-up costs TERMS Initial five-year term plus three further options to renew. n
JANUARY/FEBRUARY 2018 | 80 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
BUYING INTO
THE DREAM JANUARY/FEBRUARY 2018 | 82 | WWW.FRANCHISEBUSINESS.COM.AU
T
he ambition to run your own business can turn into a reality quite quickly if you choose to buy a franchise. Here’s what you need to know about franchising….
FRANCHISOR AND FRANCHISEE Franchising is a business contract in which the franchisor grants the rights to run a branch of the business under its guidelines to the franchisee, who can be an individual, a group of people, or a company. The franchisee is granted the right to operate the business for a set period of time, what is described as the franchise term. Typically this will be three or five years, but it may be seven, or 10, even 20 years. There is in most cases a limit to the franchise term and franchisees may be able to renew this; the option is often highlighted in the offer as, for instance, 5+5+5. The right to renew is not, however, automatic.
FRANCHISE FEES There is of course a cost to this commercial contract. Typically franchisees pay franchisors an initial franchise fee plus regular ongoing fees, charged monthly. These payments are in exchange for the franchisor’s expertise, tried-and-tested methods and brand power. Commonly the franchisor will charge a monthly franchise fee and a marketing levy, which must be used specifically for marketing purposes. The upfront investment and ongoing fees can cover the following: • pre-opening training • provision of a business model • the backing of an established brand • access to the franchisor’s operating systems and processes • ongoing franchisor support - ie business, technical
WHAT MAKES A FRANCHISE AN EFFECTIVE BUSINESS MODEL? It’s effective because of the shared brand, intellectual property and marketing
clout. It’s effective when everyone plays by the rules. Compliance and commitment are at the heart of franchising. It is a highly regulated business model, with obligations and responsibilities on the side of both the franchisor and the franchisee. Franchisees need to consider if the system is legally compliant - in particular, whether it complies with the Competition and Consumer Act and the sector’s overarching regulation, the Franchising Code of Conduct. Greg Nathan established the Franchise Relationships Institute and is a highly respected franchising expert. He points out that Australia’s Franchising Code of Conduct helps manage "the creative tension between legitimate opportunity and opportunism" with an obligation by franchisors and franchisees to act in good faith. "Let’s define this as being fair, honest and well-intentioned in delivering on your obligations. For franchisors, this means providing credible leadership, and offering franchisees a proven business model that delivers a reasonable return on their energy and investment. The assumption is of course they work hard and apply the model. "To deliver on this obligation, franchisors need to also work hard to keep their business models competitive, relevant to customers, and profitable for their franchisees. A franchisee is effectively running their own small business, with daily decisions to make, and control over how the business is run. As with any other small business, the owner is responsible for operating and developing their own business - it is no different in franchising, but there are guidelines, processes and limits to observe. Franchising works best when the franchisee and franchisor share a common bond and can develop a relationship built on trust. It can be a profitable venture but there are no guarantees. A successful franchise model will deliver franchisees the opportunity to be financially successful. Franchising works when everyone in the partnership is making a profit.
WHY DO BUSINESS OWNERS CHOOSE TO FRANCHISE?
successfully run an outlet than a paid employee; 2. The franchisor may want to provide individuals the opportunity to be successful as business owners; 3. The franchisor may require extra capital to expand the business and turn to franchisees to provide this; 4. The franchisor may be looking for national representation and employ franchising as the most effective method of growth.
WHAT DOES A FRANCHISEE BUY? A franchisee is in effect leasing the important elements of the business - use of the brand, marketing material, the operations manual, any relevant information technology, access to training modules, access to ongoing support which will vary with each brand. Location based franchises may or may not require a lease to operate from specific premises - this is in addition to the franchise agreement and payments. Some franchises are territory based, and these or may not be exclusive. Territories or locations can be either already established or greenfield (brand new). Franchisees running a mobile operation may need to add the lease of a vehicle to the costs of the franchise. Each franchise will outline what the franchisee receives in the package - some offer so-called turnkey packages which gives a business everything required to open up and start trading. It is crucial for a franchise buyer to research the franchise and the details of the particular business opportunity and to ensure advice is sought from legal and financial professionals - even if the brand is a personal favourite or a household name. It’s in the early pre-purchase stage that the right decision can be made that will lead to franchise success. Over the following 20+ pages in this Franchise Basics section, Inside Franchise Business uncovers some of the issues to consider. n
There are various reasons why businesses follow the franchising model: 1. The franchisor may believe in the power of independent business owners to more
JANUARY/FEBRUARY 2018 | 83 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
FRANCHISING
– AN UNPARALLELED STORY OF SMALL BUSINESS SUCCESS
BRUCE BILLSON Executive chairman, Franchise Council of Australia
W
e all know that entrepreneurship comes with very few guarantees. As a small business owner, you can guarantee that you’ll pour time, effort and resources – financial and otherwise – into your business as you seek to realise your aspirations of success. But there is no guarantee that success will follow.
What franchising does, however, is dramatically shift those odds in your favour.
JANUARY/FEBRUARY 2018 | 84 | WWW.FRANCHISEBUSINESS.COM.AU
Only one in every four standalone small business start-ups survive beyond the first five years of operations – that’s the challenge of entrepreneurship. But for a franchisee the prospects of success are infinitely better, with three out of four franchised small businesses continuing to trade beyond that five-year period. That’s the beauty of franchising – it
assist the ongoing relationship between the franchisee and franchisor. Importantly, it provides for: • the disclosure of the important information to the franchisee about the franchisor before an agreement is entered into; • the inclusion of certain terms in all franchise agreements; • complaint handling and dispute resolution procedures; • and contains requirements for a good faith obligation between the parties. For all these reasons, any prospective franchisee needs to ensure the business agreement they are entering into is in fact a franchise agreement.
WHAT IS A FRANCHISE, AND WHAT IS IT NOT?
provides local, family owned small business men and women with the opportunity to realise their business dreams in a way that no other model of entrepreneurship can. Franchising is unique in the support, training and marketing assistance that is provided by the franchisor to their franchisees. It is also unique because of the protections afforded to franchisees under the Franchising Code of Conduct. This mandatory code is designed to
There is an immense complexity and diversity, variety and range to what comprises a franchising business. As a business model franchising operates across most industry verticals; can involve retail or service delivery; and a franchisee’s day-to-day business operations may take place in a bricks and mortar shop, in a mobile van or truck, or from their own home. There are, however, some common threads that, woven together, comprise a franchise business. In a franchise arrangement, the franchisor allows a franchisee to use the franchisor’s trademarks and systems for a set period of time and has significant control over how a franchisee conducts the aspects of their business covered by the franchise agreement. The franchisor will normally change an up-front ‘franchise fee’ for a franchisee to use their systems and intellectual property. Generally, a regular ‘royalty fee’ is also charged by the franchisor, either as a percentage of turnover or as a flat fee. In return, the franchisee should get ongoing training, support and marketing assistance to help them grow their business and maximise profitability. There are also two key business arrangements that share some similarities with franchising – but also some very important differences. These are licence arrangements and distributorships. Under a licence arrangement, a licensee can use the licensor’s trademarks and other intellectual property (IP), but the licensor does not control how the licensee uses that IP or how the business is run. A licensor is not expected to provide much, if any, support to the licensee. A distributorship is usually established between a manufacturer (the vendor) and a localised business (the purchaser) to distribute products in a specified locality or region. Once again, in this arrangement,
the purchaser doesn’t receive any support from the vendor – they just have the right to stock and sell the product. Distribution and licence agreements are usually less complicated than franchise agreements, but the flipside is they are also generally far weaker in terms of branding, the breadth of support and training, consistency of tenure, saleability and value.
THE FRANCHISOR-FRANCHISEE PARTNERSHIP As the small-business survival statistics show, franchising is a wonderful story of success, but owning a franchised small business is not a guaranteed right of success. It’s not an annuity. It’s not set, forget, sit back and reap the rewards. Like any small business owner, a franchisee will need to put in the hard yards, bring their energy and local market knowledge and make the sacrifices that are necessary to build a successful small business. The difference is that a franchisee is not alone in their ambitions. A franchisor absolutely has a vested interest in their franchisees’ success. After all, each franchisee has been carefully selected to ensure they will be a good fit for the franchise system. The franchisor has also made an investment in the development and refining of the business concept and its successful operation, training those franchisees on the business, its systems and processes as well as providing guidance on general business management skills. Looking at the bigger picture, a franchisor is relying on the success of their franchisees for their own profitability, and for the sustained growth of their franchise network. Successful franchisees or the genuine prospect of success is an essential pre-condition for the sustainable success of any franchise system. In practical terms, this means that a good franchisor will provide franchisees with all the tools they can to realise the full potential of their businesses. This can include ongoing training, regular visits and contact with field support staff and national or regional marketing campaigns to promote the brand. These are the great advantages of franchising and what makes this such a fantastic model for small business owners to shine and fulfil their own entrepreneurial dreams. With the support of your franchisor, the protections that underpin this unrivalled business model, and your own drive and persistence, franchising could just be your pathway to business success. To find out more about becoming a franchisee, visit www.franchise.org.au/ buying-a-franchise. n
JANUARY/FEBRUARY 2018 | 85 | WWW.FRANCHISEBUSINESS.COM.AU
Australia’s premier Test and Tag Franchise has opportunities for passionate franchisees Australia wide.
Your Appliance Tagging Services franchise ticks all the right boxes …. Low entry costs
BRW Fast Franchises 2009, 2010, 2011, 2012, 2013
Large territories Access to an established ATS Client base Sales and Marketing support High level of administration and operational support Report preparation, invoicing, debt collection handled for you! Genuine repeat business Full training provided – no electrical experience required Not weather dependant
Top Franchisor 2010
Part of the $10 billion safety industry For further information visit appliancetaggingservices.com.au or contact Steve Wren +61 1300 287 669 steve@ats.com.au
FCA Emerging Franchisor of the Year 2011
Keen to run your own business but not sure if you are ready for an independent venture or a franchise? Inside Franchise Business investigates the positives and negatives of each option to help you make a more informed decision. By Gali Blacher
D
o you like things done your own way, or do you prefer ongoing help and guidance? The answer to that will help determine whether you would find franchising frustrating or challenging.
JANUARY/FEBRUARY 2018 | 87 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
AN INDEPENDENT
FRANCHISE BASICS
From an ownership perspective, running a typical small business is far different to running a franchise. Independent business owners have the freedom to change their products and services based on personal preferences. This is not so for franchise owners, with franchisors generally making decisions about products and other measures. However, independent owners do not have the security of knowing that products, services and systems have all been tried and tested. Franchisee Bev Taylor from courier company InXpress says the beauty of a franchise is that there is a model that works. “Follow the model – I am the biggest advocate of that,” she says. While independent business owners are likely to have higher investment costs, they have more control over investment decisions. If cash is tight, they can delay plans or choose to downsize projects. On the other hand, says advisory service BDA director Mark Fernandez, a franchisor and their group collectively can buy supplies and services cheaper than an independent business. “It is about the number of widgets. There is also the group marketing fund, and that pool of money is generally
more than you would have on your own,” he says. “The franchisor usually employs someone to look after marketing, market trends, innovation and marketing initiatives, where a business owner usually needs to do this themselves on top of networking and bringing in business.”
STRESS AND RISK Despite the many positives of owning an independent business, it comes with a high degree of stress and risk. Doing things on your own means you need to trial marketing or product initiatives yourself, and you do not have the benefit of the constant support and help available in a franchise network. An existing brand, tried-and-tested systems, an experienced head office and a network of ongoing support are just some of the benefits of a franchise. Brand awareness can have a big impact on a new business, so buying an established business, be it independent or a franchise, means you'll be trading from the get-go. You will not have to spend time and resources convincing customers to try something new, which is
Delicious
Opportunity to Join the Mrs. Fields family!
a significant challenge for new business owners. There will not be systems in place, however, or ongoing support for an established independent business, which again makes a franchise such an appealing option. “It’s all about the brand,” says Fernandez. “People turn to recognised brands, and franchisees look for the systems and processes under that umbrella.” Having an existing brand means there is a head office with experienced staff members ready to offer the right business advice.
BRAND EQUITY Even if not a household name or even established nationally, a franchise will have multiple outlets so there is some brand equity in the community. Buying a franchise rather than an independent business can also mean a faster return on investment because of the support and structure provided. This can often provide a competitive edge. A 2016 report from Griffith University says sales turnover for the franchise sector was estimated at $146 billion,
Mrs. Fields Bakery Cafe are now baking fresh Franchise opportunities Australia-wide.
Become your own Boss! Entry from $200,000
(with low Franchise Fees)
• • • • • • • •
Simple Business Model Work/Life Balance Comprehensive training Great Cafe Style Product Range including Breakfast & Lunch Options National & Local Marketing Full ongoing support No experience required Passion is a must!
Contact: Lee Rubino National Franchise & Leasing Manager T: 02 9472 8555 M: 0411 220 342 E: leer@cookiecorp.com.au www.mrsfieldsfranchise.com.au
JANUARY/FEBRUARY 2018 | 88 | WWW.FRANCHISEBUSINESS.COM.AU
while IbisWorld identifies three key success factors for franchising: • Having a loyal customer base • Having a clear market position • Having the combined business expertise of the group. A franchise makes it possible for people who have never been in business before to run one successfully. A major benefit of being part of a franchise is the support available, from training to ongoing business development and benchmarking. Opportunities for specialised learning or training is another tool in the arsenal for the development and profitability of a franchisee.
you,” says Taylor. To uphold the reliability of their brand, franchisors work out nearly every detail for how the business should be run for peak performance. Franchisees are expected to follow the franchisor’s direction on most aspects of the product or service offered, marketing direction, and quite often which suppliers are used. However, franchisees make management decisions on the kind of culture they want and decide who they will hire. Depending on your abilities and goals, this could be exactly what you need to start a business. If you don’t have much experience with business but would like to own one, then this could be the most beneficial model for you.
LEARNING FROM OTHERS Taylor says it is really important that franchisees have a group of colleagues they can visit and learn from. “Before you consider going into franchising, visit established franchisees. Ask to meet with those who are successful and those who were not,” she says. “Speaking to other franchisees is a really great aspect of owning a franchise. There is the opportunity to discuss and learn from others in the same position as
NO CLEAR ANSWER So which model is better? There is no clear answer or data that proposes either model as more likely to succeed. And, in terms of costs there are too many variables to provide a clear answer. What is clear, however, is that business success is highly dependent on the attitude and commitment of the owner. It is the same in franchising. The decision to pick a franchise
above an independent business is really personal. It pays to consider what is expected of a franchisee and whether it is in your nature to be compliant and follow tried-and-tested practice, or whether your independent streak will out and you’ll be reinventing the wheel at every opportunity – not the best place to be as a franchisee. The only way to really decide which model will work best for you is to make sure you have researched all angles and have spoken with both independent business owners and franchisees. “Learn everything you can about the franchises,” says Taylor. Do not research just the positives but also the negatives. Taylor says her experience as a franchisee has been incredibly rewarding, but not without hurdles. “It is important to look at your life and priorities and know what it will entail to be a franchisee or an independent business owner. Owning a small business can be a great experience with either model, and it is important you speak with experts and research as much as you can before making a decision.” n
“I explored plenty of other franchise models, but Kwik Kopy’s tried and tested system continued to come out on top.” - Dan McKenzie, Kwik Kopy Miller Street
INCOME
GUARANTEE
Open a new Kwik Kopy franchise and we will guarantee you an income for a year!* For a limited time only, when you open a new Kwik Kopy Centre you will receive:
1 2
$52,000 guaranteed income for you in the first year.* We match marketing expenses dollar for dollar to launch your new Kwik Kopy Centre.*
WE CAN TAKE YOU FURTHER. For more information call (02) 9967 5500 or visit kwikkopy.com.au/newfranchise
*Offer expires on June 30th, 2018. For full terms and conditions, visit kwikkopy.com.au/newfranchise
kwikkopy.com.au JANUARY/FEBRUARY 2018 | 89 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
ARE YOU RIGHT
FOR THIS BUSINESS? BILL LOCKETT Director, People2Business
A
s you are reading this magazine, you are probably looking for a franchise system to invest in. You may have already contacted a few franchisors and the business looks good and you have a gut feeling that you would fit there. Whilst gut instincts may work for you in some instances, when it comes to making an investment decision on a
franchise system, leaving it to instinct is simply not enough.
SOUND BUSINESS DECISIONS TAKE RESEARCH The franchising sector has many business opportunities, from well-known franchise systems to start up franchises looking for their first franchisees. But basic research
JANUARY/FEBRUARY 2018 | 91 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
will indicate that what has proven a successful opportunity for one person may not be as fruitful for the next. So how do you move beyond the gut feeling that you will be successful?
IT’S ALL ABOUT YOU This article will focus on you. There are many sources of information regarding the steps to take when buying a business, but very few that will help you decide whether running your own business is the right step for you and if it is, what sort of business should you be considering.
COMPATIBILITY As with personal relationships, business relationships built on compatibility are much more likely to succeed. You really need to know yourself and understand what makes you tick, what is hard wired in your brain. You need to uncover what it is that will deliver the likelihood of long-term success and satisfaction for you when it comes to selecting your investment. You may be gripped by the question – “have I got what it takes?”, but rarely ask it out loud. It is even rarer to get an
Ensuring that the core values of what drives a business and the franchisee align with one another is the key for long-term compatibility and success. affirmative answer in advance of taking the leap into business ownership. This one question has hindered countless individuals from achieving their dreams. Granted not everyone has the ‘right stuff’ to be a franchisee, but even more frequently the issue is one of being the ‘right fit’ for a particular business. Two different things and both are important.
SHARED VALUES Shared values are the number one indicator of compatibility. Our values define us: they govern our desires and how they are expressed. Values are what motivate us and shape our behaviours. But how does that relate to selecting a franchise system? Think about yourself:
do you need to be in control, do you enjoy winning, do you value security, do you enjoy developing relationships? If a franchise system values innovation and risk while a franchisee values traditional risk-adverse business tactics, it’s easy to see how that would quickly create tension between the two. Ensuring that the core values of what drives a business and the franchisee align with one another is the key for long-term compatibility and success. When values are at odds, the stress caused by the misalignment can be painful.
SHARED STAGE OF GROWTH What stage in life are you at? Age range? Gender? Corporate refugee? Adding
JANUARY/FEBRUARY 2018 | 92 | WWW.FRANCHISEBUSINESS.COM.AU
to your business portfolio? Previous business owners? Immigrants? Former defence force or emergency service personnel? Returning to work after raising a family? FIFO worker looking to settle back home? Looking to establish in a regional location? Franchisor and franchisee need to share a similar stage of growth. Businesses, like people, evolve over time. Consider this: if a franchise system is in an early stage of growth they likely have not fully developed best practices and market penetration, and could still be developing the brand as a franchise. A system at this stage would need a more entrepreneurial candidate who is comfortable with the hands-on ownership and collaborative culture between the franchisor and franchisee that is common in the early years of a franchise. A later-stage candidate that excels at exploiting systems and following a well-developed process would find an early-stage franchise system challenging.
describe yourself as collaborative, competitive, innovative, family-like? Culture evolves through the values of an organisation. Finding yourself in a place of cultural misalignment creates dissatisfaction and will eventually decrease your performance. We’ve all been in jobs or situations where we were not a good cultural fit. People often discover this when a company they have been working for is taken over and new management comes in. The original culture may have allowed for autonomy and innovation – the new culture may be one of micromanagement and rules. The emphasis when selecting your business opportunities as a franchisee should be compatibility, and not gut feeling.
SHARED CULTURE
COMPLIANCE
What sort of person are you? Do you
WORK STYLE What is your preferred business environment? i.e. structured, formal, functional, busy, efficient, friendly, interactive. Are you assertive, analytical, amiable?
regulations in a business? Compliance with the system is important in a franchised business. Are you open to that challenge?
CORE COMPETENCIES How do you rate your skills in leadership and vision, sales planning, management, HR and training, marketing, public relations, administration, customer service, technical, finance and operations? A small business owner needs a variety of skills to succeed, but most of these skills can be learnt and franchise systems generally have great induction and training programs.
CONCLUSION Compatibility is the crucial determinant of your future success. Competencies can be trained. n Bill Lockett is the director of people2business, a franchise-specific solutions provider offering a suite of customisable psychometric assessments for both franchisors and franchise applicants.
Do you find it easy to follow the rules and
Step Into A Business With Proven Success & Ongoing Support Soccajoeys is an Australian owned and operated Franchise network with over ten years of success developing over 35,000 children through fun kids’ activities using the world’s most popular sport, soccer. When you choose a Soccajoeys franchise, we’ll help you make a positive impact in the community and achieve your business goals with support from our experienced team, offering business best practice, ongoing training and marketing support. WHY CHOOSE A SOCCAJOEYS FRANCHISE?
• Join an established and recognised brand • Ongoing training & operational support • Australia wide marketing initiatives to drive business within your area
• • • •
Low entry cost & expected ROI within a year Flexible lifestyle running your own business Be in business for yourself, not by yourself Exciting career in the childhood development industry
Enquire today at www.soccajoeys.com.au/startingabusiness for an exclusive guide on becoming a Soccajoeys Franchisee info@soccajoeys.com
1300 781 735
JANUARY/FEBRUARY 2018 | 93 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
KEEPING TABS ON
FRANCHISING
Buy into a franchise and there will be rules and regulations that govern the conduct of franchisee and franchisor. MICHAEL SCHAPER Deputy chair, ACCC
B
uying a franchise can be exciting, especially if you’re looking to buy into a brand you know and love.
The Franchising Code of Conduct is a mandatory industry code across Australia which regulates the conduct of franchising participants towards each other. It requires the franchisor to provide you with certain information to assist you in making an informed decision about a franchise opportunity. The Australian Competition and Consumer Commission (ACCC) regulates
the Code and provides guidance and updates to the franchise sector on the Code and broader ACCC activities.
UNDERSTAND THE RISKS You should conduct due diligence before any business decision. You can assess the risks of a franchise decision by: • finding out what would happen if you, or the franchisor, became insolvent • working out how much capital would be required to establish the franchise and keep you going if you have a slow start
• understanding the consumer demand for the product or service • asking what will happen at the end of the agreement, and whether you are able to renew, extend, or in the event of a sale, transfer the agreement • considering whether the franchise matches your personal attributes, skills, experience and lifestyle • completing a pre-entry franchise education program (www.franchise. edu.au/) to find out how franchising works, and • researching the franchise system.
JANUARY/FEBRUARY 2018 | 94 | WWW.FRANCHISEBUSINESS.COM.AU
3 30+ 60+ 100+ 3,000+
days PRESENTED BY
sessions
speakers
exhibitors
Feb 28 - Mar 2 2018 | MCEC Melbourne
delegates
insideretail.live
supported by
AGENDA HEADLINES DAY 1 /
DAY 2 /
DAY 3 /
RETAIL 2018
EMERGING BUSINESS TRENDS
MARKETING AND BRANDING
WORKFORCE AND HR
CHINA - THE BIG OPPORTUNITY
THE FUTURE
INNOVATION
LEADERSHIP
LOGISTICS
THE CUSTOMER
PURPOSE-DRIVEN BUSINESS
PITCHFEST
FEATURED SPEAKERS
Radek Sali
Wai Tang
Charlie Cole
Bernie Brookes
Chau Banks
Former Chief Executive
Non-executive Director
Chief Digital Officer
Former CEO
Executive VP
Hey Influencers
Phillip Scala
Gretta Van Riel
Adam Ferrier
Nati Harpaz
Paul Kennedy
Group General Manager
Founder & CEO
Founder and Consumer Psychologist
CEO
CIO
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SPONSORS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUPPORTERS
PART OF
FRANCHISE BASICS
marketing or advertising fees, uniforms and merchandise. The franchisor must also disclose any payments that the franchisor knows, or reasonably foresees, you will be required to make to other people.
DISCLOSURE DOCUMENT Under the Code, franchisors must provide a disclosure document, which will tell you about the franchisor, its officers and the franchise system. Information you’ll find in your disclosure document includes: • relevant business experience of each officer of the franchise • certain legal proceedings against the franchisor, its directors or associates • contact details of current and former franchisees • whether the franchise is for an exclusive territory. The franchisor must give you the disclosure document, a copy of the franchise agreement in its final form and a copy of the Code at least 14 days before you enter into the agreement or make any non-refundable payments. When reviewing your disclosure document, it’s worth paying attention to: STATEMENT OF SOLVENCY – the franchisor must provide a signed statement confirming that the franchisor will be able to pay its debts. START-UP COSTS – the franchisor must
You should always check your franchise agreement and disclosure document carefully before entering a franchise to identify any costs you might face.
PREVIOUS INSOLVENCY – the franchisor must disclose if the franchisor, its directors or associates have been bankrupt or insolvent under administration in the last 10 years. If the franchisor was insolvent during the last two financial years, they must provide you with a solvency statement and an auditor’s report about the current solvency of the business.
outline the range of costs associated with establishing the franchise (such as legal fees and equipment).
SUPPLY ARRANGEMENTS AND RESTRICTIONS – the disclosure document must include any limitations on the suppliers from whom you can buy goods and services, or whether the franchisor has nominated specific suppliers you must use. If there are any restrictions on sourcing supplies or services this may need to be factored into the cost of the business.
ONGOING OR FORESEEABLE EXPENSES – the franchisor must provide details of any payments you must make to them or their associates such as royalties,
TOP FRANCHISEE TIP: If you become a franchisee, you can request a copy of the franchisor’s latest disclosure document once every 12 months.
Have you noticed that all laser clinics look the same? Unique Laser is different. Very Different. fr a n c h i si n g
nOW
UNIQUE LASER IS REVOLUTIONISING THE BOOMING AESTHETIC INDUSTRY
• Unique business model that reduces initial investment and increases profitability • Investment required $100k-$450k – up to half that of competitors • Exclusive rights to superior technology • Different branding • Excellent training, support and medical supervision Do not invest in another laser franchise before speaking to us.
Contact: Sarah Oram 0439 094 068 franchising@unique-laser.com.au
w w w. u ni qu e -la s e r.c o m.a u JANUARY/FEBRUARY 2018 | 96 | WWW.FRANCHISEBUSINESS.COM.AU
It is also a requirement under the Code that the franchisor provide you with an information statement when you apply, or express an interest, in buying a franchise. This is a two-page document highlighting some of the risks and rewards of franchising.
WHAT ELSE THE CODE REGULATES SIGNIFICANT CAPITAL EXPENDITURE Under the Code, the franchisor can’t force you to make significant capital purchases such as new equipment of stock unless you agree to it, or: • it was in the disclosure document you were given before your entered (or renewed) your agreement • the expenditure is system-wide and a majority of franchisees agreed to it • it’s needed to meet a legal requirement • the franchisor justifies in writing why it’s necessary (including the benefits and risks), and how much it’s likely to cost you. You should always check your franchise agreement and disclosure document carefully before entering a franchise to identify any costs you might face. It’s also a good idea to ask your franchisor whether there are likely to be any future initiatives (such as rebranding
or upgrades) that could lead to additional costs. EARNINGS INFORMATION If the franchisor or their representatives make claims about how much you can earn, how much other franchisees earned or how much the previous franchisee earnt in the past, ask them to confirm the claims in writing. You should also get professional advice to check how feasible these claims are for you.
GET INDEPENDENT PROFESSIONAL ADVICE A crucial step in undertaking your due diligence involves seeking independent professional advice from a lawyer, accountant and business advisor. These advisers will help you to thoroughly review all documentation provided to you. In particular, this advice will guide you with: • understanding any guarantees you may be asked to provide • considering any additional leasing or licensing agreements you may be required to enter in to • reviewing the costs associated with the franchise • developing and testing a business
plan, including projected income and expenses.
SPEAK TO OTHER FRANCHISEES The most valuable advice you receive will likely come from the people who were in your shoes. Ask questions such as: • what have your experiences been like with the franchisor? • what sorts of challenges have you experienced with running your business? • are you happy with the earnings? • would you buy this franchise again? • (if they’re a former franchisee) why did you leave the system? Buying a franchise is a significant financial and personal commitment. Reading the ACCC’s Franchise manual at accc.gov.au is an essential first step to working out whether franchising is right for you. n
Dr Michael Schaper is the ACCC deputy chair. His special focus is on small business, franchising, industry associations and business liaison with the national competition and consumer protection regulator.
NightOwl Owl Franchises A V A I L A B L E N AT I O N W I D E
JANUARY/FEBRUARY 2018 | 97 | WWW.FRANCHISEBUSINESS.COM.AU
nightowl.com.au
FRANCHISE BASICS
JANUARY/FEBRUARY 2018 | 98 | WWW.FRANCHISEBUSINESS.COM.AU
20 QUESTIONS HARD-HITTING
When it comes to considering a franchise, it pays to be curious. Ask questions of the franchise, but first look at your own situation and expectations.
Y
ou are excited about your future and can’t wait to get stuck into running your own franchise. But hold on...asking some difficult questions before you get too far down the track can prepare you for what lies ahead.
Here are 20 questions you should be asking, and you can find plenty more to consider if you visit www.franchisebusiness.com.au. As well as questions to ask the franchise business, first there are 10 questions to ask yourself...
HOW READY ARE YOU TO FOLLOW RULES AND PROCEDURES ON A DAILY BASIS? Franchising relies on compliance at every level, and to run a successful business you’ll need to follow the steps defined. There really is little point in trying to do things your own way if a tried-and-tested system is already in place.
DO YOU CONSIDER YOURSELF A TEAM PLAYER? As a franchisee, your time and efforts will be focused on growing your business. One of the benefits of a franchise is the knowledge on hand among other franchisees and the franchisor team. Many franchised businesses expect knowledge-sharing to be part and parcel of being a franchisee. When it comes to changes to the business you might not agree with, you will need to show your team spirit and accept the new way.
HOW HARD ARE YOU PREPARED TO WORK AT THE BUSINESS? There is no golden rule to the amount of time you need to be working in the business, but it is accepted across the franchise community that no success is achieved without hard work. What that looks like depends on you, whether you want reduced working hours for a better work/life balance or you are striving to fulfil your ambitions and are prepared to put in the hours. What is important is understanding your needs and how to match them in a franchise.
IS YOUR FAMILY SUPPORTIVE? You may not yet have raised with your nearest and dearest the option of buying a franchise. It is an important step, though, to ensure you have strong support from family and friends because there will be hardships, missed family events, long hours and possibly financial constraint as you work to build the business. Having the backing of your loved ones and sharing the vision and goals will make the process easier, and reduces the likelihood of family disputes in tough times.
ARE YOU PREPARED TO UNDERSTAND THE FRANCHISING CODE OF CONDUCT AND RELEVANT DOCUMENTATION? Of course, no-one likes spending hours ploughing through documents, but buying a franchise is a legal commitment. Because there are ramifications if responsibilities are not met, on either side, it is essential to get a grasp on what you are signing up to.
A formal procedure to documentation is issued under the code, and there are penalties for major breaches, so it pays to read the key documents thoroughly, as well as seek legal advice.
CAN YOU IDENTIFY WHAT YOU NEED MOST FROM YOUR FRANCHISOR? Every franchisee will have different strengths and weaknesses, and it is important to match your skills gap with support from the franchisor. Marketing, skills training and bookkeeping are just some of the commonly valued elements in a franchise.
ARE YOU READY TO SHARE YOUR BUSINESS DATA WITH THE FRANCHISOR AND NETWORK OF FELLOW FRANCHISEES? Franchisees benefit from shared data, and franchisors who have strong reporting systems can help them improve their performance. But to do this effectively needs data, and that means franchisees must share their sales figures, costs of goods and so on.
WHAT STRENGTHS WILL YOU BRING TO THE NETWORK? Do you know why a franchisor would find you a good choice for their network? Ask yourself which of your attributes would be of value to a franchisor. What would identify you as a good prospect? Again, match your strengths to the right brand to make the most of your business.
JANUARY/FEBRUARY 2018 | 99 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
WHAT YOU NEED TO ASK ABOUT THE BUSINESS:
ARE YOU PREPARED TO PAY ONGOING FRANCHISEE FEES? It is a rare franchise that does not extract fees from its franchisees. First up, an initial payment will be required, then there will be monthly fees and levies, including a contribution to a marketing fund. If you do not see the value in paying for the benefits of a franchise, then don’t follow this path. It is not for everyone.
WHY DO YOU WANT TO BUY A FRANCHISE? Why do you consider franchising a good option? Be clear about the benefits of a franchise over alternative ways to boost your career, improve your finances or fulfil your ambitions. Buying a franchise can seem like a shortcut to making money, but there are no guarantees. Even with hard work, a great location and a respected brand, failure is a possibility. You need to know exactly why a franchise is for you.
DO YOU KNOW WHO OWNS THE BUSINESS?
Having the backing of your loved ones and sharing the vision and goals will reduce the likelihood of family disputes in tough times
In a smaller business it is likely the franchisor is also the founder, or at least a managing director in a family-owned business. In more corporate set-ups there is likely to be a board and shareholders. It is good to know who is pulling the strings behind the scenes.
HOW DOES THE BUSINESS SOURCE ITS INCOME? A crucial question: how will you earn revenue from this business? Is it a long-term prospect? Consider the external threats that could affect turnover.
IS THERE A HEALTHY CASHFLOW? A good revenue earner may not equate to a business with a solid cashflow. You need funds to run your business, pay wages and
PARTNER WITH A LEGAL PROFESSIONAL WITH COMMERCIAL ACUMEN Franchising is an important decision for both franchisors and franchisees. We are on hand to provide strategic, practical solutions to help you plan and achieve your short and long term goals. Unlike other legal firms which provide legal advice piecemeal, we look at the whole picture, help you with risk management, compliance requirements to eliminate unwanted surprises. Our principal has valuable in-house experience, has advised businesses for more than 25 years and understands first hand the many challenges faced by business owners.
Contact Christine Lau on (03) 9653 9203 or via email at Christine@laulegal.consulting for a confidential discussion to start or grow your business
JANUARY/FEBRUARY 2018 | 100 | WWW.FRANCHISEBUSINESS.COM.AU
keep growing, so check the outgoings are not excessive.
CAN THE BUSINESS DELIVER A PROFIT? When franchisors or franchisees indicate typical turnover, it is important to remember that is not the same as profit. Working to a return on your investment is all about achieving profits, and you need to be confident there is a suitable profit margin in the business.
IS THE FRANCHISOR COMPLIANT WITH REGULATIONS? You need to follow the rules, but so does the franchisor. Franchising Code commitments need to be followed, and franchisors also need to comply with industry-specific regulations.
IS DOCUMENTATION UP TO DATE AND ACCURATE? Be wary of any franchisor who is not on top of their documentation and legal
commitments. A franchise lawyer will be able to point out any anomalies.
HOW PROFESSIONAL IS THE FRANCHISOR TEAM? The culture and ethos of a franchise network is far from standard. Your expectations of a mobile lawn-mowing business will be different from your expectations of a tutoring business or a fast-food chain. Certain levels of professionalism should be apparent, though – the timeliness and manner of communications, the presentation of franchisor staff members, the material available to you as a prospective franchisee, a readiness to share information and not pressure you into a decision.
HOW MUCH TRAINING IS PROVIDED, BOTH BEFORE START-UP AND ONGOING? As many franchisees enter entirely new arenas when they buy a business, the upfront training is absolutely crucial. It is worth asking franchisees in the network if the training offered is fulfilled, and valuable.
WILL THE FRANCHISOR PROVIDE THE SUPPORT YOU NEED? You have already identified your strengths so you will need to ensure your weaknesses are covered, either by training or tools available in the network.
HOW HAPPY ARE FRANCHISEES IN THE NETWORK? Levels of satisfaction are a good gauge of the franchise. Happy franchisees tend to be more profitable, are likely to renew their agreements and will work to help others ‒ all good signs of a franchise you’ll want to be a part of. n
CALLING ALL ASPIRING CAFÉ ENTREPRENEURS! Introducing a new benchmark for Australia’s Café culture Shingle Inn is offering aspiring franchisees the opportunity to own an exceptional boutique café and be part of a National Café Network that has been delighting generations of customers since 1936. Join Shingle Inn and transform your Café dream into a reality!
Call Patrick on 0431 649 450 or franchisedevelopment@shingleinn.com shingleinn.com JANUARY/FEBRUARY 2018 | 101 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
EXPERIENCE VERSUS
EXCITEMENT
The pros and cons of an established versus a fledgling franchise chain.
JASON GEHRKE Director, Franchise Advisory Centre
B
ecoming a franchisee can be a rollercoaster of emotions and frantic activity in preparation to start or take over an existing business. Potential franchisees need to consider a huge range of factors in their decision-making
process, including an assessment of the relative merits of joining a longstanding and established chain, or joining a relative newcomer that might not be as experienced. Consequently, there are some fundamental
differences potential franchisees should take into account when considering whether to invest in a mature brand with lots of franchisees, or a new brand with just a few outlets (or where the potential franchisee could even be the very first franchisee).
JANUARY/FEBRUARY 2018 | 102 | WWW.FRANCHISEBUSINESS.COM.AU
Want to be your own boss? Learn how to get into your own business
franchising & business expo opportunities FREE sem inars
MEET
the exhibitors
E FRE ice adv
Sydney 17-18 March Perth 6 May Brisbane 21-22 July Melbourne 25-26 August Get your free ticket online using code FMG franchisingexpo.com.au JANUARY/FEBRUARY 2018 | 103 | WWW.FRANCHISEBUSINESS.COM.AU
ENDORSED BY
FRANCHISE BASICS
INVESTMENT COST The up-front investment cost to buy into a franchise may often be lower for a new brand compared to an established brand. This is because established brands can usually charge a higher premium for the use of their intellectual property and have a greater range of inclusions in their franchise offer that new brands have not considered. However the premium that a mature brand can charge for the use of its intellectual property can also be partially offset by the economies of scale it can generate among suppliers to potentially decrease the cost of a new store fitout, fixtures and equipment.
RISK A fundamental difference between established and new brands is the level of risk involved in the business for new franchisees. Mature brands that have been around for years can be expected to have a high degree of consumer awareness, whereas new brands will still be building that awareness and customer loyalty. Mature brands are likely to be have more highly-evolved systems in place to support franchisees. A combined lack of customer awareness and franchisor support substantially increases the level of risk a franchisee will face in a new franchise system.
ACCESS TO FINANCE Another factor linked to the level of risk in the choice of a new or mature franchise is the potential franchisee’s capacity to raise finance. Around 100 franchise brands operating in Australia currently have some form of bank accreditation, which means the bank has reviewed the brand and will take the expected cash flows of the business into consideration when assessing a loan application, rather than relying exclusively on the borrower’s real estate security. In other words, it should be easier to get a loan for a mature brand that has bank accreditation than for a new brand without accreditation. However, if the borrower has 100 per cent (or more) real estate security to back the loan, then the borrower may still be able to access funding even if no bank accreditation exists for the brand they are buying into.
ABILITY TO INNOVATE Another difference is that there is often much greater scope for innovation by franchisees in a new system compared to mature systems where the franchisor will place greater limitations on what franchisees can and can’t do. As franchise brands mature, the franchise
operations manual increases in size and complexity, placing greater constraints on a franchisee’s freedom and autonomy in their business. These progressive changes are often necessary to maintain competitive advantage, improve efficiencies and to tighten operational loopholes to ensure consistent high levels of customer service. In new franchise networks, the operations manual will not be as highly evolved, and consequently franchisees may have greater influence in shaping future changes to policies and procedures.
GROWTH POTENTIAL Franchisees in new networks may have better growth opportunities available to them compared to mature networks that may be approaching market saturation. New networks may have hundreds of potential locations, compared to mature systems that might have only a few sites left, and these could be in places far removed from where a potential franchisee currently lives. A franchisee in a new network who is successful in their first outlet will be likely to have more opportunities to open additional outlets than in a mature network. This could potentially accelerate the franchisee’s wealth trajectory, subject to the risks of investing in a new franchise and the other factors outlined above.
DO YOUR HOMEWORK FIRST In determining whether to invest in a relatively new franchise, compared to a long-established brand, potential franchisees must assess themselves, their appetite for risk and their ability to capitalise on opportunities. While franchising is often seen as a safer investment option than independent small business, there is no such thing as a safe bet in any business. Potential franchisees must always do everything possible to inform themselves about the pros and cons of any investment decision, and first-time business owners in particular must spend an extraordinary amount of time up-front to do this. As a rule of thumb, first-time business owners are encouraged to spend one hour of due diligence and research for each $1,000 to be invested in the business. This might require hundreds of hours up front, depending on the cost of the investment, but if a potential franchisee is thorough in their assessment of a franchise offer, they will vastly increase their chances of making a success of it. n
Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for more than 25 years. He regularly conducts franchise education courses throughout Australia.
JANUARY/FEBRUARY 2018 | 104 | WWW.FRANCHISEBUSINESS.COM.AU
JANUARY/FEBRUARY 2018 | 105 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
TERM TIME Buy a franchise and you’ll be signing up to operate a business for a set period. How does it work?
A
franchise agreement is a binding contract that commonly has an expiry date. While there may be the choice to sell early, or to renew the agreement for a second term, any business plan and financial strategy should be based on the period of the franchise agreement. Ideally the term stipulated in the agreement will be a long enough period for you to have made a profit from the exercise - recoup your initial investment, repay any loans associated with the initial purchase of the franchise, and receive a profit. A franchise term may last for three, five, seven, 10 years or longer. If the franchise operation requires premises, it is best to align the franchise and lease agreements.
HOW TO RENEW AN AGREEMENT The Franchising Code of Conduct governs the process of franchise term renewals.
Under the regulations, the franchisor is compelled to supply disclosure information as part of the renewal process. It’s wise to seek legal advice, even though the franchisor and agreement are familiar, because franchisors can make amendments to the agreement and it is crucial to understand any proposed changes. Franchisors may charge a renewal fee and demand the business premises are refurbished as the part of the contractual obligations.
WHAT THE FRANCHISOR CAN DO The franchisor can terminate a franchise agreement, but only under strict guidelines set out in the Franchising Code of Conduct. This means franchises must have significantly breached the franchise agreement or Code. The franchisor can choose to refuse to grant a second term of the franchise agreement when the time comes to consider renewal, but again, clauses in
the Code restrict the circumstances in which this can take place.
WHAT THE FRANCHISEE CAN DO The Franchising Code of Conduct allows for a seven-day cooling-off period, which means a franchisee can pull out of the franchise agreement almost immediately after signing it or paying non-refundable amounts. A franchisee may also choose to sell the business before the end of the term. It is likely the agreement will specify certain restrictions on a sale - it is common for the franchisee to require the franchisor’s approval of the incoming franchise buyer before a sale for instance can go ahead. If the lease ends earlier than the franchise agreement, for whatever reason, and replacement premises or new franchisee cannot be found, terminating the lease by mutual agreement is an option. In all cases expert franchise lawyers can provide important advice on the content and process of renewal or sale of the business. n
JANUARY/FEBRUARY 2018 | 106 | WWW.FRANCHISEBUSINESS.COM.AU
Everything you need to find a franchise
• Browse more than 4,700 franchise opportunities to discover on Franchisebusiness.com.au – the Official online directory for the Franchise Council of Australia – the peak body for the $146-billion franchise sector in Australia • Free online educational program “How to buy franchise” designed to kick-start your journey into franchising • Access essential financial, legal and business advice and up-to-date news and information • Be inspired by real-life stories of everyday people making their franchising dream a reality
Inside Franchise Business is your essential guide to buying franchise – join us online now at www.franchisebusiness.com.au
INSIDE
ACCESS FREE ONLINE EDUCATION PROGRAM
FRANCHISE B US I NE SS official online directory
FRANCHISE BASICS
REASONS
FRANCHISING COULD SHAPE YOUR FUTURE Franchising ticks all the boxes when it comes to setting up in business – it’s just a matter of following the formula to replicate a brand’s success at a personal level.
JANUARY/FEBRUARY 2018 | 108 | WWW.FRANCHISEBUSINESS.COM.AU
IS TRIED AND TESTED 1.FRANCHISING
fees into development, support and research to keep the business competitive.
It takes courage, commitment and a hefty dose of luck to get a business up and running. So when you can piggyback on a concept that has already been developed, tried and tested, it is like taking a shortcut to success. However, as with any venture there are no guarantees. The franchisor will have worked out efficient ways to run the business and how to market to customers; the best businesses are well structured and organised with processes and tools in place to help franchisees replicate the success.
IS AN EFFECTIVE 2.FRANCHISING WAY TO EXPAND The power of multiples comes into play with franchising, and franchisees benefit as the network grows. Retail franchisors with brand influence can negotiate leases on behalf of franchisees while increased buying power, greater brand awareness, stronger marketing campaigns and access to highly developed tools are all results of strong outlet growth. Good franchisors will reinvest franchise
3.FRANCHISING SUITS NOVICES Perhaps you are highly skilled in your chosen sector, and there are certain advantages to tapping into an established brand to help further your career. However, it is common for franchisees to invest in a business without any similar experience. Franchise systems are set up to train incoming franchisees who may lack business skills, and that makes franchising an appealing option if you want to try your hand at something new. Good initial training and ongoing opportunities to learn best practice are a big advantage not readily available to an independent business owner.
IS GOVERNED 4.FRANCHISING BY A CODE OF CONDUCT Actively involved in keeping the sector honest, the Australian Competition and Consumer Commission is the governing body for the Franchising Code of Conduct.
The code has been revised several times since being introduced in 1989 with a focus on setting up a fair balance of responsibilities and obligations between franchisee and franchisor. Court actions and penalties result from franchisor misconduct and breaches of the code, but there is also an onus on the franchisee to act in good faith and comply with the franchise agreement.
IS IS A SIGNIFICANT 5.FRANCHISING PLAYER IN THE ECONOMY Involving about 1120 brands, Australia’s franchise sector was worth $146 billion in 2016, of which $66.5 billion was estimated to come from the sales revenue of business-format franchising (there are about 70,700 of these units across the nation). The remaining $79.4 billion was attributed to sales of fuel and motor vehicles. Franchising is also a big employer. According to the Franchising Australia 2016 survey, 472,000 people earn their living from working in a franchised brand. About 4 per cent of Australian small businesses are franchise units. n
JANUARY/FEBRUARY 2018 | 109 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
LEARNING THE
BUZZWORDS
Like any area of endeavour, the franchise sector has its own particular terminology that new franchisees need to understand.
ACCREDITATION: a banking
loan scheme that provides franchisees with some of the finance they may need when buying the franchise. It is based on a bank’s understanding of the brand and its business methods. While this funding option is popular, it is not common across the sector.
ASSIGNMENT: when a franchisee sells their business to a new franchisee, it is referred to as assignment. It is common for the franchisor to retain the right to interview and accept or reject any proposed buyer. The franchisor may also have the right to buy back the franchise. The vendor franchisee can set the value of the franchise. BUSINESS-FORMAT FRANCHISE: a business
model with four criteria – a franchise agreement, a trademark or symbol, payment of a fee, and a system or marketing plan. A franchise business falls under the jurisdiction of the Franchising Code of Conduct and franchisors have certain obligations to fulfil.
COMPANY-OWNED UNITS:
locations run by the franchisor rather than a franchisee. CONVERSION: an existing
independent business that joins a franchise network. DISCLOSURE DOCUMENT: this
document provides information about a franchise system, the franchisor and the franchised business. It must be supplied to a prospective franchisee in accordance with the Franchising Code of Conduct. DUE DILIGENCE: the process of conducting in-depth research on a business before purchase. FIELD MANAGER: an individual tasked with managing a group of franchisees, with a focus on relationships, brand alignment, and sales and profit. This role might also be called business development manager or area manager. FIXED SERVICE FEE:
franchisees may pay their franchisor a weekly or monthly fixed-amount payment, or a service fee calculated as a percentage of turnover
(above a minimum payment). FRANCHISE AGREEMENT:
this is the legally binding business between the franchisor and the franchisee. FRANCHISEE: an individual
who runs a franchised business using the intellectual property of the franchisor.
FRANCHISEE ADVISORY COUNCIL: a structure for
franchisors to seek and receive feedback from their franchisees. Participating franchisees may be elected or chosen by the franchisor.
FRANCHISE FEE: an up-front cost paid to the franchisor. It covers the use of the brand name and business system. FRANCHISING CODE OF CONDUCT: a mandatory
code that governs franchising in Australia. It is designed to guide the behaviour of franchisors and provide certain protections to franchisees. It is administered through the Australian Competition and Consumer Commission (ACCC). FRANCHISE TERM: this
JANUARY/FEBRUARY 2018 | 110 | WWW.FRANCHISEBUSINESS.COM.AU
is the period granted for trading under the franchise agreement. Most franchise terms are on a renewable three or five year term but they can vary from one year to perpetuity. Franchisors often refer to a term with two options to renew as 5 + 5 + 5, for instance. FRANCHISOR: the franchisor
grants permission to the franchisee to conduct business using its intellectual property, brand name, working methods and marketing.
GREENFIELD SITE: a
brand new site.
GOODWILL: this is a
calculation of the value of trade in an existing business that is likely to continue and benefit the incoming business owner.
INFORMATION STATEMENT:
this is a two-page standard document that outlines what franchise buyers need to know about franchising.
INTELLECTUAL PROPERTY:
this term refers to the trademarks, copyright, know-how, trade secrets, designs, patents, branding, operational manuals, methodologies and/ or recipes franchisors license to franchisees.
LICENSE: the right to use
intellectual property in business, such as sales rights in a territory, manufacturing technology or access to a trademark. A license is not
the same as a franchise. LOCAL AREA MARKETING:
often abbreviated to LAM, this is marketing the franchisee is responsible in their territory or designated marketing area. MARKETING & ADVERTISING LEVY: a regular flat or
percentage-based-fee paid into a centralised advertising or marketing fund.
for a further term. This process is bound by the Franchising Code of Conduct. There is no automatic right of renewal. ROYALTY: fee paid by the
franchisee to the franchisor for the ongoing use of the brand and systems, management and technical support. It may be a flat fee or a percentage of sales or profit.
franchisee who is responsible for a large territory, appointing other franchisees within the territory with direct agreements, and ensuring that the franchisor’s systems and methods are applied.
TERMINATION: the ending of the franchise contract between franchisee and franchisor, usually for breach of contract. Some franchise agreements allow the franchisor to terminate the agreement even if the franchisee has not breached the agreement.
MULTI-UNIT FRANCHISEE:
TERRITORY: is the area assigned
MASTER FRANCHISEE: a
a franchisee who has been granted the rights to run more than one franchise outlet. Not every franchise system allows for franchisees to be multiple operators. OPERATIONS MANUAL:
the franchisee’s guide to operating the franchise business. The franchisor may produce several manuals for different areas of the business, and should regularly update the information. REGIONAL FRANCHISEE:
similar to master franchisees, regional franchisees operate a large territory and appoints franchisees within the area. RENEWAL: once a franchise
term nears its end, franchisees may or may not be given a right to renew their agreement
to franchisees for their business. Territories can be exclusive or nonexclusive.
TOTAL INVESTMENT: the total
amount of money a franchisee requires to set up in business. This includes the franchise fee, working capital and any equipment purchases required.
TURNKEY FRANCHISE: a
franchise package that includes all the equipment, information and systems required for a franchisee to open up the business and start trading.
WORKING CAPITAL: the funds required by any business to pay its costs before it starts making a profit, and as ongoing cash flow to counter any dips in business activity.
JANUARY/FEBRUARY 2018 | 111 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
BUYING A FRANCHISE:
THE PROCESS It can take three months or 18 months to find and open up a franchise. This is the typical path that will take you to franchise ownership.
MAKE AN INQUIRY
CONDUCT DUE DILIGENCE
Fill out an inquiry form or phone the recruiter for further details of the franchise opportunity that appeals.
This is a crucial stage, so take your time and be thorough in your research. You will need to sign a document confirming that you have received independent advice, or that you have decided not to do so. Obtaining expert opinion from franchiseexperienced professionals can save you money in the long term, so it is a worthwhile investment.
FRANCHISOR RESPONDS If you have emailed an inquiry, typically a franchisor will send out an information pack to you, and follow this up with a phone call.
FIND OUT MORE Fill out an inquiry form or phone the recruiter for further details of the franchise opportunity that appeals.
CONFIDENTIALITY The franchisor will ask you to sign a confidentiality agreement before sharing sensitive information with you. Expect a copy of the disclosure document, draft franchise agreement and the Franchising Code of Conduct, plus an information statement. Your franchisor might also send more commercially sensitive information to help you consider the viability of the franchise opportunity and build your business plan.
FIRST MEETING This is the time you will get a much clearer idea of the business, and the franchise team you will be working with.
PROVE YOURSELF You will need to create a business plan and show to the franchisor you have the capacity to take ownership of and drive this particular franchise unit. A follow-up meeting will enable you to ask further questions following on from your due diligence, and for the franchisor to further quiz you.
OTHER STEPS Some brands can include a number of interviews, try-before-you-buy work experience or a panel review. The franchisor might ask you to complete a profiling assessment.
DON’T RUSH IT The process to get from inquiry to sign-up could be a matter of weeks, or it could be months. Buying a franchise is a significant, long-term commitment. It is important not to rush the process.
JANUARY/FEBRUARY 2018 | 112 | WWW.FRANCHISEBUSINESS.COM.AU
THE
INFLUENCERS Who will be driving the business that you invest your hard-earned dollars into?
W
hat influence will the franchise team have over your future? Here we look at key roles in a larger franchise business that will be shaping the direction and operation of the network. Not every business will include each role and in a small franchise set-up the franchisor will be wearing several, or all, of these hats.
CHIEF EXECUTIVE OFFICER/ MANAGING DIRECTOR: : The top ranking executive in a company, the CEO is focused on directing high level company strategy and growth. In a smaller company, the CEO’s role includes operational business decisions and they may be much more hands-on on a daily basis. In a larger business the CEO may have a position on the company’s board, and act as the link between corporate operations and the board of directors. The founder of a franchise typically takes a CEO role. CHIEF OPERATING OFFICER/ OPERATIONS MANAGER: A COO/ operations manager essentially works with the CEO to implement the strategy, making the decisions on how to achieve the goals set out. The role is typically responsible for daily operations, production, research and development, creating operational policies, and HR. The operations manager can influence the franchise business performance through resource allocation, cost reduction, improved efficiencies, the introduction of high quality products and services. In a franchise where the founder is the CEO, the COO may be the more experienced executive. CHIEF FINANCIAL OFFICER: This senior executive reports to the CEO but plays a strategic role in the way the company
manages its finances, investments, and capital structure and is influential in the company’s long term success. Any funding for marketing or development initiatives will be approved by the CFO. The CFO manages the finance and accounting divisions and takes responsibility for the accuracy and timeliness of the company’s financial reports. CHIEF INFORMATION OFFICER : A CIO has responsibility for the implementation, management and efficacy of information and computer technologies, vital in today’s digital world. It’s the CIO who will investigate the benefits of any proposed technological change, and then implement the system - a website or inventory software, for instance. The role is increasingly strategic and directed to gaining and maintaining the competitive advantage of a business. CHIEF MARKETING OFFICER: The CMO is essentially charged with increasing revenue through increased sales using market research, product marketing, pricing, marketing communications, advertising and public relations. Responsible for directing the planning, development and implementation of the franchisor’s marketing and advertising campaigns, ensuring a common message across multiple channels and platforms, the CMO reports directly to the CEO. GENERAL MANAGER: A general manager has overall profit and loss responsibility for the company, and usually oversees sales, marketing and daily business operations. The responsibilities of the role may be incorporated into a CEO role. FRANCHISE RECRUITMENT MANAGER: The franchise recruitment manager is responsible for attracting franchise buyer enquiries and for the recruitment
selection process, increasingly working with managers from other divisions and the CEO or MD in the final selection. The franchise recruitment manager needs to meet internal recruitment targets and ensure franchisees are a match for the franchise brand. BUSINESS DEVELOPMENT MANAGER/ FIELD MANAGER: Variously called a BDM, regional manager, field or area manager, this role is the interface between the franchisee and franchisor. Responsibilities include helping franchisees achieve their business goals, ensuring brand compliance across the network, communicating brand direction and strategy to franchisees. TRAINER: The person or team who will set up a franchisee to run the business. Responsibility for training may fall under operations or general management. Training may involve technical skills, customer service, business basics, and operational procedures. The trainer may train franchisee staff. PR AND COMMUNICATIONS: How the brand is presented in the media, how the brand engages with social media, how brand damage is mitigated... all these are influenced by the team that handles PR and corporate communications. This may be an internal team or an external agency. SUPPORT TEAM: The individual employees at head office who manage, monitor and deal with queries, requests and complaints from franchisees. FRANCHISE ADVISORY COUNCILLOR: A franchisee member of the Franchise Advisory Council which is typically involved in providing frontline feedback from franchisees to the franchisor, and in assessing and trialling new initiatives.
JANUARY/FEBRUARY 2018 | 113 | WWW.FRANCHISEBUSINESS.COM.AU
FRANCHISE BASICS
30
THINGS TO CHECK BEFORE YOU INVEST
Get set prior to your purchase with our easy checklist. Just tick off the must-do items.
Are you confident in the franchisor?
Have you worked out your operating costs?
What are the franchisee and franchisor obligations?
Have you seen a disclosure document?
Do you know the term of the agreement?
What training is available and who pays for it?
Is the franchisor compliant with the Franchising Code of Conduct?
Do you need a permit or license to operate the business?
Who owns the intellectual property and what is licensed to the franchisee?
Have you run a credit check on the franchisor?
Is the business operating from fixed or mobile premises?
What marketing will the franchisor implement?
Does the franchisor have a history of litigation? Are there any cases coming up?
Have you checked the lease? Is there a right to renew?
What marketing is your responsibility?
If you are buying an existing business, have you seen current financial statements (balance sheets, profit and loss, tax returns)?
Does the length of the lease match the franchise term?
What is the dispute resolution process?
Have you evaluated the financial returns?
What are the store fit-out costs?
Do you know what it is like to be a franchisee?
If you are buying a greenfield (brand new) site, do you have sales and profit examples and know the method behind the calculations?
Are you working within a territory? If so is the area exclusive?
Do you have an exit plan?
Do you know all the expenses franchisees are required to pay?
Are you restricted in your product purchase?
Have you spoken to former and current franchisees about the business?
What royalties are there and how are they calculated?
Are you required to reach a minimum performance level?
What restrictions are there on the franchisee and guarantor operating a similar business?
JANUARY/FEBRUARY 2018 | 114 | WWW.FRANCHISEBUSINESS.COM.AU
RESOURCES ASIA-PACIFIC CENTRE FOR FRANCHISING EXCELLENCE
organisation or anyone involved in the franchise industry including franchisees.
A pre-entry franchise education program is available for free and online through this centre. Funded by the ACCC this course attempts to help franchisees understand the process of due diligence and have realistic expectations of what it means to be a franchisee.
Visit: WWW.FRANCHISE.ORG.AU
The Centre was launched by Griffith University in 2008 and undertakes research on franchising best practice. This research helps inform policy and team members regularly engage with government bodies and franchise associations across the Asia-Pacific.
FRANdata is the home of the Australian Franchise Registry which identifies franchise brands that have up-to-date franchise agreements and disclosure documents, and which have confirmed with the Registry their compliance with the Franchising Code of Conduct. FRANdata also provides reports on the franchising sector.
Visit: WWW.FRANCHISE.EDU.AU
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION (ACCC) The ACCC is an independent Commonwealth statutory authority which regulates the mandatory Franchising Code of Conduct (Code) and can investigate alleged breaches of the Code. The ACCC is responsible for enforcing the Competition and Consumer Act 2010 as well as legislation, promoting competition, fair trading and regulating national infrastructure. Its role is to protect, strengthen and improve the way competition works in Australian markets and industries. Visit: WWW.ACCC.GOV.AU
BUSINESS.GOV.AU This website is an online government resource for the Australian business community which gives the public access to government information, forms and services for all things business. It is aimed at assisting individuals or a group of people to plan, start and grow their business. New business owners can access the advice finder, events calendar, grants and assistance finder, a directory of government and business associations, planning templates, business videos, and business checklists. Business topics include emergency management and recovery, finance, recruitment, environmental management, fair trading, taxation, online business, franchising, importing and exporting, intellectual property and training. Visit: WWW.BUSINESS.GOV.AU
FRANCHISE COUNCIL OF AUSTRALIA The FCA is the main body for representing franchisees, franchisors and service providers in the $146bn franchising sector in Australia. Becoming a member of the FCA is a voluntary and is available for any
FRANDATA
Well established in the US since 1989, the business was established in Australia in 2013 to help the franchise sector address key strategic challenges and take advantage of opportunities available to qualifying brands. Visit: WWW.FRANDATA.COM.AU
THE FAIR WORK COMMISSION Fair Work Commission (the Commission, previously called Fair Work Australia) and the Fair Work Ombudsman (FWO) are independent government organisations that regulate Australia’s workplace relations system but have different roles. The Commission is the independent national workplace relations tribunal. It is responsible for maintaining a safety net of minimum wages and employment conditions, as well as a range of other workplace functions and regulation. The FWO enforces compliance with the Fair Work Act, related legislation, awards and registered agreements. It also helps employers and employees by providing advice and education on pay rates and workplace conditions. Visit: WWW.FAIRWORK.COM.AU
FRANCHISEBUSINESS.COM.AU This is the online arm of the Inside Franchise Business publication. Both platforms are focused on providing essential advice and information for anyone looking to invest in a franchise. The website provides short and snappy business tips and news, video interviews, industry commentary and market reports. FranchiseBusiness.com.au is also the official directory of the FCA and lists franchising opportunities available in Australia and New Zealand. Potential franchisees looking to move into the franchising sphere can explore opportunities that currently exist in the market and enquire about the franchisor or brand. Users also have access to franchise consultants and advisors who can assist prospective or existing franchisees and franchisors with legal, financial educational and training, IT and other services. Visit: WWW.FRANCHISEBUSINESS.COM.AU
JANUARY/FEBRUARY 2018 | 115 | WWW.FRANCHISEBUSINESS.COM.AU
Phone: Shayne Boogaard (NSW): 0418 136 156 Brett Reading (Qld): 0407 877 674 Peter O’Hara (Vic/WA): 0408 175 534 Contact: Shayne Boogaard (NSW): szh@7eleven.com.au Brett Reading (Qld): bzr@7eleven.com.au Peter O’Hara (VIC/WA): pwo@7eleven.com.au www.franchise.7eleven.com.au
A-Z LISTINGS
Start up costs: $400,000 to $1,000,000 PROFILE: 7-Eleven is the largest convenience and independent petrol retailer in Australia with more than 650 stores across VIC, ACT, NSW, QLD and WA. We opened our first store in 1977 and have almost 40 years’ experience in franchising. When you buy a 7-Eleven franchise, you buy two things. Firstly a globally recognised brand name, and secondly a business system that works, one that provides more support than most other franchises. As our stores are open 24/7, support is just a call away 24 hours a day, 7 days a week. We are looking for Franchisees who have the potential to lead their team to deliver an outstanding experience to customers. Learn more about what it takes to be part of a partnership in success with 7-Eleven, at www.franchise.7eleven.com.au
Phone: 1300 988 960 Contact: Alfredo Attard info@franchisesupportcentre.com.au www.accountmanagementaustralia.com
PROFILE: We deliver huge benefits to all brands that are highly dependent on their franchisees maintaining internet connectivity to their POS related devices. We resolve critical telecommunication and internet downtime issues by adopting faster and quicker methods. We have one small fixed monthly fee per site and we don’t charge extra to send out qualified technicians or hardware replacement (conditions apply). We help maintain productivity by reducing downtime. We support the industry by servicing and supporting franchisees in their critical times. We have 20 years industry experience. So, if your business highly depends on internet online orders, please contact us now to know how we can help your brand stay connected.
Phone: 02 9415 5300 Contact: Raheem Abdul Raheem.abdul@anytimefitness.com.au www.anytimefitness.com.au/own-a-gym/
Phone: 1300 287 669 Fax: 1300 795 287 Contact: Steve Wren steve@ats.com.au www.appliancetaggingservices.com.au
Start up costs: Enquire
Start up costs from: $52,000 + GST
PROFILE: Australia’s biggest gym community, Anytime Fitness Australia has over 500,000 members and 450+ clubs nationwide. We’re the brand that brought the 24/7 concept to life, and cut-through app Anytime Workouts. We’re getting Australians moving for a fitter and healthier future.
PROFILE: Looking for a franchise with on-going repeat business, large territories and access to an existing client base to get you started? ATS are Australia-wide specialists in Electrical Testing and Tagging in accordance with AS/NZS 3760:2010. Providing expert technical, admin, business and sales support, access to our National client base and comprehensive on and off-site training, ATS are committed to helping its 56 franchisees grow profitable and successful businesses. No prior electrical experience is required - just a passion for safety and a commitment to growing your business. With low entry fees and minimal franchisee administration, an ATS franchise may just be the opportunity for you.
Phone: (07) 5509 0000 Contact: mark@ozskin.com www.australianskinclinics.com.au/franchise
Phone: 0409 720 063 Contact: Dean Lightfoot franchise@palmoasisventures.com www.baskinrobbins.com.au Start up costs: from $150,000 - $250,000
PROFILE: Australian Skin Clinics was founded in 1996, and is Australia’s leading skin and laser clinic. Since opening we have helped more than 65,000 people achieve their dreams and make them feel they look and feel the best they can about themselves. We have spent 18 years perfecting our skills, experience and systems to develop an easily replicable model, with the specific purpose of becoming an international franchise network. This has led to our story being one of rapid growth and achievement.
PROFILE: Baskin-Robbins® has been creating irresistible treats to make you smile and feel good inside and out for over 70 years. We’ve perfected the combination of delicious treats and a fun atmosphere. Now, we’re offering rewarding franchise opportunities that help aspiring business owners thrive and to continue to be the world’s leading chain of ice cream specialty restaurants If you love to have fun and put a smile on people’s faces; if you are hard-working, dedicated and community oriented; and in touch with your ‘ice cream side’; Baskin-Robbins® may be a perfect fit for you. Contact: franchise@palmoasisventures.com to scoop up your own Baskin-Robbins®. New sites available in QLD, NSW & VIC.
Phone: +61 8 8267 2144 Contact: Andrew aphillips@focalpointintl.com www.focalpointintl.com
Phone:03 9508 4409 Fax: 03 9508 4499 Contact: Caitlin O’Connor caitlin.oconnor@retailzoo.com.au www.boostjuice.com.au
Start up costs from: $59,950 + GST
Start up costs: $280k - $350k + GST PROFILE: Boost Juice is an Australian franchise success story. Founded by adventurer and entrepreneur, Janine Allis, the brand has taken its winning combination of healthy fresh fruit, blended and squeezed into delicious smoothies and juices to open over 480 stores across the globe.
PROFILE: Listing Profile The name Brian Tracy is synonymous with personal and professional success. Our excellent reputation and highly-regarded programs are unrivalled and will give you brand credibility, prestige and trust in your business community.
Boost Juice has come a long way from its humble beginnings but one thing hasn’t changed – our commitment to health, fun and loving life. Our partners are provided with an abundance of support and we strive to innovate and develop in all facets of the business. Take the steps to join one of Australia’s most loved brands today!
FocalPoint is the franchise arm of Brian Tracy Global. We are searching for high-calibre individuals who are self-motivated thinkers, looking for a business opportunity beyond the generic franchise. If you are an innovative leader with a knack for business and you want to build a solid financial future, take the next step and find about more about the FocalPoint franchise.
JANUARY/FEBRUARY 2018 | 116 | WWW.FRANCHISEBUSINESS.COM.AU
Phone: (02) 4587 630 Fax: (02) 4587 8733 Contact: Josh Wood josh@chemdry.com.au www.chemdry.com.au
Phone: 1300 659 676 Fax: 1300 659 675 Contact: Dan Toms customerservice@cashflowit.com.au www.cashflowit.com.au
Start up costs from $39,950 PROFILE:
PROFILE: Cashflow It are the franchise finance experts. With competitive rates and flexible terms from 12 months to 5 years, Cashflow It can provide the funding that franchisors and franchisees need today. We offer flexible rental solutions, traditional leasing and business loans tailored to your requirements. What can we Fund - New equipment / Used equipment / Fit-outs / Store refurbishments / Re-financing from other lenders / Buying an existing franchise / National equipment roll-outs Franchise Accreditation - If you belong to a Cashflow It Accredited Franchise system, you can enjoy pre-approval and other exclusive benefits.
Chem-Dry is Australia’s largest and most successful carpet and upholstery cleaning franchise. Established in 1986 as a healthy and green carpet cleaning alternative, today Chem-Dry cleans more carpet and surfaces than any other company. Using the company’s patented cleaning solutions and over 35 years of experience, our franchise partners are able to build successful businesses by making their customers’ homes and workplaces cleaner and healthier. Our franchise partners are passionate about providing their customers with the cleanest and healthiest homes. A Chem-Dry franchise is not just about residential and commercial carpet cleaning. Our franchise partners also clean upholstery, leather, tiles and grout, and are specialists in water damage restoration.
Phone: 03 9336 3200 Fax: 03 9336 3266 Contact: Peter Collins franchising@fergusonplarre.com.au www.fergusonplarre.com.au
Phone: 1300 131 888 Contact: Hannah Giang Email: franchise.recruitment@dominos.com.au Web: www.dominosfranchise.com.au Start up costs: $480,000 - $600,000 + GST PROFILE: Domino’s is not just Australia and New Zealand’s leading pizza brand – it’s also one of the world’s most advanced digital retailers and an undisputed leader in online ordering with Australia and New Zealand’s most advanced mobile ordering apps, pizza creation app and only real-time pizza tracker. Being a part of the Domino’s family is a rewarding way to take control of your own personal wealth and be your own boss. You’re not only joining Australia’s largest food chain but a community of passionate, excited entrepreneurs. There has never been a better time to join the Domino’s family. Enquire now to receive your copy of our Domino’s franchise information booklet.
Start up costs: $250,000 - $350,000 PROFILE: 2017’s #1 Food Franchise (TopFranchise Awards 2017) Ferguson Plarre Bakehouse recently celebrated 116 years of baking award winning pies, cakes and tiddly oggies. Ferguson Plarre Bakehouses are still a family owned and operated business with the 5th generation of the Plarre family still actively involved in managing the day to day running of the business from baking, through to retail shop design, operations and bakery franchising. The Family continue to embrace their forefather’s commitment to quality products, service and innovation. With no Royalties or Marketing fees, freshly baked products delivered daily to your store and no baking required, the business is perfect for anyone with passion and a small business dream.
Phone: 0457 380 484 or 03 9653 7440 Contact: Kevin Lacey kevin@firstindex.com Partners.firstindex.com
Phone: 1300 852 556 or 0438 801 575 Contact: Andrew Roberts Andrew.roberts@fifocapital.com.au www.fifocapital.com.au
Start up costs: $100,000*
Start up costs: $49,500 PROFILE: PROFILE: Fifo Capital provides cash flow assistance to small businesses whilst giving a great lifestyle, excellent returns and an enviable work/life balance to its franchisees. No experience necessary as full training and ongoing support is provided. Having grown by over 35% this year Fifo Capital is making a huge impact right across the country for a variety of reasons. Below are some of the benefits our partners enjoy as members of the Fifo family. • • • •
ROI of 50+% annualised* Backed by insurance Part-time potential, Work from home (if you wish),
• Backed by one of the biggest and most successful finance franchisors in the country. • Multiple income streams
Phone: 0411 478 806 Contact: Robbie Damjanovic franchising@freshiiau.com http://www.freshiiaufranchising.com.au Start up costs: Investment levels: $160,000 - $300,000 based on 25sqm to 100sqm Capital investment: Financing options available from 0% deposit (subject to approval) PROFILE: Join the world’s fastest growing franchise! Are you passionate about healthii, delicious, affordable food? Partner with Freshii as we change the way customers think about fast food! Freshii is all about inspiring day-to-day living at its best with fresh, healthy and custom menus served from hundreds of stores across ten countries! •
•
Become a Freshii partner from just $160,000* (ex GST) incl. franchise fee and fitout Opportunities in CBD and urban locations across Australia
• •
Uncapped earning potential No experience necessary – training, marketing & site development support available
Ready to be your own boss and join an international and socially conscious brand? Visit Freshii Australia today at www.freshiiaufranchising.com.au * T&C’s apply. All applicants will be reviewed on an individual basis.
First Index is a fully regulated global financial services company now offering franchise opportunities, in select locales throughout Australia. The mission is to transform the trading industry by providing all Australians a new and better way of investing in a range of financial products and services, including shares, commodities, CFD’s and indexes. First Index are going beyond the offering of the typical unreliable and sometimes unregulated online trading companies, to provide your clients with a branch based model that provides the very best trading technology with unrivalled levels of service, education and expertise.
A-Z L I S T I N GS
FOR A-Z LISTINGS ENQUIRIES CONTACT:
NATIONAL SALES & MARKETING MANAGER DAVID STRONG ON 02 8224 8370 DAVID.STRONG@OCTOMEDIA.COM.AU
JANUARY/FEBRUARY 2018 | 117 | WWW.FRANCHISEBUSINESS.COM.AU
A-Z LISTINGS
Phone: 03 9234 2200 Fax: 03 9234 2266 Contact: Mark Crapper franchising@hairhousewarehouse.com.au Hairhousefranchising.com.au
A-Z LISTINGS
Contact: Keith Knapp info@ibeconnect.com ibeconnect.com Start up costs: $10,000
Start up costs from: $350k + PROFILE: PROFILE: With over 20 years of experience in the hair and beauty industry, Hairhouse Warehouse is one of Australia’s leading retail franchise brands. Hairhouse Warehouse’s vision is clear and simple. Offer quality products at a reasonable price, whilst providing exceptional customer service. This mission is clearly on display in each and every one of our locations by simply looking at our franchisees and the teams they work with. As a franchisee, no hair or beauty certification is required - just a passion for success.
IBE Connect is your first choice in expanding your business to the United States. Our successful model has helped franchises of multiple industries expand by helping get their products and services compatible with the US Market. By partnering with IBE Connect we connect you with the best tools, resources and connections that specialize in working with businesses coming into the US. Connections such as national distribution networks, legal representation, accounting, media networks, and much more. Visit us online at IBEConnect.com to find out more.
As Hairhouse Warehouse continues to dominate the hair and beauty industry in Australia, the brand and franchisees are seeing amazing results. To continue our brand domination Hairhouse Warehouse is planning to expand to over 180 stores over the next three years.
Phone: (03) 9653 9203 Fax: (03) 9841 9332 Contact: Christine Lau Christine@laulegal.consulting www.laulegal.consulting
Phone: (02) 8962 8556 Contact: Benoit Davi franchise@kwikkopy.com.au www.kwikkopy.com.au/franchise Start-up costs: $280,000 (for a Greenfield)
PROFILE: Start your franchising journey with Kwik Kopy, the leading provider of design, print and online solutions throughout Australia. Kwik Kopy offers a flexible franchise model, where each Centre is fully equipped to create high quality services on-site. Owning your B2B franchise means operating business hours Monday to Friday so you’ll also enjoy work-life balance. As a Kwik Kopy franchisee you get to become your own boss and be part of a supportive community committed to your success. You’ll also receive all the training you require, so no prior print or design experience necessary. A Kwik Kopy franchisee is young at heart with business experience, entrepreneurial flair and most of all – an absolute passion for customer service.
PROFILE: A legal consulting firm which understands your business, is commercially astute and offers strategic legal advice on every aspect of your business. Our principal has advised businesses for over 25 years, owned a wellness business and worked in-house for 8 years. We partner with you to provide strategic legal advice which factors in compliance issues and your short and long term plans for your business.
We provide advice in: • Franchising (for both franchisors and franchisees, international and local) • Master franchising • Corporate structuring • Stakeholders agreements • Dispute Resolution • Intellectual Property including trade mark, copyright, design advice • ACCC and consumer law advice • Sale and purchase of businesses • Corporate law • Asset protection • Risk management
We have both existing and new locations for sale throughout Australia.
Phone: 02 8115 9550 Contact: Phillip Blanco franchising@madmex.com.au www.madmex.com.au
Phone: 03 9604 9400 Fax: 03 9600 3313 robert@mmrb.com.au www.marshmaher.com.au
Start up costs: $375,000 to $550,000
PROFILE:
PROFILE: As a thriving fast casual food brand with a strong growth strategy, we are actively seeking new franchise partners. Our menu is influenced by fresh, Baja-style Mexican food made with authentic ingredients true to our roots. We’re focused on leading the way in tasty, fresh and healthy with the freshest produce available, food made fresh every day and allowing our customers to tailor their meals to personal tastes and dietary requirements or health trends. If you have the drive to lead the way with fresh authentic Mexican flavour, a passion to utilise your past business knowledge & skills to deliver an outstanding customer experience, all with a cheeky grin, then this journey is for you! Become your own Head Honcho at Mad Mex, enquire today!
A-Z
Well recognised and published franchise specialist with over 30 years industry knowledge and experience. Providing advice to: 1. International Franchisors and Franchising. 2. Master Franchising. 3. Dispute Resolution – Solutions and Strategies
Franchisee Advice and fixed fee reports. Sale/ Purchase of franchise systems. IP/ Trademark advice. Company structures and tax advice. ACCC and Consumer Law advice.
We provide clients fixed fees based on the scope of work. Contact Robert on (03) 9604 9400 or by email at robert@mmrb.com.au
Phone: 02 9415 5300 Contact: info@collectivewellnessgroup.com.au www.massageenvyfranchise.com.au Start up costs: Enquire
PROFILE: Taking care of yourself shouldn’t be a luxury. Massage Envy Australia offers great value membership to rejuvenating massage, stretch and facial sessions that help you to feel your best. If you want less stress, more energy and improved wellness, it all starts with treating your body right.
L I S T I N GS
FOR A-Z LISTINGS ENQUIRIES CONTACT:
4. 5. 6. 7. 8.
CONTACT SENIOR ACCOUNT MANAGER CHARLOTTE REDFERN ON 02 8224 8373 CHARLOTTE.REDFERN@OCTOMEDIA.COM.AU
JANUARY/FEBRUARY 2018 | 118 | WWW.FRANCHISEBUSINESS.COM.AU
Phone: 07 3088 1229 Fax: 07 3088 1212 Contact: Judy Lesina judy.lesina@nightowl.com.au www.nightowl.com.au
Phone: 02 9472 8555 Contact: Lee Rubino leer@cookiecorp.com.au www.mrsfields.com.au Start up costs: $200,000 - $300,000
Start-up costs: $300,000 - $400,000
PROFILE: Mrs. Fields Franchisees are attracted to our brand, for a wide variety of reasons. Whether you are currently an experienced business owner or you are commencing a new and exciting journey, Mrs. Fields is a great way to be in business for yourself, but not by yourself, as you always have the full support of your very own Franchise Business Consultant. Mrs. Fields is all about making people feel good, through simple, special moments. The mouth-watering taste of Mrs. Fields freshly baked cookies, toasties and savoury selection, along with a hand-crafted Barista coffee (specially blended and exclusive to Mrs Fields Bakery Cafes and roasted at Mrs. Fields Head office roasting facility), what more could you want?
PROFILE: NightOwl is a national convenience franchise system established in 1975 as Australia’s first 24 hour trading Convenience retail business. First franchised in 1987, we have never stopped growing and with an exceptionally strong brand presence, we now operate over 67 stores throughout Queensland and New South Wales. Retail experience is not necessary in running a NightOwl, but motivation and entrepreneurial skills are a must. You must be determined to succeed and the Franchisee Support Office will help you with the rest. We are seeking motivated and hardworking franchisees with a determination to succeed!
Phone: 0413 546 565 Fax: 8 5095 456 Contact: Marc franchise@nirvanabeauty.com.au www.nirvanabeauty.com.au
Phone: (07) 3625 400 Contact: Ralph Marks franchising@novusautoglass.com.au www.novusautoglass.com.a Start up costs: $40,000
Start up costs: $250,000 - $550,000 PROFILE: Having conquered some of the latest beauty treatments and technologies, Nirvana Beauty Laser Clinics presents a huge investment opportunity for people wishing to enter an industry with enormous potential. As a franchise owner with Nirvana Beauty Laser Clinics, you will experience the satisfaction of working in an exciting and on-trend industry. Every day you will reap the fruits of your own input by delivering results-driven treatments to many satisfied clients. Enjoy working with state-of-the art equipment, a great work-life balance, a personalised support network, and ongoing training through our Head Office What are you waiting for? Contact us today and join in our success.
PROFILE: Novus Glass invented Windscreen Repair Technology. A Novus Glass franchise enables you to go into business for yourself, but not by yourself. Novus Glass is an international brand with over 55 locally owned and operated franchise territories across Australia. Novus Glass also replace windscreens and all other auto glass components. Novus Glass offers a complete franchise package covering everything from initial Technical Training through to Ongoing Marketing and Operational support. Novus also offers its franchisees access to its unique patented products, equipment and specialty resins. Enquire today about owning your own Novus Glass franchise – The Clear Choice for Windscreen Repair and Replacement.
Phone: 02 4626 7777 Contact: Brian Laul franchise@ozfunland.com www.ozfunland.com
Phone: 02 9415 5300 Contact: info@collectivewellnessgroup.com.au Start up costs: Enquire
PROFILE: A one-of-a-kind personal training workout, Orangetheory Fitness is all about keeping you fit, healthy and ready for anything. Backed by science, heart rate monitors are worn throughout the one-hour session, making sure you stay at the optimum metabolic rates.
Start up costs: from $300,000 + leased equipment PROFILE: Since it opened in July 2008, The Wizard of Oz Funland has become a landmark in Sydney’s Macarthur Region, a popular community hub and winner of several prestigious awards. •
A unique, first-of-its-kind venue in Australia, an exciting children’s entertainment, party and education centre.
•
Recognises that children today demand more than just passive play, and that the children’s entertainment sector will soon have to reach beyond current boundaries to remain relevant for the future.
•
An interactive ‘live’ space that is changing the way children are entertained by engaging its young visitors with creative activity and giving them an unforgettable time of adventure, fun & discovery.
We seek expressions of interest from people who wish to join the growth of Oz Funland in Greater Sydney, Central Coast, Newcastle, Wollongong, Melbourne, Brisbane, Perth, Adelaide and Regional Australia. Read more at http://www.franchisebusiness.com.au/brands/ozfunland#H8sedhki4FaGDRPz.99
Phone: 1800 245 447 Email: joinourteam@poolwerx.com.au Web: www.poolwerx.com.au Start up costs: From $97,000 + GST + Van
PROFILE: Australia’s Franchise System of the Year - Twice!! Build your successful business future with us. We have a career path in business that we can tailor to suit you. As a Poolwerx Franchise Partner, you can start small or jump right in. Join us as a man in a van, progress to multi-vans, a retail store and vans and then in multi store. Or purchase an existing fast start mobile territory or retail mobile business. Whatever your journey, we will help you realise your vision. Our one focus is to create a profitable partnership. We do that by matching over 25 years experience and outstanding support, marketing and business development systems to your energy and enthusiasm. For more information, visit poolwerx.com.au/franchising.
Phone: 1800 809 913 Fax: 03 8699 1555 Contact: Anna Goncalves franchising@questapartments.com.au www.questfranchise.com.au Start up costs: $750,000 upwards PROFILE: Quest Apartment Hotels is the largest and fastest growing apartment hotel operator in Australasia, with a network of 150 franchised properties across Australia, New Zealand and Fiji. For 30 years, Quest has provided convenient locations, reliable standards and flexible living conditions for extended stay business travellers. Quest is now one of the top 15 apartment hotel providers in the world, and widely recognised as the market leader of apartment hotel accommodation in Australia. To become a Quest Franchisee you must be prepared to make a significant investment and commitment to the business, both personally and financially.
JANUARY/FEBRUARY 2018 | 119 | WWW.FRANCHISEBUSINESS.COM.AU
A-Z LISTINGS
Phone: 1300 729 900 Contact: Gary Glen franchising@schnitz.com.au www.schnitz.com.au
Phone: 1300 4 REDCAT (1300 473 322) Contact: Lawrence Pelletier hello@redcat.com.au www.redcat.com.au
A-Z LISTINGS
PROFILE: Redcat POS is an integrated end-to-end Australian-based hospitality solution, including round the clock local support, designed for the rigours of hospitality. Our system gives you the information you need to grow your business, without having to be an IT expert. From head office to store - hassle-free IT, leaving you free to do what you’re good at – offering great food, drink and service to your customers. Redcat’s end-to-end point of sale, accounting and business management solutions give users total control of their business. Our customers include some of Australia’s best-known franchises, restaurants and cafés. Redcat Polygon is an integrated software and hardware solution that manages sales, staff, stock, payroll, accounts, inventory, online ordering, smartphone apps, and customer loyalty. Polygon includes web based multi-site reporting, to provide a complete business management system. Our 3rd party integrations round out the solution, covering everything from accounting to rostering.
Start up costs: $500k +
PROFILE: We all know the smell of home cooking. The recipe might be different for each of us, but the feeling of experiencing something that’s been made with love and care never leaves us, and brings us back to the table time and time again. Our mission is to extract that feeling via the crumbed goodness of a lovingly prepared Schnitzel. At Schnitz, we’re a franchise family obsessed with schnitzel. To this day each and every schnitzel is obsessively made by hand with fresh, locally sourced, quality ingredients, and crumbed then pan cooked and never (ever) deep fried. It’s food made the right way not the easy way. We’re proud to share the happiness that only a schnitzel cooked with passion can bring.
Phone: 07 3399 3000 Fax: 07 3399 3077 Contact: Patrick Mulcahy franchisedevelopment@shingleinn.com www.shingleinn.com
Phone: 07 54 784 014 Fax: 07 54 777 133 Contact: Leigh Wallis leigh@smithandsonshq.com www.smith-sons.com.au Start up costs: $50,000 - $80,000
PROFILE: Shingle Inn is a leader in the boutique café market. Established in 1936, against the backdrop of the Great Depression, Shingle Inn has been the perfect destination to share special times with family and friends for generations. Luxurious high-backed chairs, warm rich colours and intimate booths create an atmosphere that attracts customers and Shingle Inn’s focus on superior quality food and coffee keeps them returning. With decadent cakes and delicious treats, made from traditional recipes in Shingle Inn’s central bakery, Shingle Inn prides itself on an exclusive product range that will not be found in any competing café. Together with Shingle Inn’s constant focus on coffee excellence and freshlyprepared meals on our extensive menu, Shingle Inn is unsurpassed in today’s café culture. Contact us to find out why Shingle Inn could be the right coffee and food business for you. Patrick Mulcahy 0431 649 450.
PROFILE: We aim to make the world a better place – better businesses mean better families and better communities. Our happy, profitable franchisees own and run their own professional renovation businesses utilising the systems, tools and resources we provide. Smith & Sons is committed to seeing each of our franchisees and master franchisees reach their business and personal goals.
Phone: 1300 781 735 Fax: (02) 9150 0837 Contact: Stacy Alogdellis info@soccajoeys.com www.soccajoeys.com.au/franchise
Phone: 1800 762 766 sota.franchise@snapon.com www.snapontools.com.au Start up costs: from $55,000 PROFILE: PROFILE: Snap-on Tools is a mobile franchise operation putting high quality tools and equipment into the hands of mechanics, engineers and technicians across the country. Snap-on Tools Australia & NZ is a wholly owned subsidiary of Snap-on Inc., a developer and manufacturer of innovative and technologically advanced tools with over 4,500 franchisees worldwide. After 30 years in the Australian market, Snap-on Tools continues to grow with an increasing number of franchisees reaching the million dollar club, and new growth opportunities available for existing franchisees such as sales assistants, multi-units and specialised tool storage and diagnostic sales programs. Initial training occurs in Dallas, USA and ongoing support is provided - no previous mechanical experience required. Snap-on offers an exclusive finance package to assist new franchisees.
A-Z L I S T I N GS
FOR A-Z LISTINGS ENQUIRIES CONTACT:
Soccajoeys has been developed by a team of childhood development experts to provide soccer programs to children aged 2.5 to 8 years. We deliver our programs to over 35,000 children annually with over 300 classes in operation across the country. Transform lives, including yours and become a Soccajoeys Franchisee. We offer a unique opportunity for people to become mentors to the next generation of Australian kids, instilling in them a passion to lead healthy and active lives.
• Ongoing training to boost your success • Continuous Head Office support (marketing, operational, financial and systems) • Access to industry leading childhood development programs • Coaching and mentoring workshops • Trusted Australian brand • Become part of a thriving and energetic network of franchisees • Your own business and exclusive franchise zone • Rewarding career in the childhood development industry • Flexible lifestyle.
Phone: 1800SPLASH (775274) Contact: Kylee Clasper admin@splashswim.com.au www.splashswim.com.au Start up costs: From $150,000
PROFILE: Splash Swim School is a boutique custom-made swim school. We have a state of the art turnkey fit out. Our pools are custom made to suit any size warehouse. We follow Royal Life’s Swim and Survive program that is accredited Australia wide. Full training and support. An easy 1800SPLASH telephone number to remember. Operation system and full support Splash have their own in house architectural service, project manage and building contractor that are registered in all states of Australia
CONTACT SENIOR ACCOUNT MANAGER CHARLOTTE REDFERN ON 02 8224 8373 CHARLOTTE.REDFERN@OCTOMEDIA.COM.AU
JANUARY/FEBRUARY 2018 | 120 | WWW.FRANCHISEBUSINESS.COM.AU
Phone: 1300 372 300 Contact: David Thomson Franchises@sportstaracademy.com www.sportstaracademy.com
Phone: 0418 870 920 Contact: Graham Streeter GrahamS@sumosalad.com www.sumosalad.com
Start up costs: Starting From $25,000
Start up costs: From $200,000
PROFILE: Sport Star Academy (SSA) believe “Champions are made, not born” and see the potential in every child. Through sport, SSA empower kids to believe in themselves and nurture a love of sport through focused attention, dedication and simply having fun. SSA is the number one provider of skill based sport programs, providing weekly sessions to over 5000 children nationally. Football Star Academy (Soccer division) was awarded “Franchise Business of the Year” in the 2017 Optus My Business Awards.
PROFILE: Join SumoSalad, Australia’s largest and most awarded healthy fast food franchise, on our journey to make Australia a healthier place. We offer healthy, tasty food in a fun, affordable and convenient way. Our high level of standards and superior customer service enables us to continue to flourish and grow within this exhilarating industry. With unparalleled training, continuous support and a strong, proven store concept, becoming a franchisee within SumoSalad is more than just becoming a business owner; it’s about joining a movement.
Choose your franchise from the following options: Rugby, Netball, Footy (AFL), Football, Basketball, Cricket, Golf, Tennis, Sport Star Performance and Soccer Time Kids.
Phone: 02 9723 1011 Fax: 02 9727 6771 Contact: Nick Avgerinos nicka@cheesecake.com.au www.cheesecake.com.au Start up costs: New store - $389,000 + GST PROFILE: The Cheesecake Shop is one of Australia’s favourite retailers and shares in the celebrations and happy occasions of millions of people each year with their signature dessert products. With over 200 stores across Australia and New Zealand and a two time winner of the Franchise Council of Australia’s Franchisor of the Year award, The Cheesecake Shop is one of Australia’s premier franchise systems.
Phone: 02 4957 4230 Contact: Franchise Development Manager jarrod@goodfeet.com.au www.goodfeet.com.au Start up costs from: $150,000 to $250,000 PROFILE: The Good Feet Store Australia and New Zealand franchise is looking for outstanding franchisees. The ideal candidate should have solid business or retail experience, with strong management skills and business ethics. Candidates should have a customer service mentality, with the desire to enhance the quality of our customers’ lives. Benefits of a Good Feet Store Franchise * Serves the needs of a large and broad market: people searching for relief of foot, knee, hip, and back pain * A category leader with few direct competitors * Attractive unit level economics: a proven model, The Good Feet Store is designed to generate some of the highest sales per square foot in the industry * Comprehensive branding and marketing: campaign materials and support – broadcast, in-store, online and collateral *The Good Feet Store provides full training and on-going support
Phone: 04 3909 4068 Contact: Sarah Oram franchising@unique-laser.com.au www.unique-laser.com.au Start up costs: $100,000 to $450,000
Phone: 1300 549 200 Contact: Kevin Bugeja kevin@franchise4u.com.au walkersdoughnuts.com.au Start up costs: $100,000 - $250,000
PROFILE: Unique Laser is revolutionising the aesthetics industry… Have you noticed that laser clinics and skin franchises all look the same? Unique Laser is the newest laser clinic and is different. Very different. We have developed a Unique, multi-award winning business model that: • Stands out from the rest in terms of initial investment, return on investment (ROI) and branding • Has exclusive rights to the fastest, newest lasers in the world • Provides complete training, ongoing support and medical supervision We have a range of partnership opportunities available that will allow you to take control of your life within a booming sector. Do not invest in another laser franchise before speaking to us. Contact to us today to see how we can change your life, and the lives of others, for the better.
PROFILE: We make food that adds a smile to your day. Just one bite and you’ll know you are eating something special; something reminiscent of your childhood. A simple model with absolutely minimal baking* in store; just filling, decorating and displaying. Our famous varieties include Boston Custard Cream, our signature Vanilla Glazed, Pretzel Choc Caramel, Cherry Bomb, Cookies & Cream and many others. Our *Hot Jam doughnuts are freshly proofed and cooked on site throughout the day. The aroma is impossible to resist! Together with our specialty-coffee created especially for Walker’s, our Classic hot dog flavours, our soda-fountain diner Milkshakes, and our speciality Heritage Sodas imported exclusively by Walker’s Doughnuts directly from the USA, you’ll find us an unbeatable and irresistible offering.
Phone: 0414 669 101 Contact: Stephen Spitz stephen.spitz@xpressodelight.com.au www.xpressodelight.com.au
Phone: 1300 73 44 33 Mobile: 0428224433 Contact: Darren Young franchising@yarravalleyfarms.com.au www.yarravalleyfarms.com.au/franchise
Start up costs from: $49,500 + GST
Start up costs: $75,000 +
PROFILE: Invest in an Xpresso Delight franchise and seize the opportunity to profit from one of the fastest growing markets on the planet. As the number of savvy, educated coffee drinkers has boomed, the market has exploded!
PROFILE: Yarra Valley Farms are wholesale suppliers of quality fruit and vegetables to the Hospitality Industry; including some of Australia’s best restaurants, hotels, cafes, caterers, education and care facilities.
Each day, thousands of workers trek to the nearest café to pay as much as $4.00 for their morning and afternoon coffees.
We source fresh produce from farmers, and deliver this directly to customers via owner-operated Franchisees. Our Franchisees collect the produce from our distribution centres and deliver it to our customers each morning. Our franchise offers a great work/life balance, and a guaranteed income for the first 6 months.
This is the premise of Xpresso Delight - transplanting the cafe into the heart of the workplace at a fraction of the price that people pay normally.
We’re looking for positive, passionate, motivated and fun loving people to become Yarra Valley Farms Franchisees, so if that sounds like you, contact us today!
This pent up demand for gourmet coffee in the workplace is very poorly met.
JANUARY/FEBRUARY 2018 | 121 | WWW.FRANCHISEBUSINESS.COM.AU
A-Z LISTINGS
FINAL WORD
HOW TO SPOT
A FRANCHISE WINNER Potential franchisees need to ask the hard questions if they are to pick out a business that can stand up to scrutiny and lead to success. ANDREW TERRY Professor of Business Regulation University of Sydney Business School
H
indsight is a beautiful thing - an “exact science” in the words of Guy Bellamy and “always twenty-twenty” according to Billy Wilder. Foresight is an even more beautiful thing – but of course so much more elusive. Picking winners inevitably requires foresight and this - whether in relation to the 24 Melbourne Cup horses or the 2400 ASX listed companies or even the 1120 franchise brands in Australia - is not an exact science. The commitment to a franchise is of course a much more serious commitment than a flutter on the horses or a dabble on the ASX and it is not my intention to trivialise this by the association. But no investment is without risk and there are no guarantees of success. The odds are nevertheless in the franchisee’s favour. Australian franchising has a good record of innovative and successful franchising but the overall success of franchising does not guarantee that all systems will be successful or even that within successful systems all franchisees will be. How then does a prospective franchisee move the odds in his or her favour? An informed decision to pick a franchise winner requires an assessment of a number of factors – the concept itself, the system which implements the concept, the financial equation, the franchisor and the franchisee.
The starting point for the prospective franchisee is the disclosure document that franchisors must provide to prospective franchisees. It is a rich vein of information and facilitates due diligence. It provides comprehensive information as to the structure of the system and the experience of the franchisor. It also provides valuable information about past performance although prospective franchisees need to remember that past performance is no guarantee of future success. However the disclosure document as such does not protect the franchisee. The law provides redress for false or misleading or incomplete information - but at the end of the day the disclosure document only provides information. Whether the disclosure document records a prospective winner is a matter for the prospective franchisee. In relation to the other key factors to be assessed in picking a winner the disclosure document is less helpful. It provides little information as to the viability of the business concept itself. We live today in a world of business disruption, and change is a constant. The viability of the concept in a rapidly changing and evolving marketplace is a key consideration for the franchisee. Similarly the financial equation. While the disclosure document requires certain financial information to be provided the franchisor is not required to provide the information that to most franchisees is the most influential – the expected financial
performance and earnings information. The disclosure document obviously cannot assist in relation to another key factor in picking a winner – the capacity and willingness and preparedness for the prospective franchisee to trade off independence to work within the franchisor’s system. Whether or not the franchise is a good fit for the franchisee is of course of interest to the franchisor - but it is ultimately one for the prospective franchisee. It is in this context that the prospective franchisee is in a much stronger position than the gambler or the investor. Once the bet is placed there is absolutely nothing that can be done to influence the outcome of the race. Once the shares are bought there is, in practical terms, little that a small investor can do to influence the outcome. But a prospective franchisee is much better placed to make a good decision and, because a franchisee is an operator and not simply an investor, to influence the outcome through active participation. The advice - given so often in this column - is that prospective franchisees must exercise informed due diligence. Talk to former and current franchisees, family, professional advisors. Get educated as to the realities of franchising. Ask the hard questions. Be prepared to step away from the opportunity that seems too good to be true.
JANUARY/FEBRUARY 2018 | 122 | WWW.FRANCHISEBUSINESS.COM.AU
Join Domino’s
JOURNEY TO
SUCCESS
Domino’s invites like-minded entrepreneurs to join our solid and established brand as we pave the way to success. Be a part of our success story and create your legacy now! head to:
www.dominosfranchise.com.au/applynow
OWN YOUR FUTURE
With a network of over 360 restaurants across the country, Red Rooster are spreading their wings and looking for owner/operators to open new restaurants in regional and metro NSW, QLD, VIC and TAS. ENQUIRE TODAY www.redrooster.com.au/franchising JOIN THE
Chicken
Champions